3. Marketing Plan
3.1. Market analysis: Taiwan
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3. Marketing Plan
This section of the Thesis will cover a wide range of issues relevant to the Marketing Plan. A more detailed analysis and overview of the specific geographic market (Taiwan), macro environmental factors will be performed to determine its attractiveness. In addition to that, the report will aim to develop value proposition, unique selling points and points of differentiation, which will help formulate a clear marketing strategy for Pokémon GO to increase its current market share in Taiwan.
3.1. Market analysis: Taiwan
3.1.1. Video game market in Taiwan: overview
Within the context of Taiwan, video games sector is known to be dominant within the bigger – toys and games market. Importantly, video games category is appealing not only to children and adolescents, but is also paving its way to a broader demographic of consumers, among them – young adults (Euromonitor, 2018). It is forecasted that the discussed category will continue its growth within Taiwanese market in the future. The segment has been impacted in 2018 by the decision of Sony and Nintendo to stop production of their hand-held consoles.
The issue with such decision is that it came at a time when AV and VR headsets industry has received little development and growth, as such headsets remain relatively expensive and limited to a small sub-population of the consumers (Euromonitor, 2018). In addition to that, apart from the Niantic`s Pokémon GO, there was a relative stagnation observed within the AV/VR segment, with a fear that the customers will lose interest in these types of games.
According to the forecasts developed in 2019, the growth of the video game industry will continue globally. As of 2018, the size of the global market was estimated to reach 139 billion USD; however, by 2020 it is expected to reach 196 billion USD (Figure 7) (Forbes, 2019). As shown in Figure 7, vast majority of this growth (54.9 billion USD) will be due to the increased popularity of playing games on smartphones, which account for 36% of users in the video games market. Console will remain the 2nd most popular outlet, which will account for 47.9 billion USD and be used by 32% of the gamers. Downloaded games will account for 21%
of the market, and tablet gaming will reach 13.6 billion USD (or 9%) (Figure 7) (Forbes, 2019).
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Overall, according to the forecasts the industry will continue experiencing stable growth throughout all of its segments, but particularly – through the smartphones.
Figure 7 Forecasted video game market growth (source: Forbes, 2019)
Another important factor, impacting consumer preferences within the segment of AV/VR video games concerns the new products related to AV/VR headsets. Importantly, a number of local manufacturers offer various products in the segment, among them – Samsung, HTC Inc., Sony. Prior to 2018, these companies have launched a wide range of AV/VR sets, which sparked the interest among the gaming community (Euromonitor, 2019). However, the initial interest has been relatively quickly lost as the gamers failed to see an immediate benefit of purchasing such headsets in regards to playing AV and VR games. At the same time, it is important to note that in Taiwan the market segment related to AV and VR technology is developing quickly, with the first VR theme park opened in Taipei in 2017 by HTC Inc., which also uses its own line of products (HTC VIVE) in the establishment (Euromonitor, 2019).
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Figure 8 Online population (Newzoo, 2018)
As of 2018, the video game market in Taiwan was estimated to be worth 1.3 billion USD and was ranked as the 15th most attractive in the industry. As shown in Figure 8, similarly to the global trend majority of the gamers prefer games that can be played on their smartphones:
67% of male gamers and 65% of female gamers. One important distinction, however is the console gaming is only the third most popular option (35% and 20% of male and female audience respectively). Unlike in the U.S. and other countries, in Taiwan many users still prefer PC Games: 54% of male gamers and 38% of female gamers (Figure 8) (Newzoo, 2018).
According to the available market, data nearly one half of the urban gaming population (54%) watch gaming video content (49% - on their mobile devices). This data suggests that there is a high level of penetration among the urban population of Taiwan. Up to 78% of the individuals, who play games have spent money on various in-game items and virtual products within the last 6 months; among them 32% of male and 30% of female gamers purchased various power-up offerings (Newzoo, 2018).
3.1.2. Taiwan: PESTEL analysis
This section of the report will present analysis of the key macro environment factors, relevant to Niantic`s performance within the chosen geographical market – Taiwan. PESTEL framework will be used as a model to structure findings of this analysis and identify relevant factors that can help the company position its key product – Pokémon GO.
Political. In 2020 although Taiwan was among the countries with the confirmed cases
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cases of the disease officially registered as of May 2020. Although certain quarantine measures have been introduced, overall the island was least affected unlike the neighboring mainland China (Wang et al., 2020). Taiwan has been facing diplomatic isolation from mainland China, due to the latter claiming the island as its territory and the latter opposing such view. Although boycott has negatively impacted the flow of tourism to Taiwan, it is the political tensions between it and China that cause uncertainties for the foreign investors (Copper, 2019).
Importantly, the isolation worsened following election of Tsai, Ing-Wen in Taiwan, who is an open proponent of the island`s independence (Copper, 2019).
Economic. In 2018 – 2019 Taiwan has experienced 2.7% GDP growth and its GDP per capita was 24,828 USD (Wang et al., 2020). As of 2018, an average household income in Taiwan was 14,273 USD, which has increased from 9,720 USD registered in 1983. This data strongly suggest that although average income keeps increasing in Taiwan, majority of the population has significantly less disposable income when compared to Niantic`s key markets (United States, United Kingdom, Germany, France, Japan) (Easternpeak, 2020). Thus, it is likely that people have significantly less money to spend on computer games and in-app purchasing.
Social. As of 2015, the country had 13.6% of residents ages 0 – 14, 73.9% ages 15 – 64, and 12.5% - ages 65+. There is a major segregation in Taiwan with the urban population on average earning 30 – 50% more than their urban counterparts (Wang et al., 2020). Taiwanese people are historically interested in and aware of cultural trends in other Asian countries, among them – Japan, China, South Korea. This makes them dedicated audience for a game such as Pokémon GO, because majority of the Millennial population on the island grew up watching the famous cartoon. This fact makes the market of Taiwan significantly different from other (Western) markets, where the percentage of Pokemon fans is lower than in Taiwan.
Technological. It has been estimated that over 14 million people in Taiwan are using smartphones, which means that only 60% penetration is currently observed and there will be a significant increase in the number of mobile phone users in future. Apple controls one third of the market share (33.8%), which makes iOS the most popular mobile platform in Taiwan (Statista, 2020). The brand is followed by Samsung (20.8%), OPPO (11.7%) and Xiaomi (6%) (Figure 9).
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Figure 9 Leading types of smartphone brands in Taiwan (source: Statista, 2020)
The Internet penetration is 92.6%, although the Internet speed and coverage remains a critical issue in the rural areas of Taiwan. Overall, due to the level of income the consumers in Taiwan are unlikely to invest into the headsets allowing for AR and VR experiences. Despite that, the AR and VR themed parks and recreational areas are gaining popularity in Taipei and other major cities.
Environmental. Due to the rapid industrialization process and economic development and growth on a relatively limited territory, Taiwan has been facing a number of environmental issues, beginning from 1980s when these problems started to accumulate. Among the current concerns facing the nation are: deforestation, endangered species and shrinking natural habitats, air, soil and water pollution, waste management (Tseng & Pilcher, 2019). Although the local residents are less concerned about sustainability issues when compared to the neighboring Japan or the Western countries, there is an increased level of awareness among the local populations regarding the impact businesses have on the island. As of 2020 the country is investing into green and renewable energy to minimize its impact on the environment (Tseng & Pilcher, 2019).
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Legal. Taiwan tries to create a plausible climate for Foreign Direct Investment (FDI) and other types of market entry strategies for the foreign companies to increase the flow of capital into the country. Intellectual property (IP) laws implemented in Taiwan closely resemble those adopted in the United States, however the government invests less effort to ensure that these laws are followed. Thus, there are frequent violations of the IP legislature in Taiwan (Euromonitor, 2019).
The environmental analysis strongly suggests that in order to develop an effective strategy in Taiwan, Niantic Inc. has to consider a number of macro environmental aspects and significantly modify its strategy. The key consideration is relative political instability caused by the frozen diplomatic relationships with China. The second concern is relatively modest economic development, which makes purchasing power of the customers significantly lower than in the United States or Japan. At the same time, there are some environmental factors that support Niantic`s decision to develop local market. Among these positive factors are an overall high awareness of Pokemon game among the Taiwanese people and rapid growth of the percentage of residents that owns a smartphone. The latter strongly suggests that unlike the saturated Western markets, Taiwan`s mobile gaming industry is still undergoing its development (growth) stage as only 60% of the residents own a smartphone. Another important finding is that despite proximity to the epicenter of the COVID-19 crisis (China), Taiwan was among some of the world`s countries which have been least impacted by the epidemics.