Monetising

The main approach we believe that will be the most effective for Virgin Atlantic would be to introduce a freemium game. A freemium game is a mix of both free and premium. This is a strategy where customers can access a basic version of a product or service for free, they then have the option to change to a premium version which offers additional features by paying a price (Gu, Kannan, Ma, 2018). An example of one company which offers a freemium service is Fortnite, they offer their users the ability to play the game for free, the payment is only used for character extensions (i.e. outfits). Fortnite accumulated $223 million in revenue amongst all their platforms (Business Insider, 2018). With most freemium based games, the developers set out limitations within the game so that friction increase with free users to that it encourages them to pay for the premium (Hubspot, 2018). The limitations which would be in place would be:

The Difference

Virgin Atlantics new game will feature the chances to win exciting offers such as half price on selected soft drinks or collect a free snack on your next VA flight. The reason for the introduction of special offers and discounts is so that they gain a competitive advantage. The Huffington Post reported that 51% of participants agreed that were influenced by deals, discounts or sales when shopping online (Huffington Post, 2016).

Communication

Virgin Atlantic already use numerous methods of communication channels to communicate with consumers. These include email marketing, social media and TV advertisements. Virgin Atlantic should use channels such as their app, on-flight poster ads and email marketing to promote their new initiative. The reason for this choice is due to the low cost associated with promoting their initiative through these channels.

When communicating this initiative, it is important that Virgin Atlantic use the AIDA model (Awareness, Interest, Desire and Action) in the delivery of their communication. This is important if Virgin Atlantic want an effective message of communication as it helps persuade the buyer towards making their purchase decision.

SmartInsights, 2013

Associated Risks

One major risk which can be associated with this is ensuring that the game has the ‘fun factor’. The producers of any game must consider that its only about the delivery of a strong creative product but to create a product that the audience will want to play (Schmalz, Finn, Taylor, 2014). ‘Fun’ is deemed as an ephemeral trait, this means that it is challenging to find an audience that will enjoy the game to its full potential (Schmalz, Finn, Taylor, 2014).

Another risk with creating a mobile game would be within the development strategy. These could include problems such as incorrectly prioritising work, implementing an inefficient project structure, failure to allocate time for quality assurance, and insufficient prototyping before production (Schmalz, Finn, Taylor, 2014). This can be a big risk for Virgin as they may find that if these risks are not dealt with from early then this could heavily impact the release of the game.

Another risk associated with this initiative is the challenge of using a freemium strategy. There is a threshold with freemium strategies between attracting a large user base and then generating increased levels of a direct network effect, while users are still upgrading to premium (Hennig-Thurau & Marchand, 2013). Wu, Chen, and Cho (2013) argued that giving away games for free can maximise revenues if the positive network effects of the game are high and then the negative effects of the game’s limitations are low.

References 

Cox, J. (2018). The Ultimate Guide to Freemium. [online] Blog.hubspot.com. Available at: https://blog.hubspot.com/service/freemium

Gu, X., Kannan, P. and Ma, L. (2018). Selling the Premium in Freemium. Journal of Marketing, 82(6), pp.10-27.

Hennig-Thurau, T. and Marchand, A. (2013). Value Creation in the Video Game Industry: Industry Economics, Consumer Benefits, and Research Opportunities. Journal of Interactive Marketing, [online] 27, pp.141-1587. Available at: https://www.marketingcenter.de/sites/mcm/files/downloads/research/lmm/literature/marchand_hennig-thurau_2013_jim_value_creation_in_the_video_game_industry_industry_economics_consumer_benefits_and_research_opportunities.pdf

HuffPost. (2015). What Science Says About Discounts, Promotions and Free Offers. [online] Available at: https://www.huffingtonpost.com/danny-wong/what-science-says-about-discounts_b_8511224.html.

markets.businessinsider.com. (2018). Fortnite is following the blueprint of the most profitable video game of all time (TTWO) | Markets Insider. [online] Available at: https://markets.businessinsider.com/news/stocks/fortnite-copies-most-profitable-game-gta-2018-5-1025067183.

Schmalz, M., Finn, A. and Taylor, H. (2014). Risk Management in Video Game Development Projects. [ebook] Waikoloa: IEEE. Available at: https://ieeexplore.ieee.org/document/6759136.

Wu, Chi-Cheng, Ying-Ju. Chen, and Yung-Jan Cho (2013), “Nested Network Effects in Online Free Games with Accessory Selling,” Journal of Interactive Marketing, 27, 3, 158–71.