CHAPTER I INTRODUCTION

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CHAPTER I

INTRODUCTION

This chapter focuses on the background of the research, discussing the general

background of MOBA mobile games and in-app purchases, which includes data, facts,

statistics, and trends regarding the mobile gaming industry, specifically MOBA mobile games.

From the gathered data, the research problem is discussed, which generated questions

regarding the research that are useful to answer the objectives of the research. The purpose of

the research with its limitation also being presented in this chapter. Attached below is a flow

chart of this chapter outline.

Figure 1.1 Chapter I Flow Chart

Source: Created by the author for the purpose of this research (2019).

1.1 Research Background

Mobile games are popular in this era, indicated by the presence enthusiastic behavior

towards mobile phones that combine both mobility and entertainment to satisfy their needs.

The growth of operating systems of mobile devices, the presence of dependable internet

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service provider, and hardware which ensures a high quality mobile devices’ performance,

has been an ideal condition for the mobile gaming industry to make more room for

improvement and increasing competition among the industry (Skobeltcyn & Shen, 2018, 12).

According to Newzoo (2018), mobile devices which facilitate mobile gaming such as

smartphone and tablet were able to contribute approximately around 50% of gaming market

worldwide, which is around $70 billion global revenue. Figure 1.2 below shows the global

games market 2018 report.

For the mobile game developers to gain income from their games, they must apply a

good business model to achieve maximum profitability. There are three major types of

business models that revolves around the mobile gaming industry. These include premium

mobile games, in-app advertisement, and in-app purchase model (Han & Windsor, 2013, 618).

According to Statista (2017), 79% of gaming applications worldwide prefer in-app purchase

as their main source of revenue. In-app purchase is considered to be most popular among

game developers. With the total revenue of $37 billion from in-app purchase in 2017, in-app

purchase overtake both in-app advertising which generate $33 billion and paid-to-play games

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with $29 billion in revenue (Statista, 2017). Furthermore, the revenue generated from mobile

games in worldwide region, has shown constant growth from 2014 to 2019 (refer to figure 1.3

below).

Figure 1.3: Revenue from Mobile Games segment from 2014 to 2019

Source: Statista (2019)

The gaming industry in South-East Asia is considered to be having the fastest growth

within the gaming market. Indonesia has a total of 43.7 million gamers in 2017 with total

revenue of $880 million, making them ranked #16 globally in revenues for gaming. In

addition, revenues from mobile gaming industry in Indonesia has generated around $624

million by the half of 2019 (Statista, 2018).

In mobile gaming, one of the most popular genres in Indonesia is MOBA genre. As an

example, Mobile Legends: Bang Bang is classified as Multiplayer Online Battle Arena

(MOBA) as its genre, a type of game where two teams compete to reach a goal which will

result in a victory to one side of the teams (Tyack, Wyeth, & Johnson, 2016, 313).

Similar to most MOBA mobile games, Mobile Legends: Bang Bang rely upon

purchasing behavior towards the in-app purchasing system in order for the game to make

profit (Mäntymäki & Salo, 2013, 282). The in-app purchase that MOBA mobile games feature

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virtual currency, virtual goods and premium services as its purchasable features. The growth

in the mobile game industry is unquestionable, especially with the technological advancement

in developing countries, giving access to new users as time goes by.

However, mobile game developers are faced with the problem of where the users who

are able to freely download their games have the possibility to be reluctant towards doing any

in-app purchase or transaction inside their game (Han & Windsor, 2013, 618). Furthermore,

if a user decides to not make any in-app purchase in the game, there is a high possibility that

the user refuses to adopt the in-app purchase system of the game (Guo & Barnes, 2011, 306).

According to KumparanTECH (2017) Mobile Legends: Bang Bang managed to capture eight

million daily active users. Meanwhile, in 2017 they only managed to generate a total of $5.3

million in revenue (Lopez, 2017).

Calculating the Revenue-per-user (RPU) ratio, they were only able to generate

approximately 0.66 dollar per active user. This shows a huge gap between the players who

play for free and the players who actually make in-app purchases. According to Sifa, Hadiji,

Runge, Drachen, Kersting, & Bauckhage, (2015, 79), the vast majority of free-to-play players

are made up of non-spending players. This leads to the question of how MOBA mobile games

can encourage free-to-play users to make in-app purchases.

There are several past studies that have done a research towards what drives users to

make in-app purchase towards an app (Gainsbury, King, Russel, & Delfabbro, 2016; Han &

Windsor, 2013; Hsu & Lin, 2016). In specific, research on the MOBA mobile games topic is

very limited (Akbar, Irianto, & Rofiq, 2018; Damariva, Santiya, Hutomo, & Ardiko, 2018).

Hence, this research’s objective is to examine the relationship between variables and their

influence toward in-app purchase intention towards MOBA mobile games in Indonesia.

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1.2 Research Questions

Based on the previously discussed research background, the research questions that

are being aimed by this research are:

1. Does utilitarian value and hedonic value affect attitude and satisfaction of

virtual goods on MOBA mobile games?

2. Does subjective norms and social identification affect purchase intention of

virtual goods on MOBA mobile games?

3. Does attitude affect stickiness towards MOBA mobile games?

4. Does satisfaction affect stickiness towards MOBA mobile games?

5. Does social influences affect stickiness towards MOBA mobile games?

6. Does stickiness affect purchase intention of virtual goods on MOBA mobile

games?

1.3 Research Objectives

1. To determine whether utilitarian value and hedonic value affects attitude and

satisfaction of virtual goods on MOBA mobile games or not.

2. To determine whether subjective norms and social identification affects

purchase intention of virtual goods on MOBA mobile games or not.

3. To determine whether attitude affects stickiness of virtual goods on MOBA

mobile games or not.

4. To determine whether satisfaction affects stickiness of virtual goods on MOBA

mobile games or not.

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5. To determine whether social influences affects stickiness of virtual goods on

MOBA mobile games or not.

6. To determine whether stickiness affect purchase intention of virtual goods on

MOBA mobile games or not.

1.4 Research Purposes

1. Testing the applicability and the relationship between of the ABC model theory

and purchase intention in the Indonesian MOBA mobile gaming market.

2. Helping the Indonesian mobile gaming industry on interpreting purchase

intentions of MOBA mobile gamers with the result of this research.

3. To develop and update the theory of ABC model and purchase intentions with

the latest market situation.

4. This reasearch will contribute in the increase of the knowledge source

regarding market research of MOBA mobile games in Indonesia.

1.5 Research Limitations

1. The result of this research may not be fully applicable to the entire mobile game

industry since it focuses only on MOBA genre.

2. Since the majority of the respondents would be gamers with no age limitation,

the result of the research may not be fully reliable to determine the purchase

intention of people from different generations.

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3. The research source of respondent is only limited to mostly West Java region,

mostly Jakarta, Tangerang, and Bekasi, which is making this research might

not be applicable to broader areas.

1.6 Research Method Overview

This research is inspired by an already condcuted research by Chin-Lung Hsu and Judy

Chuan-Chuan Lin in 2016 with the title “Effect of perceived value and social influences on

mobile app stickiness and in-app purchase intention”.Inspired by their research, this research

adopts eight variables from the mentioned research including hedonic value, utilitarian value,

attitude, satisfaction, stickiness, social norms, social identification, and intention to purchase.

This research also adopots the ABC model of attitudes as a base for model development from

the previous research by Hsu and Lin (2016). However, Hsu and Lin (2016) applied the

research on the whole general mobile application and does not specify what type of app they

did the research for. Compared to that previous research, this research is focused specifically

on the MOBA mobile game genre.

First of all, the researcher applied research paradigm which is fundamental in

conducting a business research (Sekaran & Bougie, 2016, 28). There are five types of

applicable research paradigm which are positivism, post-positivism, construction, critical

realism, and pragmatism. The researcher applied post-positivism as the research paradigm for

this study. Post-positivism is suitable for quantitative and close-ended questionnaires, which

is the method of data collecting this research are using (Scotland, 2012, 10).

Secondly, the researcher needs to decide the method of how to approach the research.

The research can be approached with two methods, namely qualitative and quantitative. The

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researcher is using quantitative method as its research approach. Quantitative research can be

defined as a research that seeks to explain a certain phenomenon through statistical analysis

on numerical data (Yilmaz, 2013, 311).

Thirdly, the researchers need to choose the type of the research. According to Sreejesh,

Mohapatra, and Anusree (2014), there are three types of research. These include descriptive

research, exploratory research, and causal research. The researcher has chosen to use a

descriptive research design, since it allows the researchers to gather information through

questionnaires (Sreejesh et al., 2014, 58).

Fourthly, the researcher needs to choose the appropriate unit of analysis. According to

Sekaran and Bougie (2016), there are five main categories to be the unit of analysis in

research. The main categories are individuals, dyads, groups, organizations, cultures. The

researcher has chosen to use individual as unit of analysis, since each of the data must be

analyzed separately.

In the fifth step, the researcher needs to choose one out of four types of measurement

scale. Scale measurements are differentiated into four types, namely nominal scale, ordinal

scale, interval scale, and ratio scale (Sekaran & Bougie, 2016, 207). The researcher has chosen

to apply interval scale. According to Hair, Celsi, Money, Samouel, and Page (2016, 230),

interval scale does more than ordinal scale in terms of its ability to quantitively measure the

differences between the points, giving the researchers the ability to interpret and compare

them using those informations. The specific type of interval scale that has been chosen is

Likert Scale. Likert scale is a type of interval scale which does the measurements of attitudes

or opinions. It is oftenly done using a five-point scale to determine the strength of agreement

or disagreement about a particular question or statement (Hair, et al., 2016, 237).

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In the sixth step, the researcher needs to choose the type of data collection. There are

two types of data to obtain contextual information, namely secondary data and primary data

(Sekaran & Bougie, 2016, 37). The researcher has chosen to use primary data collection

method, conducted through questionnaire strategies. According to Nardi (2018, 16),

questionnaire is suitable for gathering opinions and attitudes.

In the seventh step, the researcher needs to choose the type of questionnaire. There are

three types of questionnaires that can be used for the research, namely personally administered

questionnaires, mail questionnaires, and electronic or online questionnaire (Sekaran &

Bougie, 2016, 144). The researcher has chosen online questionnaire distribution which will

be distributed through Google Form. The data obtained from Google Form is then converted

into excel format, in preparation for data analysis.

In the eighth step, the researcher needs to choose a sampling method. There are two

sampling techniques, namely probability sampling and non-probability sampling. For this

research, the non-probability sampling has been chosen. Non-probability sampling is chosen

because the elements in the population doesn’t have the chance of being selected as sample

subjects (Sekaran & Bougie, 2016, 240). Furthermore, non-probability sampling has three

types of method to implement from. These are judgement sampling, convenience sampling,

and quota sampling. The researcher has chosen judgement sampling, which is suitable for the

questionnaire since it needs the respondents’ knowledge about the matter in the questionnaire

(Sekaran & Bougie, 2016, 241).

In the ninth step, the researcher needs to test the validity and reliability of the collected

data. SPSS 21 software is chosen to check the reliability of the data through Corrected Item-

Total Correlation. This is done for the purpse of checking whether any of the indicators need

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to be deleted in order to increase the variable’s reliability. Moreover, the researcher has chosen

to use SmartPLS 3.0 Software to check validity and reliability of the gathered data. SmartPLS

3.0 Software allows the researchers to conduct Partial Least Squares Structural Equation

Model (PLS-SEM) to analyze the data.

1.7 Research Outline

This research consists of five chapters which follows previous researches done

according to UPH standards. The five chapters are arranged systematicly and in sequential

order to give the readers ease in following through this reasearch. These chapters are:

Chapter I: Introduction

The first chapter of this research discusses the general background of mobile games

and in-app purchases. Furthermore, this chapter includes data, facts, statistics, and trends

regarding the mobile gaming industry. In this chapter the researcher also addresses the

research problem, research questions, objectives, purposes, limitations, as well as the research

outline.

Chapter II: Literature Review

In this chapter, the researcher mainly discuss concepts and theories utilized as the

foundation of this research. Various research journals become the references for the conduct

of this study, and the findings within it are the basis to elaborately define the concepts and

theories even further. Variables of this research are also discussed thoroughly in this chapter.

Lastly, this chapter also reveals the previous research and the research model that have been

benchmarked in order to produce the current research.

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Chapter III: Research Method

The third chapter is solely dedicated to explain the methodology that is adopted to

conduct this research. Basic requirements that are fundamental for this research such as

research design, research object, sampling and data collection method are discussed in this

chapter. In addition, the reseacrh model and data analysis method are also included in this

chapter.

Chapter IV: Results and Discussion

The fourth chapter could be considered as the backbone of the research as it elaborates

the findings of the research and the result of the data collection itself. This chapter shows how

the data is tested with rigorous data analysis method to ensure its validity and reliability.

Finally, the result acquired from this chapter is compared to the previous research that

becomes the benchmark of the research.

Chapter V: Conclusion

The last chapter reveals the conclusion and translates the result of the research into

real life application. This chapter also include limitations and suggestions for future studies

regarding the same topic or area, hence it may become a suitable reference for other

researchers in conducting similar research. Lastly, implications of the research are being

derived in this chapter; consisting of both theoritical and business implication of the research.