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CUSTOMER INTEGRATION IN NEW PRODUCT

DEVELOPMENT AND THE EFFECT OF PRODUCT

COMPLEXITY:

A CASE STUDY OF ONLINE GAME DEVELOPMENT

MSc BUSINESS ADMINISTRATION

STRATEGY AND INNOVATION MANAGEMENT

FACULTY OF ECONOMICS AND BUSINESS

UNIVERSITY OF GRONINGEN

Tanja Haandrikman

S 1861808

23 July 2014

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ABSTRACT

Thus study focusses on customer integration in terms of roles and types across the different NPD stages for successful online game developers. It contributes to current literature by combining customer roles and types, adding an updating stage and accounting for product complexity differences. Cross and within case analyses of the four case studies, consisting of secondary data, questionnaires and interviews, provided interesting insights: Customer types and roles integrated differ across development stages and among simple and complex games, are generally low during early stages and show an overall importance of lead users. This opens up a window for knowledge generation on the influence of product complexity on customer integration throughout the development process. This study provides an overview of customer integration strategies that make it possible for managers to adapt customer integration to their specific situations.

Key-Words: customer integration, online game development, new product development, NPD success, innovation, customer types, customer roles, lead users, product complexity.

INTRODUCTION

The usage of external ideas and knowledge in new product development (NPD) is becoming more and more important in today’s industries (Chesbrough and Appelyard, 2007; Laursen and Salter, 2006). Increased competition and faster technological developments have decreased the lifetime of products and increased the importance of fast response to customer requirement changes (Oskarsson, 2011). External sources can provide the necessary additional inputs for innovation processes (Chesbrough, 2011; Kang and Kang, 2014). Segelod and Jordan (2004) found in their study that customers are by far the most important external source: it can help specify the difficult to translate customer needs and transform them into product requirements. Being able to produce based on customer needs increases the success rate of new products (Laursen and Salter, 2006; Segelod and Jordan, 2004).

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quality customer satisfaction and product acceptance (Carbonell et al., 2009; Fang, 2008; Subramanyam et al., 2010). However, there are also disadvantages to customer integration in terms of increased risk, coordination costs and development time and (Fang, 2008). It is argued that when product complexity increases, the disadvantages of customers as external sources start to outweigh the advantages (Fang, 2008; Rosenzweig et al., 2003; Zahay et al., 2011).

One way to access customers as external sources is through customer integration into product development (Alam and Perry, 2002; Chesbrough, 2003; Da Mota Pedrosa, 2012; Laursen and Salter, 2006). Customer integration is defined as the active integration of the customer in the provision of goods and their upstream and downstream processes (Büttgen, 2009). Product value is defined and developed with the customer through identification, acquiring and understanding of the customers’ expressed and latent needs (Da Mota Pedrosa, 2012). Benefits of customer integration include reduced costs, high customer satisfaction and increased market share (Straub et al., 2013).

Current literature acknowledges the differences in customer integration throughout different stages of the development process to retrieve optimal results (Bogers et al., 2010; Kristensson et al., 2002; Yadav et al., 2007). This different customer integration is often researched in terms of customer roles, how customers add to development (Coviello and Joseph, 2012; Nambisan, 2002) or customer types, what kind of customers are integrated (Enkel et al., 2005; Jespersen, 2010) but fails to combine both.

This study combines the phenomena mentioned by examining customer integration in terms of customer types and roles and while doing so, accounting for differences in product complexity. Current literature addresses the need for this research: added knowledge of customer integration into the NPD process (Straub et al., 2013) and the changing roles and types of customers across stages (Alam, 2006; Bartl et al., 2012), linking of customer roles and types (Coviello and Joseph, 2012) and the effect of product complexity on customer integration (Fang, 2008) are called upon.

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The research question “how are customers integrated across different stages of the development process, accounting for product complexity?” is addressed in the context of online game development. This setting creates the opportunity to include the important update stage into the development process and thus to increase knowledge on customer integration. During this stage, launched products are continuously improved and content added to keep customers interested in the product, increase customer satisfaction and attract new customers (Choi and Kim, 2004; Wi, 2009). This stage is not only relevant for online game development, but is also found in software development (for instance the Microsoft Office packages) and in service industries (improvement and broadening of current services).

The remainder of this paper provides a theoretical background for this research by addressing the relevant concepts, followed by a detailed description of the research method. Next, the results are provided, divided into within case and cross case analyzed, and discussed. Finally, the paper will be concluded with implications and directions for further research.

LITERATURE REVIEW

In order provide useful insights into customer integration, these views and concepts mentioned in the introduction are discussed within this chapter. Subsequently, the online game development process, product complexity and customer integration are elaborated on. Finally, preliminary conceptual relationships are built based on the current literature.

ONLINE GAME DEVELOPMENT PROCESS

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the prototype is tested by developers and users as if it were launched to dissolve flaws in the product. The commercialization stage is where the game is made publicly available. Finally, with regular and irregular updates, the game developers continuously improve the product. This process is depicted in figure 1.

Figure 1. Online game development process (adapted from Wi, 2009)

Adjusting a product after launching it is not uncommon in other industries as well: automobiles are frequently upgraded after launching it, for instance. However, these upgrades lead to new products alongside the original product and thus do not modify the original product as happens with online games. In software development and service delivery, this updates without the creation of a new product are found as well, what may increase the generalizability of this study.

CUSTOMER INTEGRATION

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Although customers are important for the development process, the relevant types and roles differ among the different stages, as mentioned in the introduction. Therefore, the remainder of this chapter explains the different customer roles and types.

Customer Roles

Most of the literature classifies customer in terms of roles, recognizing the customer as active part of the product and service development process (Rudawska, 2011). According to this concept, customers belong to a strong network, co-create and extract the value of business, they cooperate and co-participate in offer development and managers and thus forced to treat customer as part of the organization (Rudawska, 2011).

Customer roles have been grouped and redefined into three broad categories: the customer as a co-creator, a co-producer or as a user (Füller and Matzler, 2007; Nambisan, 2002; Rudawska, 2011). As co-creator, customers supply the company with information and wealth. As co-producer, customers can add to a number of activities in design and development, for instance: The design of product features specification of the interface requirements and establishment of development process metrics. With customers as users, customers are the primary recipients of products and can add value in product testing and support.

Although this classification provides a useful picture, it has been criticized for being too broad and thus of limited practical importance (Coviello and Joseph, 2012), suggesting customer types as an additional classification of customers.

Customer Types

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Since the larger share of the literature is focusing on the customer roles, customer roles and types overlap in the current literature and since they are complementary to each other, both will be used in this research.

CUSTOMER INTEGRATION AND PRODUCT COMPLEXITY

When product complexity increases, the disadvantages of customers as external sources start to outweigh the advantages (Fang, 2008; Rosenzweig et al., 2003; Zahay et al., 2011). High product complexity decreases the possibility to specify the process and requirements beforehand, increasing the risk of developing an unfit product (Fang, 2008). This calls for increased customer integration to identify those changing needs (Rosenzweig et al., 2003). However, the increase of customer integration needed with higher levels of product complexity needs increased coordination efforts of the customers and the development team, which increases costs and can increase the development time (Fang, 2008; Zahay et al., 2011). Simple product games are likely to have a general customer base, need a fast development time and do not integrate specialized product requirements (Wi, 2009). More complex games usually have an experienced customer base with high quality requirements of gameplay and content and need for the product to be adjusted to customer needs well in order to keep the customer base (Wi, 2009). This difference in complexity than cause for different strategies of customer integration: when product complexity increases, more customer integration is needed to match the product with the customer and benefits outweigh the disadvantages. This results in higher customer integration for more complex games.

To the best of my knowledge, no research has yet been conducted in the integration of customer types and roles in different development stages with respect to product complexity, however the varying importance has been acknowledged (Fang, 2008; Rosenzweig et al., 2003; Zahay et al., 2011). This research thus makes a first attempt to understand the relations of these concepts.

CUSTOMER ROLES AND TYPES ACROSS THE NPD STAGES

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Idea Generation

During the idea generation stage, what developer mostly need are suggestions. Requesting users can provide the developer with ideas for new products based on their needs (Enkel et al., 2005). Also, lead users can provide the developer with information on what the customer is going to like and thus are of interest for this stage (Enkel et al., 2005). Customers in this stage behave as co-creators by generating ideas for development (Chesbrough, 2003; Füller and Matzler, 2007; Mazini et al., 2013; Vaisnore and Petraite, 2011). From the study of Jespersen (2010), requesting customers was the only group with a significant relationship to the idea generation stage.

Concept Development

The launching customer should be integrated into the development process from this stage on to stimulate, design or participate in the activities (Enkel et al., 2005). In order to create and test the concept, customers should still behave as co-creators to provide ideas on further improvements (Mazini et al., 2013; Vaisnore and Petraite, 2011). Although Enkel et al. (2005) find no result to indicate importance of lead users in concept development, the study of Jespersen (2010) shows a significant positive influence of lead users in this stage.

Game Development

Launching customers are still important to further stimulate, design and participate in activities, mainly because of their technological knowledge (Jespersen, 2010). However, reference customers are becoming important as well to share opinions on application experiences (Enkel et al., 2005). Also, according to the research of Jespersen (2010), lead users have a significant positive relation on the development stage. During this stage, customers take a role as co-creators: they develop the game together with the developers (Chesbrough, 2003; Füller and Matzler, 2007; Mazini et al., 2013; Vaisnore and Petraite, 2011).

Testing

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Commercialization

During this stage, feedback information is needed. Information on first buyers, a passive group of users, can enhance market penetration strongly (Enkel et al., 2005). Jespersen (2010) also found a positive influence of first buyers on commercialization, though not significant. Reference customers did show a significant influence on this stage. Launching customers on the other hand, have shown a significant negative influence on the commercialization stage (Jespersen, 2010). Customers behave as users during commercialization (Chesbrough, 2003; Füller and Matzler, 2007; Mazini et al., 2013; Vaisnore and Petraite, 2011).

Updating

Preliminary relations in this stage cannot be drawn from literature since, to the best of my knowledge, that literature does not exist yet. During this stage, suggestions, complaints and advice from customers are needed to address problems with the game, improve the product, create a better fit with current customers and attract new customers (Choi and Kim, 2004; Wi, 2009). It is also believed that customers provide their own input for further development since they are experiences in playing the game, but only if they have the technical abilities. Thus, customers are needed as resources and users to provide information, as well as a co-developer role to provide technical input. Launching users thus are important, as well as requesting (Jespersen, 2010), reference and lead users.

The matching of customer types and roles to the different stages as provided above has been summarized in the table (1) below. Product complexity is not included in this overview because of the lack of current research on product complexity influence on customer integration in the different stages.

NPD stage Roles Types

Idea Generation Resource Lead users and requesting users Concept Development Co-developer Requesting users and launching users

Game Development Co-developer Lead users, reference users and launching users Testing User Launching users, reference users

Commercialization User First buyers and reference users Updating User, Resource,

co-developer

Requesting users, lead users and reference users

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METHODOLOGY

The previous sections have described the problem and the context in terms of existing literature. This part of the paper elaborates on how the research is conducted: first the appropriate research design had to be chosen. Next, the sample for the cases had to be selected and defined. Third, the best suiting data collection mechanisms had to be elaborated on and finally, the data analysis plan was built. These concepts are discussed in detail below. These are discussed in more detail consecutively.

RESEARCH DESIGN

The design chosen for this research is a multiple case study. This research design is chosen because there is a lack of knowledge on the current phenomena, creating a need for theory development. Also, this research focusses on construct relations in a single setting, namely the online gaming development industry. The dynamics in a single setting are best understood by case study research methods (Eisenhardt, 1989). A multiple case over a single case method is chosen because it permits replication logic (Yin, 1984), treating several cases as independent experiments to confirm or disconfirm emerging conceptual insights, and thus increases the reliability of the research.

SAMPLE SELECTION

The sample for this study is made up out of four successful developed online computer games. Since the number of cases typically ranges from four to ten and the time available for this research is low, the minimal amount of four cases has been decided on. The criterion successful has been chosen because resulting relations between concepts are most likely to be contributing to efficient company practices. The proxy used for measuring the success of a game is the number of awards received, since an award signals quality of a product (Huang et al., 2004).

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need more effort to understand the gameplay. This distinction creates the opportunity to find whether the complexity of a product requires a different customer integration strategy.

Case1 Case2 Case3 Case4

Game description MMORPG Battle Arena Adventure, horror point-and-click

Pokergame Casual action-adventure platform NR employees firm 1000 180 60 3 NR games 1 59 16 1 Revenue company $624M $50M $150M $25M Revenue game $624M $40M $7M $25M

Complexity Very complex Complex Very Simple Simple

NR awards 20 90 2 7

Metascore 78 82 -- 90

Respondent Quality Assessment Developer CCO, PR Developer Country US US Netherlands Vietnam

Table 2. Overview of the cases.

DATA COLLECTION

Data is collected through secondary sources as well as surveys and interviews with a respondent from the company. The use of multiple data collection methods, or triangulation, increases the strength of theory grounding (Eisenhardt, 1989). The three different mechanisms, questionnaires, interviews and secondary data, are discussed in terms of execution and measurements used.

Data Collection Methods

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or via Skype due to the large geographical distance. During each of these data collection steps, field notes were written up electronically and categorized per case and per development stage in order to react to any occurrence as it happens. This increased the likelihood of anything important to be included in data analysis.

Measurements

Customer types and roles were measured by asking for characteristics of users involved for each development stage. For each role or type, two items were generated on a 7 point Likert scale (1= highly irrelevant, 7=highly relevant). The customer type items are drawn from the work of Gruner and Homburg (2000), and Jespersen (2008) and are used in several other existing studies (Enkel et al., 3005; Jespersen 2010; Jespersen 2011) as well. The items are thus considered as reliable. The customer role items are generated from existing research as well (Jespersen, 2010; Fang, 2008) and are transferred to other research as well (Lin and Huang, 2011). These items are thus also considered as reliable. The questions for both constructs are presented in Appendix A.

New product success was measured by the metascore and number of awards, provided by secondary data sources. The metascore is found on Metacritic (game review website) and Steampowered (download platform), using both websites to verify matching scores. The second product success criterion, the number of awards, is found by adding the number of awards received by reputable Awards, such as the Game Developer Awards and Dutch Gaming Awards. These numbers are not retrieved from company websites to prohibit biased information.

Product complexity is measured by assessing reviews on the product from renowned reviewers and by asking the game developers on the complexity of the game. It is based on the ease of playing the game, skills needed, ease to develop the game and graphics quality.

DATA ANALYSIS

After designing the study and the research instruments, the data analysis approach has to be considered. As is typical for inductive research types (Eisenhardt, 1989), this research contains within case and cross case analysis consecutively and these will be discussed respectively.

Within Case Analysis

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customer roles and types were denoted along with a discussion of the findings. Combined with overall pattern findings, these results are combined into a single case description. However some general patterns emerge while developing single case descriptions, these are not further analyzed to maintain the replication logic mentioned before. The results from the data collection are matched with the preliminary relationships provided in the literature review section of this study. Possible dissimilarities are motivated and included in the case descriptions.

Cross Case Analysis

After the individual case descriptions are built, similarities and dissimilarities between findings of the different cases are analyzed and discussed. These results are than linked to the complexity differences of the games; pattern recognition for customer integration for simple and complex games individually. Finally, emerging patterns of customer integration strategies over all four cases are discussed. This analysis plan leads to insights on what customers are generally integrated during the different development stages and the difference between simplistic games and the more complex games.

QUALITY ASSESSMENT

This research contains a low number of cases and within case respondents, decreasing the reliability of the research. However, the reliability is enhanced by standardization of the questionnaire, semi-structure of the interviews, keeping an open mind, triangulation, existing Likert scale measurements and using multiple constructs per item. The validity of the study is increased by using an existing, proven measurement items, triangulation and the use of multiple over one case.

RESULTS

This chapter elaborates on the findings of the research. Coherent to the methodology, first the within case analysis descriptions are provided, followed by the cross case analysis.

WITHIN CASE ANALYSIS

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Case One

This massive multiplayer online role playing game in battle arena style is developed by an independent game company in 2009 and is playable on a freemium base (free but in game content can be bought. It incorporates high quality graphics, over 80 different characters, different maps to play on and numerous and complex coding. The game has been developed as single game in the portfolio by a large independent developer with a thousand employees and a revenue over 600 million dollar.

New product success. The amount of awards and nominations the game has won over the past three years signals the success of the product: 20 in total since 2009. These awards range from Gamer’s Choice (best PC game, best multiplayer, best strategy, audience awards) to Best of All Time awards, community relations and Game of the Year awards. Also, the game has earned a metascore of 70 out of 100 and is thus seen as a successful online game.

Development process. During the interview with a quality assessment employee, the development process of the game has been discussed and was concluded to be similar to the one in figure 1. The respondent stated that the game concept is based on an existing, popular game that received much criticism from players on gameplay and quality. A similar game along with a company was built to create a similar game with customers as central focus. The idea was worked into a concept story before in went to actual coding (creating the source code with transforms input into a game). Toolboxes were provided for potential customers to modify and create possible content and commercialization already began. The coding led to a prototype which was used for testing and commercialization. During testing, people are invited to test the game while playing it in-house to gather immediate feedback in terms of advice and complaints. After incorporation of the feedback, the game was fully launched through an online platform. A strong online community was built online to live up to the customer relations importance promise. Post-launch feedback was gathered and to create updates, which improve the quality of the game and add content, based on customer needs.

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providing feedback on ideas, although not large in number. Lead users remained important during concept development by being a resource for further development (providing information on needs) and collaborating in development. Lead users were still integrated as resources during game development. Launching users, due to their technical skills, proved to be important as co-developers, creating and modifying content with the development team. Also, representatives of the targeted segment showed to be important by providing feedback on game features and providing suggestions for further development. During the testing stage, launching and reference users received high scores as being part of the development team by testing the beta version and modifying the game. First buyers and reference users played the role of customers as users, however first buyers are more passively integrated just to increase market penetration, as mentioned in the interview. Lead users are still important as resources. The commercialization phase included lead, requesting and reference users and first buyers to build a large and strong community and increase market penetration. Finally, for updating the needs of lead users were important as resources, co-producer and user roles, requesting users served as resources and users and reference users co-produced the updates and had a user role. This information is summarized in table 3 on the next page.

Stage Findings case 1 Preliminary

Idea Lead users* Lead & requesting users

User Resource

Concep t

Lead users Launching & requesting users

Resource* & Co-developer Co-developer Game Lead users Launching

users*

First buyers Lead, reference & launching users

Resource* & Co-developer

Co-developer User & resource Co-developer Testing Lead users Launching

users*

Reference users*

First buyers

Launching & reference users

Resource Co-developer Co-developer & user*

User* User Launch Lead users Requesting

users

Reference users

First buyers

Reference users & first buyers

User User User User User

Update Lead users* Requesting users*

Reference users Lead, reference & requesting users

Resource*, co-producer & user

Resource* & user*

Co-producer & user* Resource, co-producer & user

*. Considered >6 on both constructs in the questionnaire. Table 3. Findings of case 1.

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this, roles have been evaluated as the way different types are integrated and are thus reported in a different way than established in the methodology section to increase the usefulness of the results. The results show some remarkable findings. First, lead users have shown to be important in every stage. This has been previously hypothesized but not found in the results of the work of Jespersen (2010), who states that lead users are an important source for every development stage due to their creativity and innovativeness. Second, the preliminary conceptualized requesting users have not found to be important in early stages. This can be a result of the lack of possibilities to provide complaints on a not yet existing product (Brockhoff, 2003). During the idea stage, customers were integrated as users, which can be a result of the idea stemming from an existing product which already has a customer base. Thus, the customers behave as users. Finally, more customer types and roles are integrated into every stage as conceptualized. This can be a result of the company’s customer focus or on the product complexity that requires close customer relations.

Case Two

This case concerns an episodic video game from an independent developer and publisher, which is launched in 2012. It is a point-and-click horror adventure game with a focus on problem solving rather than combat. It involves high quality graphics, interactive gameplay and other factors increasing the complexity of the game. The game can be bought online for €5 per episode or $25 per season (one season contains 5 episodes). The company has 180 employees and developed 59 game titles so far. The company’s yearly revenues amount up to $50 million, of which $40 million stems from the focal game.

New product success. The game has won 90 Game of the Year awards, for instance the Spike VGA’s and DICE awards, signaling the success of the game. The metascore of 82 out of 100 can also be seen as high. Thus, this game is considered as very successful.

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data and feedback, as well as in meetings at the headquarters. Prototype feedback was then collected and included in further development. These steps iterated several times, before the game was launched. After the full launch of the game, regular updates were designed to enhance the quality of the game and for extra gameplay.

Customer integration strategy. From the questionnaire, it seemed that customer integration in the first two stages was relevant in terms of lead users but no customer roles. During the interview it was clarified that the game was developed in order from the television show owners and customers had no role in this. However, lead user characteristics in the questionnaire did match the type of customer they had in mind to create the product for in these stages and were thus marked as relevant. During development, customers were integrated to help generate content and create a certain feel of the product and testing. A lot of customers were encouraged to test the product and provide feedback before it was commercialized in-house. Feedback on the game is gathered by meetings, online and through conventions. For commercialization of the game, the developers chose for a digital, downloadable strategy over a tangible retail product. This choice is based on customer base characteristics and preferences. Updating occurred through extra packages and in game improvements. These updates are based on and developed with the customers and their preferences, suggestions and advice. This information is summarized below (table 4).

Stage Findings case 2 Preliminary

Idea (Lead users) Lead & requesting users

-- Resource

Concept (Lead users) Launching & requesting

users

-- Co-developer

Game Lead users Launching users Lead, reference & launching users

Co-developer Co-developer Co-developer

Testing Lead users* Launching users Requesting users Reference users* First buyers

Launching & reference users

Resource Co-producer, resource

Resource User* User* User

Launch Lead users Requesting users First buyers* Reference users & first buyers

User User User User

Update Lead users* Launching users Requesting users Reference users First buyers*

Lead, reference & requesting users

Resource Co-producer Resource User User* Resource, co-producer & user

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Discussion of the results. The findings show that customer integration in the earlier stages is low, which is due to the origin of the production of the game: the existent television show and comics. This is opposed to the high customer integration in the later stages, where all customer types are relevant. This signals the importance of customer integration for the game development, increasing the possibility of the first stages to be caused by the development origin. Also remarkable are the overall importance of lead users and the integration of all customer types during testing and updating. This also signals a strong customer focus from the company’s point of view.

Case Three

This game is a casual Texas Hold’em game which can be played alone or with friends and is free of charge with a real-money option (freemium). The developers of this game focus on quality, consistency, clarity and availability of computer games. With this strategy they do not try to develop with the customer but for the customer, to make the game easy to understand, learn and play for them. They publish their own developed games (16) as well as others and create games for others to publish. The revenue of the company, with 60 employees, amounts up to $150 million with $7 million from this game.

New product success. The game has received many positive reviews and is judged well by peers. It has won two Dutch Game Awards and had several nominations. The metascore of this game is not assessed. The game is thus seen as successful but less in comparison to the other cases.

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the product is frequently updated to keep the customers satisfied and interested in the game. Extra places to play card games are added, extra rewards and gameplay is improved through these updates. The updates do not have to be bought or downloaded; they are ready for use automatically.

Customer integration strategy. The customer roles and types relevant were established from the questionnaire. However, this questionnaire had some odd results (just a type and not a role and vice versa, or types marked but customers not seen as part of that stage) needing for clarification by the interviews. The customer integration results thus stem from both the questionnaires and the interviews. The stages concept development, beta testing and updating were the only three to involve active customer integration. During idea generation and commercialization, customer characteristics were marked in the questionnaire (lead users), but interviews revealed that this just meant keeping customer needs and preferences in mind. The development was carried out by the company itself due to beliefs of time to market, simplicity and quality benefits. As mentioned, during concept development a handful of customers renowned to the company were asked to provide feedback on concepts. These customers were selected based on their opinion mostly being in accordance to the mainstream opinion. During the beta stage, different kinds of customers are integrated to test the product: experienced customers to point out flaws and help improve the product, random customers to test general likeability of the product and customers to make use of word-of-mouth for rapid increase of product diffusion. However different reasons for integration were applicable, all customers were asked for their feedback. Commercialization happens without customer integration. However, lead users were mentioned in the questionnaire by the PR respondent, due to listening to customer preferences (online distribution). For continuous updates, feedback is actively gathered from the community of existent players and by feedback forms to assess possible improvements. The community is characterized by customers who like to socialize and put effort in the quality of the game, despite some members seeming to be part just to complain. Customers are invited to help create new content and be part of the development. However, this is more a direction giving and advisory role. This information is summarized in table 5 on the next page.

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Stage Findings case 3 Preliminary

Idea -- Lead & requesting users

-- Resource

Concept Lead users Launching & requesting users

Resources Co-developer

Game -- Lead, reference & launching users

-- Co-developer

Testing Lead users Launching users* Reference users Launching & reference users

Resource, user*

Co-developer User User

Launch (Lead users) Reference users & first buyers

-- User

Update Lead users Launching users Reference users Lead, reference & requesting users

Resource, user*

Co-developer, resource

User* Resource, co-producer & user

*. Considered >6 on both constructs in the questionnaire. Table 5. Findings from case 3.

Third, co-development overall is low, since the company believes it hurts the development in terms of speed and quality. In later stages, co-production is relevant but only for technical customers and in a more guiding manner. Also, the different customer types seem to have pre-established roles: lead users are always resources, launching users are co-producers and reference users are users, except for some outlines. Finally, requesting users and first buyers are not mentioned by the respondents, which can be due to the overall low customer integration. Further research should uncover whether this is a one case scenario or general for this development or game type.

Case Four

The third game is a casual single player online computer game of the action-adventure type. The game is developed and published by an independent developer. The small company, three employees, has one game only of which the revenue amounts to $25 million. The questionnaire and interview respondent is the single founder of the company and creator of the game.

New product success. The reception of the game was very well: it received seven awards including the Game of The Year award, Best of 2012 and Independent Games Festival winner. The metascore of 90 out of 100 is very high as well. The game is thus considered very successful.

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many ideas as possible, which mostly are a combination of failed prototypes and new ideas. After having collected enough ideas, he then starts to unravel themes and ideas that can be interesting and selects the ones there are sufficient time and other resources for such as skills. After the uncovering of the idea and the start of creating the concept and the game, communities are used to get feedback on drafts and for further suggestions and recommendations. Then, prototypes are being created and launched as small releases. This is because according to the developer, people need to actually see the game; they are not excited by nor are able to give appropriate feedback on ideas alone. They need to play the game. Also, ideas improve as you implement them and feedback from players also improves. These prototypes than can move up to the big release or become input for other prototypes. The big release entails a larger scale and completeness of the product in great detail. Thus the small release and big release can be seen as the beta test and commercialization respectively. After the release, additional content and levels are added by means of free downloadable packages. During the process, what the developer emphasizes is to seek help and especially criticism from every direction.

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users, providing complaints on the core game or the application and selecting feature. In all these stages, lead users characteristics have a high relevancy according to the respondent. This information is provided in table 6 below.

Stage Findings case 4 Preliminary

Idea -- Lead & requesting users

-- Resource

Concept Lead users Launching & requesting users

Resources Co-developer

Game -- Lead, reference & launching users

-- Co-developer

Testing Lead users* Launching users Reference users Launching & reference users

Resource, user*

Co-developer User User

Launch (Lead users) Reference users & first buyers

-- User

Update Lead users* Launching users Reference users*

Lead, reference & requesting users

Resource*, user*

Co-developer, resource*

User Resource, co-producer & user

*. Considered >6 on both constructs in the questionnaire. Table 6. Findings of case 4.

Discussion of the results. This case has some interesting findings. First, customer integration in the first two stages is minimal. Second, lead user importance, as discussed in previous cases, is shown in every stage. Also, customer integration during later stages is very high: a lot of different customer types and roles are relevant. This can be due to the developers view on the importance of criticism from all directions possible. What is important to keep in mind is the different commercialization stage: in this case, commercialization is the bigger prototype testing, not the formal launch strategy. This difference in development process can cause difference in results when comparing cases.

CROSS CASE ANALYSIS

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Customer Integration Across NPD Stages

This section describes the customer integration strategies per new product development stage, as found in the results from all four cases.

Idea generation. Customer integration during idea generation is very low. This can be due to characteristics of the games: two cases execute idea generation in-house, one game is built on an existing game and one on an existing television show. Lead users are however mentioned as important during this stage.

Concept development. Lead users are part of concept development in every case, however their role remains unclear: in two cases (one & three) they are mentioned as resources (in one case important), one case as co-producer and the other two unclear. In general, the resource role is accepted due to its importance (table 7) and twice mentioned. The only distinctive commonality these cases have is their high company revenue. Game type is not a cause of this difference considering the results and company data. Further research can uncover where these differences in lead user roles stem from.

Game development. Lead users (3 cases), launching users (3) and first buyers (2) have shown to be important for this stage. The important roles are quite similar, namely resource and co-developer for lead users, co-co-developer for launching users and resource for first buyers. Case 3 was the only one to not include customers at all in this case, due to their company specific beliefs of quality and speed decrease, and will be seen as an outlier.

Testing. In all cases, testing is highest in customer integration, followed by updating. Lead, launching and reference users are relevant for all cases and first buyers for three cases (excluding case 3). First buyer exclusion from case 3 can be a result of the general low customer integration of the firm and is thus seen as an outlier, including first buyers as generally important in this stage. In general, the customer roles per type are similar: lead users behave as resources (4) and users (2), launching users as co-developers (3) and resources (2), reference users as users (4) and first buyers as users.

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Continuous updating. Lead (4), requesting (3: not case 3), reference (4) and launching (3:not case 1) have shown relevant in this stage. The resource role was applicable to lead users and requesting users, the co-developer role to launching users and the user role to lead, requesting and reference users.

These results are summarized in table 7.

Stage Overall results Preliminary relations

Idea Lead users Lead & requesting users

-- Resource

Concept Lead users Launching & requesting

users

-- Co-developer

Game Lead users Launching users Lead, reference & launching users

Resource Co-developer Co-developer Co-developer Testing Lead users Launching

users

Reference users First buyers Launching & reference users

Resource, user Co-developer User User User

Launch Lead users Requesting users First buyers Reference users & first buyers

user user user User

Update Lead users Requesting users

Reference users Launching users

Lead, reference & requesting users

Resource, user Resource, user User Co-developer Resource, co-producer & user

Table 7. Overall results.

Simple Versus Complex Development Cases

Next to differences per stage, differences for product complexity levels are also considered important. The cases findings are merged based on overlapping and important results: rated the characteristic 6 or higher on the Likert scales of two constructs in the questionnaire. One asterisk means the characteristic is important for one and two asterisks for two cases.

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integration during launch is low for simple cases but high for complex cases. This might be due to the specific characteristics of the targeted customers who require a different launching strategy for optimal market penetration. Third, simple games mainly integrate user and resource role customers, showing a lack of actual co-development with the customer. Finally, requesting users and first buyers are no part of customer integration strategy for simple games anywhere in the process, but are relevant for multiple stages in complex game development.

Table 8. Comparison of complex and simple games.

Overall Results

The overall findings (Appendix C) suggest that the stage of the development and product complexity matter for the customer integration strategy. The greatest differences are found in the first two stages: however considered important, games have accomplished success without strategic customer integration. Lead user characteristics are considered as important to keep in mind during these stages, however the (active) role remains unclear. During game development, there are great differences between customer integration for complex and simple games, signaling that customer integration is more important for complex games. Also, reference types are less and resource roles more important for this stage as suggested. Testing and updating both are high in customer integration for both game types and overall, however less for simple games. Except for the conceptualized launching and reference users, first buyers seem important as well for testing. In the

Stage Complex Simple

Idea Lead users* --

-- --

Concept Lead users Lead users

Resources* --

Game Lead users Launching users* --

Resource* & co-developer Co-developer -- Testing Lead users* Launching users* Reference users**

First buyers Lead users* Launching users*

Reference users

Resource Co-developer

User** User* User**, resource -- User* Launch Lead users Requesting users

First buyers* Lead users

user user user --

Update Lead users** Requesting users* Reference users Launching users

Lead users* Reference users*

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updating stage, launching users are an addition to the conceptualized relationships. Finally, overall the importance of lead users is far greater than suggested: they are relevant for every development stage.

DISCUSSION

The importance of external sources during the innovation process has been acknowledged to be of increasing importance. However, results vary per development stage and complexity level. Therefore, this study focusses on which customers to integrate in the development process, in the specific context of online computer games and while accounting for product complexity levels. The chosen context adds the stage of continuous updates to the development process. Customers are characterized by both their roles and types.

This case study research has attempted to identify the roles and types of customers integrated during the different stages of the development process in the context of online games, while separating simple and complex games. Through secondary sources, questionnaires and interviews with employees of four different companies, data is collected on the relevant constructs: firm and game characteristics, the NPD process, customer roles and customer types. The cases have been separated into simple and complex games to develop, since this influences the need to integrate the customer. Individual case analyses have been performed as well as cross case analyses: a comparison of both game types and of all four cases. Finally, these findings have been compared to the preliminary conceptual relationship, which have generated some interesting findings and implications.

IMPORTANT FINDINGS

During the different analyses, some remarkable findings have been found and previously mentioned. This subsection will elaborate on these findings and place them into context of current literature.

Lead User Importance

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creativity of these users are beneficial at any point in the development process. The findings of this research support his hypothesis and confirm lead user importance throughout the NPD process.

Low Early Customer Integration

According to existing literature, customer integration at early stages is best to be high to increase the fit of the product with customer needs and remove the fuzziness from the front end. However, the case results show a lack of customer integration in early stages overall and of role clarity. The individual cases mentioned in-house idea generation and concept development to increase the time to market, playability and quality of the game. It also became apparent that online game ideas stem for existing products, such as a television show or criticized video game. A possibility is that these phenomena are typical for this industry: simple games are generally developed without customer interference and ideas form complex games are not actively brainstormed but built from existing matters. Further research can uncover whether these findings are a representation of this sample or the entire industry.

Customer Integration And Product Complexity

Another interesting finding is the difference between customer integration strategies for simple and complex product. For simple products, customer integration in any stage is lower than for complex product and is completely missing during idea generation and game development. During concept development and commercialization, the developers of simple games acknowledge the importance of lead user characteristics but fail to have a clear integration strategy: the active roles are unclear. Also, co-developer roles are not present during simple game development as well as the customer types requesting users and first buyers.

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Customer integration in terms of co-development brings more risks and costs in terms of coordination for instance (Fang, 2008) than in terms of information sources. For the development of simple games, these risks might outweigh speed to market (mentioned as important in case 3). This leads to a lack of co-developing users in simple games.

First buyers are useful for enhanced market penetration but have a more passive role than other customer types (Nambisan, 2002) and are thus beneficial for commercialization. Since the simple online game development cases did not integrate customer into this stage, first buyers have been left out from the results.

Next to first buyers, simple games integrate neglect to integrate requesting users who provide suggestions and complaints to the company. Since current literature describes these users as important and not particularly due to product complexity, there is reason to believe this finding is a result of this specific research. It can be the result of invalid measurement of requesting user integration or of case 3 being a poor case selection. The latter is argued because of the low overall customer integration and poorer new product performance than the other cases. Further research could uncover whether there really is a grounded reason to believe that product complexity influences requesting customer integration.

Findings Dissimilar To Preliminary Conceptual Relationships

Below, the findings that do not match with the preliminary table are discussed subsequently.

No early integration of requesting users. The results have shown overall lack of requesting user integration during the early stages of the development process. According to Brockhoff (2003) there is no possibility to provide complaints and suggestions on the product early on, since there is no product yet. This decreases the use of requesting customers.

No launching customers during concept development. This result is in accordance to the research of Jespersen (2010) who found no significant relationship between the launching customer type and the development stage. The author also argues the closed character of the middle of the development stages with less customer integration occurring. Current literature thus supports the finding that launching customers are not important for concept development.

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penetration and thus, can be important for the testing stage. Also, an overlap between testing and commercialization has been mentioned, which can enhance the likelihood of first buyers to be included earlier.

Requesting instead of reference users important during commercialization.

Opposed to the findings from Jespersen (2010) and Enkel et al. (2005), not reference but requesting users show relevant for the commercialization stage. This would mean that during the launch of the game, complaints and suggestions are acquired. This finding does not match with current literature and may need further research on the generalizability across other cases.

Launching users important for updates. Possibly due to their technical skills and creativity, launching users are valuable for the creation of update packages. No current literature, to the best of my knowledge, has done research on customer integration during the update stage. Thus, further deducting research can test whether these customer types are relevant for this stage.

IMPLICATIONS

This research has some important implications for innovation and marketing research and managerial practices, which are discussed in detail.

Theoretical Implications

This research adds to current theoretical knowledge in there ways: by adding the update stage, including types and roles and product complexity.

Adding updates. This research makes a first attempt to integrate the update stage into research on customer integration in product development as a basis for further research.

Product complexity. Another interesting finding is the difference between simple and complex products in terms of customer integration strategy. Most literature fails to make a difference between the two types of products where the results show distinct strategies: customer integration might not need to be as important for simple games as for complex games. Also, different types and roles of customers might be relevant for both types of products. This study opens a window for further exploration of customer integration for different product complexity levels.

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Managerial Implications

The results of this research also have three important managerial implications.

Low customer integration in the early stages. During the early stages, customer integration need not be as high as suggested by previous literature: the successful companies studied did not integrate customers except for lead users. Early customer integration can lead to more detailed insights into customer needs and preferences, but can slow the process down and lead to difficulties of coordination of customers and the development team, for instance. Because of this, it might be more profitable for an online game developer to integrate few customers during the early stages.

Assess product complexity. A higher degree of product complexity asks for higher customer integration during the development process. Managers thus need to consider the complexity of their products to build the right customer integration strategy.

Integrate lead users. During all stages lead users are an important external source for development. However their roles differ along those stages, they need to be integrated into every stage due to their innovativeness and creativity.

Different customer types and roles per stage. These results and previous literature have shown the importance of different customer roles and types across the stages of the development. For optimal customer integration, these differences should be considered while creating the customer integration strategy. This research provides an overview of the relevant customer types and roles per stage for successful online game developers.

In general, managers should consider the development process characteristics as well as the stages and the product complexity to build a customer integration strategy that can lead to successful new products.

LIMITATIONS AND FURTHER RESEARCH

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Some findings that remained unclear can also benefit from further research: the general low early customer integration, the roles of lead users in early stages, lack of requesting users in simple product development and launching user importance during the update stage.

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APPENDICES

APPENDIX A. MEASUREMENT CONTSTRUCTS FOR CUSTOMER INTEGRATION

Customer Types LEAD USERS

Has a great advantage of the solution/need resolution given by the new product Communicate a new and unknown need for the new product

LAUNCHING USERS

Has a high degree of technical creativity of value to the development process Has a high level of technical knowledge of value to the development process

REQUESTING USERS

Has a high frequency of communication to the company

Has a high need to state the product they saw launch on the market

REFERENCE USERS

Has a great interest in testing prototypes

Hold an image that they associate with your products

FIRST-BUYERS

Has a great reservation towards your products Represents your target segment

Customer Roles RESOURCE

Is asked for advice

Frequent transfer of information on customer needs and preferences

CO-DEVELOPER

Is part of the development team

Development effort plays a very important role in the completion of development tasks

USER

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APPENDIX B. OVERVIEWS OF THE INTERVIEWS

Case One – Quality Assessor

The award winning game X is seen as very successful, with a lot of players logging it every day. Where do you think this success comes from?

Our first motto is to keep the player experience first. We obsess over every aspect of the total experience. From a newb’s first game to a veteran's thousandth, from installation to matchmaking to support to televised e-sports. It all matters. We listen to what players say and do. We analyze deeply. Then we act to make their experience better. We’re also humbitious- ambitious and humble at the same time. Ambition cures diseases of corporate complacency. Plus, little plans just have no magic in them. Humility's a must, too. Rioters welcome feedback and always remember the families, teammates, partners, and (especially) players who make it all possible.

Is this customer focus why, on the questionnaire, you checked customer integration for every development stage?

Yes. if the players are happy with the value you’ve given them, they will reward you in kind. To do so, you need customers to be a part of every step of the game design.

Would you explain to me where you got the idea for the game?

There was this game that we really liked to play, Y, but the other games could be a real pain in the ass and there were a lot of complaints on the game. Plus, the quality just wasn’t that good. So, a couple of friends gathered up and created a game based on that game. This has resulted in X.

Since you checked customer integration in idea generation, could you tell me where the customers fit in?

Well, it was also for the customers that the game was developed. It addressed their needs and preferences.

Did you actively involve those customers to generate ideas?

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So, there was this idea for a new game. How did it develop in what it is now?

First, a basis had to be created for the game. A few champions to be played, general lay outs of the maps to play on, a general story behind the game. In a team, these things were drawn on paper, computers, blackboards, you name it. The creations were drawn again and again till these really awesome, creative things appeared. When the general story and layout of the content were ready, the nerds were placed behind computers to translate these drawings into codes on the computer. I do not recall the program the code was established with, I am sorry. Anyway, while the coding was going on, a fuss was created online about the game. The drawings were used to create these awesome pictures and they were distributed online. In 2008, the game was already announced through websites. A commercial was also created but that did not make it to the television in Europe. The beta test was also announces, since a lot of players were needed to test the game. We gathered people from everywhere to test the game and give their feedback: family, friends, other developers and a lot of people we met online. The beta tests started in 2009 and took forever, people tested the game, then it was adjusted, then it was tested again, and went back to the drawing table. Finally a version was distributed online and the game could be played the millions of people that do so nowadays.

Do you imply that the game has stayed the same through all these years?

Of course not. Many champions were added to the game. We started with a starterspack of 20 champions and we are now moving towards the 100 champions, I believe. Also, the game went from a single map top a variety of map, players can even create their own and invite their friends as well as strangers to play on them. The graphics are also improved from time to time as technologies create more possibilities. No, the people here are always busy to create new stuff and to improve the stuff they already made. Nothing is ever good enough.

How do you get these improvements to the customer?

In the game launcher, we set up the update packages which need to be installed before a game can be launched. An overview of the changes included in the update is provided on the website a few days before an update is placed, to prepare the gamers.

I have provided you with a development process during the questionnaire. Would you say this process is applicable for X?

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As I mentioned, we announced the game and created marketing stuff long before the game even went into beta testing.

Okay. And can you tell me how customers were a part of the development?

When creating new content, such as the champions or the maps or even new items, we ask customers whether they would like them or would like to see them removed or adjusted. We also receive a lot of self-made content from customers, which we gladly use if and when we can.

Why are there differences between customers in the development of the concept and of the core game?

During the creation of the concept, mainly gamers are involved that know what they are doing.

And how do you assess that?

These are players we know, they game a lot, have a name online, they mostly have created their own games or have tried to, we have worked with them previously and they know what other people want to play.

Are those the kind of customer you use at every step of the development? Yes, we like to keep them close.

You mentioned integration customers from all direction for beta testing. What do they mostly do? They play the game, and then give us feedback on what they want to see improved. That is, if they play the game here. If they play the game online, they have access to a toolbox that makes it possible for them to create the coding of the game. So they can modify the game. There are also a lot of friends and family and such that come up with ideas for the game, that want to help.

And during launch, could you tell me what customers can do there?

There is not so much they can actually do, they talk to their friends and fellow gamers and invite them to play the game as well, to try it out. This way, a large community is created.

Finally, there is the update stage.

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guess that is not what you are interested in. As I mentioned, our customers are very important to the company, not just in terms of the money they invest in the game, but they provide the opportunities to improve the game. They tell us what to do, what to make. The updates are one way to show how good we listen to them.

I have one final question for you, considering the difficulty of the game. What can you tell me about this?

The difficulty of playing the game you mean? All the employees here need to play the game at least one match a day. The first match I played, I had no clue of what I was doing. I was running around, looking at all the information on the screen but I had no clue what I was supposed to be doing, let alone that I was capable of winning a game. Afterwards, I found the tutorial which made it a bit better but it took me a couple of months before I actually got it. And then you have to learn all the different skills of all the different champions memorize them and know how to use them and how to counter them as well. I would say it is pretty difficult for a starting gamer as me at the time.

And how about the development?

I hear the nerds moaning a lot and complaining on how they can’t get anything right. I guess it must be kind of hard but then again, I have no knowledge on actual coding so I do not think I can tell you anything useful about this.

Case Two – Member development team

Okay, so let’s discuss X. It is seen as a very successful games, it has received many awards. How did you turn in into such a success?

We believe in the success of our unique strategy: instead of selling a single game, we create episodic, short games that are playable for everyone. Interactivity is also very important, the customer can at a large number of point in the game choose what the hero is going to say or do. This determines the ending of the game.

You mention that this game is everyone. Does this mean it is easy to play?

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