Factors of Affecting Online Game Satisfaction

Factors of Affecting Online Game Satisfaction CHAPTER ONE INTRODUCTION 1.1 Introduction Online gaming is one of the most popular entertainments among the citizen in this world no matter what ages they are. Due to the advancement in the technologies, it has brought lots of growth in this industry since early of 2000s. This growth has been developed online game market into the core of the world cultural industry (Sang, Yung, Jae, and Kyoung, 2004). Hsu and Lu (2003) stated that online game service has been a highly profitable e-commerce application in recent years and its market value has increasing markedly as well as number of player growth at the same time. Now a day, most of the household will owned at least one personal computer (PC) or a laptop and some even more than that due to the cheaper cost to have a computer. Consequently, the demand for computer has been grown rapidly throughout this recent year. The accessibility of internet also is easier with each passing year and the cheaper price to have broadband internet connectivity (Bizymoms.com). Generally, online game service can be categorized as business-to-consumer or B2C in e-commerce and it is also one the videogame and interactive entertainment industry. A strategic market research and consulting firm which focuses on the interactive entertainment and the emerging video game, online game, interactive entertainment and portable game markets namely, DFC Intelligence has made its forecast for worldwide videogame and interactive entertainment industry each year since year 1995. According to DFC Intelligence forecast on year 2008, the worldwide videogame and interactive entertainment industry revenue to reach USD 57 billion in 2009 with no signs of slowing due to the slumping economies and expensive hardware (Androvich, 2008). The rapid growth in videogame and interactive entertainment industry has been attracted lots of entrepreneur who would like to enter this profitable industry. Based on the report of DFC, PC was the top platform for games in 2007, with online game revenue alone eclipsing USD 7 billion on year 2006 and not including retail sales. The DFC also stated the total PC game revenue is expected to reach USD 19 billion by year 2013 (Androvich, 2008). In Malaysia, there were 15 million subscriber of internet and it was 62.8% out of the total population in 2008 (Internet World Stats, 2008). It was more than half of the citizens of Malaysia have used the internet and this has brought a great opportunity to the entrepreneur who would like to join this industry to be one of the online game service providers to share the profit since the number of internet users was increasing each year. It did not showed that the number of the online game subscribers but there is a business opportunity for the entrepreneur to start-up their business through online. Table 1.1: Internet Usage and Population Growth of Malaysia Year No. of Users Total Population % 2000 3, 700, 000 24, 645, 600 15.0% 2005 10, 040, 000 26, 500, 699 37.9% 2006 11, 016, 000 28, 294, 120 38.9% 2007 13, 528, 200 28, 294, 120 47.8% 2008 15, 868, 000 25, 274, 133 62.8% (Source: http://www.internetworldstats.com/asia/my.htm [2009, November 1]) A study showed that customer satisfaction is the immediate factor affecting the consumer retains loyalty (Cronin, Brady, and Hult, 2000). Most of the studies showed that higher levels of customer satisfaction will lead to customer loyalty. â€Å"A minor change in satisfaction could lead to a substantial change in loyalty increment† (Bowen and Chen, 2001). However, most of these studies were in offline environment. Wind and Rangasamy (2001) found that online environments offer more opportunities for interactive and personalized marketing. Eventually, these opportunities may influences customer satisfaction and customer loyalty in the online environment if compared to the traditional market or offline environment (Shankar, Smith, and Rangaswamy, 2003). The main purpose of this study is to identify the factors affects the customer satisfaction towards online game services and which could lead to customer loyalty. It is including the service quality, transaction cost, experience value, and technology acceptance factor. These four antecedents of online game service satisfaction and loyalty will test associations based on the model that has been constructs. 1.2 Background of the Research In this century, computer might be a need for a person if compared to the olden days where there was a limited growth in technologies. Now, computer seems like a tool which can do everything for you such as searching information, payment, shopping, and so on. This powerful electrical appliance has gain a well response from the citizen of the world. It has many functions can perform through computer and one of the most popular functions of computer is gaming. In the earlier 2000s, most of the games were played offline since the limited internet connectivity and expensive prices to have an internet connectivity. However, this situation has changed due to the technologies advancements and the industry has achieved economic of scale. To more understand what online games is, it is a must to brief its history. The very first online gaming activities were introduced in the late of 1960s and early of 1970s. Later, they started gain more popularity within 1970s to 1980s when dial-up Bulletin Boards became popular and the users started playing online game over them. Clyde and Thomas (2008) stated that the development of arcade game in the 1970s, and video and computer games in the 1980s; digital games have become an influential part of popular culture. The bulletin boards provided a multi-user platform which allowed few users to play at the same time. Now, it has been transformed to MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world presently (Bizymoms.com). At one time, games were used for educational purpose rather than entertainment (Clyde and Thomas, 2008). However, due to the changed in the perception of game role and the culture, it becomes an entertainment but there is still has some of the game designers and educators used it as educational purposed such as learning typing skills and so on. In the year of 1990s, due to the growth of internet technologies of Flash and Java, it has led to the increasing usage of the internet and the millions of new websites mushrooming across the World Wide Web. When enter to the millennium year, technological giants such as Sony, Microsoft and Ninetendo came out with advanced gaming consoles has changed the features of online gaming completely (Bizymoms.com). The people all around can play a same game with each other virtually at the same time. Currently, online gaming industry is growing each year and it has a great expansion in future. The online game service is one of the most competitive industries among the entire industries. The new and the existing online game service provider are delivering their best services to gain more market share to sustain its organization. To penetrate the market, the firm must meet the customer expectation which may lead to customer satisfaction. Eventually, it may bring customer loyalty. 1.3 Research Problem Customer is the one who contribute the profit to the firm because they are the one who are using the product or services. However, consumers are becoming wisely now a day when they would like to use certain product or services. They will tend to purchase the product only if the product can meet their expectation which might lead to satisfaction. To meet the customer expectation, it is a biggest challenge for the firm. Other than that, the growth of the online game has brought some a major problem to the service provider which is how to retain the existing online game users and will not shifting to other service provider or loyalty to the current provider (Yang, Wu, Wang, 2009). In order to survive in this competitive industry, many practitioners and academicians in this field have focused on how to improve online services to attract potential buyers as well as the current customers (Jun, Yang, and Kim, 2004). There are some of the factors to achieve customer satisfaction. However, the key factors especially in online game services which are able to make the customer satisfied with the products and services still under study or unknown (Dick, Wellnitz, and Wolf, 2005). If the key factors have been determined, the provider might be able to gain the competitive advantages which trying to meet the customer expectation. This research is emphasizing the customer satisfaction and loyalty in online game service. Specifically, it is trying to identify the key factors affects online satisfaction and online loyalty in order to guide the online game service provider to improve their service quality to garb more potential customers and retain the existing one. 1.4 Research Objectives The objectives were formed based on the research problem and there are formulated to achieve the main goal of this study which is to examine the factors of affecting the online game satisfaction and loyalty. To determine service quality has a positive impact towards online game satisfaction. To determine transaction costs has a positive impact towards online game satisfaction. To determine technology acceptance factor has a positive impact towards online game satisfaction. To determine experience value has a positive impact towards online game satisfaction. To determine online game satisfaction would have a positive impact on online game loyalty. To determine service quality, transaction cost, technology acceptance factors, and experience value will affect online game satisfaction and eventually online game loyalty. 1.5 Justification of the Study This study is significant for several reasons. First, it can identify the gaps between customer expectation and perception about online game service provider in order to guide them to provide better services. â€Å"It is commonly known that there is a positive relationship between customer loyalty and profitability† (Bowen and Chen, 2001). It is correct once the customer is loyal to the company because they will visit the firm after a purchase and some even recommend to their friends. In the online environment, the online satisfaction also grabs much attention from all of the researchers because to meet a customer expectation is the toughest challenges to the company. Also, it brings the profitability and the survival of the company. Online game service provider should concern about the medium which may influenced the online game satisfaction and online game loyalty. The importance of the study is to keep the online game service improvement in order to achieve the customer satisfaction from time to time. In online environment, the customer can easily compared the alternative than offline customer especially products and service (Shankar et al., 2003). As in online environment, the user is free to search the information to the product that they demand. As well as online game, there is large amount of online game service provider. Therefore, the user can easily compared the features of the game and service quality that provided by the firm. Once the factor has a positive impact on online satisfaction has been determined, the service provider is able to strengthen their weaknesses in order to sustain its market share. Besides, the study is providing guidelines for the service provider to develop their future or long-term plan. The importance of the online game satisfaction will give a direction to the service provider to plan for their future such as strategic plan. It also helps the company to gain competitive advantages in this industry. Commonly, most of the studies regarding to customer satisfaction and loyalty were did for offline environment and only limited for online environment. However, consumers still have some same characteristics in making decision when they would like to purchase a product. As the study has identified the factors affect the customer satisfaction and loyalty, the firms are able to fulfill the users need and wants. This action is trying to meet the customer satisfaction and eventually customer loyalty. Once the customer become loyal, the company may survive in this competitive market. On the other hand, it is also will benefit the user to gain a better service from the online game service provider once they have responded to what they are percept towards the online game service provider that they currently subscribed. Also, the service provider is able to understand what kind of service quality that the users perceived and expected. It will leads to a win-win situation if both of the parties could perform what they are request and give. 1.6 Definition of Important Terms There are some important terms in this study: Online satisfaction, online loyalty, service quality, technology acceptance factors, transaction cost, and experiences value. Online Game Satisfaction Online game satisfaction is customer satisfaction towards online game service. Oliver (1980) defines customer satisfaction as customers evaluation of a product or service with regard to their needs and expectations. It is just in virtual environment perspectives. Online Game Loyalty Online game loyalty is customer loyalty towards online game service. It can be defined as â€Å"a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviuor† (Oliver, 1997). Service Quality Parasuraman, et al., (1988) defined service quality as â€Å"a global judgement, or attitude, relating to the superiority of the service†, â€Å"and explicated it as involving evaluations of the outcomes (i.e., what customer actually receives from services) and process of service act (i.e., the manner in which service is delivered)† (Jain, and Gupta, 2004) Technology Acceptance Factors It is also known as technology acceptance model (TAM). Davis (1989) proposed TAM to explain and predict user acceptance of information systems (IS) or information technology (IT). In short, it is explaining â€Å"intention to use a technology† (Schepers and Wetzels, 2007). Transaction Cost It is a theory â€Å"seeks to explain why firms exist and how firm boundaries were determined† (Watjatrakul, 2005). Experience Value It refers to â€Å"shopping efficiency and making good product performance and functionality† (Wu and Liang, 2009). Wu and Liang (2009) added â€Å"its perceptions are based on interaction involving either direct usage or distant appreciation of goods or services†. MMORPG (Massively Multi-Player Online Role-Playing Games) It is known as a virtual environment where it allows multiple geographically distributed users interact with each other at the same time (Papargyris and Poulymenakou, 2005). Besides, it is â€Å"offering an alternative channel for players to communicate, share experiences, socialize, and eventually from virtual communities† (Chee, Zaphiris, and Mahmood, 2007) Online Game Service It is a service provider who provides a server for the online game user to get into the network to interact with each other by playing games. 1.7 Organization of the Report This study will be constructed into five different chapters and there are: Chapter 1 is presenting the introduction and a brief overview of the study. The problems of the study, objectives of the study, significance of the study, and the chapter outline of the research are stated in this chapter. Chapter 2 provides an extensive review of international journals, reports, and articles from online and offline resources. Besides, all the reviews in this chapter are related to the problem of the research that will guide to construct the conceptual foundation and hypothesis of the study. Chapter 3 is describing the methods used in conducting this study in detail. Besides, it also presents the development of the research framework which proposed the relationship between dependent variables and independent variables. Next, the methodology applied is provided, sampling procedures, hypothesis development, data analysis and measurement. Chapter 4 presents the findings and data analysis of the research. It analyses and discussed the data collected in the research using the research instrument which has been developed in chapter 3. The hypothesis will be tested and it is also presents the results of statistical analysis used in this study (t-test, ANOVA, and etc.). Chapter 5 is presenting the conclusion and recommendation. There is also discussion of the studys implications, recommendations, limitations and suggestion for the future research. CHAPTER 2 LITERATURE REVIEW 2.1 Introduction Chapter 1 has discussed and highlighted the important issues which related online game service satisfaction and loyalty. All of these issues that mentioned in the chapter 1 are playing an important role for online game service industry in order to understand the expectation of the user and eventually grab more market share. As a result, to more understanding these issues, an examination of literature on related study were carried out. Generally, literature review provides the theoretical basis for the development of the research framework of this study, which will be discuss in the next chapter Chapter 3. This chapter consists of the following subject areas: (1) Definition of key terms; (2) online game satisfaction; (3) online game loyalty; (4) the factors might affect online satisfaction and loyalty; and (5) summary of literature review. 2.2 Definition of Key Terms 2.2.1 Online Game Service As technologies have became more advance, people have more rely on the technologies and they even expect technology will do all the things for us. Now, most of the people are prefer online rather than offline when they would like to purchase or acknowledge a transaction. In the olden day around 1980 where the technology has a limited growth, people can only play games in offline environment such as TV and handheld game console (Nintendo). In the late 1980s computer game was invented and started popular. Currently, computer games have been transformed into MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world (Bizymoms.com). Besides, the multi-player online role-playing games also known as Net games (Lo, Wang, and Fang, 2005). Generally, net game can be divided into three which is web games, network games, and online games. The below is the definition of this three types of net games. Table 2.1 Types of Net Games Types Definition Players Web games Games which use a website as an interface. Players must register to play. Network games Games which allow multiple players to use their own PCs to interact via Local Area Networks (LANs) or the internet. Also, many of these closely resemble PC games. Players must purchase and install game software. However, it does not require any fees beyond those for internet connections. Online games Games where require players to connect to the service provider and log in to a server. Player must subscribe to the service provider and select a role to interact with other virtual roles. Source: Lo, 2008 Online game is requiring player to log in to a server in order to play the games. It is means that the players must have internet connection to connect with the service provider. After the player subscribe to the games, the user has to select a role to interact with the rest of the subscribers. The special characteristic of online game is the user can continue to play their role after they have log out for few days. The player can keep continue playing where they have stopped when they have log out last time with the experiences and assets are remain. Online game user must install a client program for internet connection and online game providers to attend the online game (Lo, 2008). This program is inexpensive and sometimes even free. However, there are some need additional fees are paid to the Internet Service Provider (ISP) (Lo, 2008). Commonly, the charges of online game is based on the time where the player spent to playing games and usually it is prepaid which pay before they play the games. Due to the technology advancement and the cheaper price for paying the internet connectivity, consumers are more easily to connect to the internet and playing online game. This golden business opportunity has been attracted lots of firms entered to this industry. Online game service is the company which provides a server for the players in order to play game with others. The company main activities is improve the performance of the online game also maintenance of the server to avoid any shut-down or system down of the server. There are some features have attracted lots of people subscribe to online game and the number of players is keep increasing each day. The online games allow the player to build the role based on their preference, beliefs, goal, or other factors and most of the time the players play it in a team (Klang, 2004). The features in the online games has play an important role in order to gain more subscriber and also some other factors. 2.3 Online Game Loyalty In general, loyalty can be defined as faithful. However, in terms of customer loyalty, it is hard to define (Bowen ad Chen, 2001). Dennis (2003) stated that loyalty is the feeling where a customer has about a brand. This could be explained as the customer has a positive perception about the brand and this brand will always come in the first of the mind of this particular consumer if compared to the other firms which have offer the same service or product. Edvarson, Johnson, Gustafsson and Strandvik (2000) define loyalty as a customers intention to repurchase from the same firm again. On the other hand, loyalty can be measured in three distinctive approaches and there are behavioural measurements, attitudinal measurements, and composite measurements (Bowen and Chen, 2001). Behavioural measurements can be defined as consistent, repetitious purchase behaviuor as an indicator of loyalty. For example, if the customer is often and repeat visit the same firm and purchase the product from the firm can be said as loyalty under the behavioural measurement. Next, attitudinal measurements can be defined as used attitudinal data to reflect the emotional and psychological attachment inherent in loyalty. Lets put it in a situation where a consumer holds a favourable attitude toward an online game service provider, but it is not necessary that consumer will subscribe o this service provider. It might be expensive to the consumer but the consumer will recommend it to others since he holds a favourable attitude towards the service provider (Toh, Hu, and Withiam, 1993). Composite approach is the combination of the first two dimensions and measure loyalty by customers products preferences, propensity of brand-switching, frequency of purchase, recency of purchase and total amount of purchase (Pritchard and Howard, 1997). This approach is valuable tool to understand customer loyalty in several fields such as retailing, upscale hotels and airlines (Pritchard and Howard, 1997). Many of the researchers and also in common think that loyalty is generating positive and measurable financial results (Dennis, 2003). In short, there is a positive relationship between loyalty and profit (Bowen and Chen, 2001). When a company is able to retain 5 percent more of its customers, consequently, profits will increase 25 percent to 125 percent (Reichheld and Sasser, 1990). The impact of loyalty has played an important role for the profit of the company. Based on the reasons mentioned above, online game loyalty (customer loyalty) is the independent variable for this study. On the past studies showed that online customer loyalty is result from customer satisfaction with the e-commerce channel. Also, the online satisfaction has the positive impact on online loyalty is the proved in the context of electronic commerce (Anderson and Srinivasan, 2003; Rodgers, Negash, and Suk, 2005. As proposed by Yang et al. (2009), online loyalty is the final result of their study. For this study, online loyalty is defined as a customers favaourable attitude and commitment towards online game service provider that results in sustaining in the same service provider which based on the study of Yang et al. (2009). Hence, this study is proposing online loyalty as the dependent variable. 2.4 Online Game Satisfaction Satisfaction is the â€Å"overall customer attitude towards a service provider† (Levesque and McDougall, 1996). Oliver (1980) defined customer satisfaction as customers evaluations of a product or service based on their needs and expectations. In the other way, it is an emotional customer anticipates and what they receive (Zineldin, 2000). Customer satisfaction could be the big challenges for all the firms and to satisfy the customer expectation is not an easy job because customers are human being who has a complex mind. As a human being, we have different characteristics and different expectation. Some people might expect a basic service from the service provider but some might expect a high service from the service provider. When people would like to defined something which involve human attitude, it is hard to find a common or universal definition. Gerpott, Rams, and Schindler (2001) proposed satisfaction is based on the customers estimated experience of the extent when the service provider is able to fulfill customers expectations. There are some benefits of customer satisfaction and the major benefits of customer satisfaction is stay loyal longer (Zineldin, 2000; Hansemark and Albinsson, 2004). Besides, Hansemark and Albinsson (2004) stated that satisfied customer are relatively less price sensitive, tend to purchase additional products, and they are relatively hard influenced by the competitors. They proposed many company view customer satisfaction as the crucial to a companys survival and must be satisfied those customer all the time as the company has been promised them. In general, much research no matter in offline environment or online environment, customer satisfaction is not really a new concept and lots of research efforts have been made to understand its antecedents and consequences (Bai, Law, and Wen, 2008). To assess a firms productivity and its marketing performance, the measures of perceived quality, satisfaction and loyalty was being used (Cortina, Elorz, and Villanueva, 2004). Besides, the great number of study of customer satisfaction is because its potential influence on consumer behavioral intention and customer retention (Cronin, Brady, Hult, 2000; Yang et al., 2009). A study of online retailing stated that satisfied customer tend to have higher usage of service and have stronger repurchase intention (Kim, Jin, and Swiney, 2008). Also, this particular customer will often recommend the product or service to their friends than those who are not satisfied (Zeithaml, Berry, and Parasuraman, 1996; Kim et al., 2008). Anderson and Srinivasan (2003) have investigated the impact of satisfaction on loyalty in the context of e-commerce. They concluded that online satisfaction has an impact on online loyalty. However, they also stated that the relationship is just moderated both by consumers individual factors and firms business factors. However, the relationship between online satisfaction and online loyalty also has been found in numerous studies (Yang et al., 2009; Kim et al., 2008; Anderson and Srinivasan, 2003; Rodgers et al., 2005). Hence, this study is going to propose online satisfaction might have a positive effect on online loyalty. 2.4.1 Online game satisfaction as a mediator Online game satisfaction will be the mediator between the online game loyalty and its determinants which are service quality, transaction cost, technology acceptance factor, and experience value. As proposed by Yang et al., 2009, service quality, transaction cost, and experience value will influence on online game satisfaction. However, this study is going to propose another antecedent which is technology acceptance factors which based on the studies of Lin and Sun, 2009; Hsu and Lu, 2003. In this model, online game satisfaction is a function of the four antecedents operating in a situation and helps to explain the influence of the antecedents on online game loyalty. As prior mentioned that online satisfaction has an impact on online loyalty, but, there are some factors might influence online satisfaction before it comes to online loyalty. To achieve the online satisfaction, the online game service providers have to meet the expectation of the consumer in some of the aspects as the four antecedents. Yang et al., 2009 stated that rare research examines the moderating effects of customer satisfaction in an integrated loyalty model and less formally tests that online game satisfaction in the online game service environment. Therefore, in this study, it proposes online game satisfaction as the mediator between the four antecedents and online game loyalty. The below table is to shows that the selected empirical research on determinants of customer satisfaction and loyalty (online). Table 2.2: Selected empirical research on determinants of customer satisfaction and loyalty (online) Independent Variables Key References Context Service Quality (SERVQUAL) Yang et al., (2009) Lin and Sun (2009) Lee and Lin (2005) Santos (2003) Online Game Service Online Shopping Online Shopping e-Service Quality Technology Acceptance Factors Lin and Sun (2009) Hsu and Lu (2003) Online Shopping Online Game Transaction Cost Yang et al., (2009) Liang and Huang (1998) Online Game Service Electronic M Factors of Affecting Online Game Satisfaction Factors of Affecting Online Game Satisfaction CHAPTER ONE INTRODUCTION 1.1 Introduction Online gaming is one of the most popular entertainments among the citizen in this world no matter what ages they are. Due to the advancement in the technologies, it has brought lots of growth in this industry since early of 2000s. This growth has been developed online game market into the core of the world cultural industry (Sang, Yung, Jae, and Kyoung, 2004). Hsu and Lu (2003) stated that online game service has been a highly profitable e-commerce application in recent years and its market value has increasing markedly as well as number of player growth at the same time. Now a day, most of the household will owned at least one personal computer (PC) or a laptop and some even more than that due to the cheaper cost to have a computer. Consequently, the demand for computer has been grown rapidly throughout this recent year. The accessibility of internet also is easier with each passing year and the cheaper price to have broadband internet connectivity (Bizymoms.com). Generally, online game service can be categorized as business-to-consumer or B2C in e-commerce and it is also one the videogame and interactive entertainment industry. A strategic market research and consulting firm which focuses on the interactive entertainment and the emerging video game, online game, interactive entertainment and portable game markets namely, DFC Intelligence has made its forecast for worldwide videogame and interactive entertainment industry each year since year 1995. According to DFC Intelligence forecast on year 2008, the worldwide videogame and interactive entertainment industry revenue to reach USD 57 billion in 2009 with no signs of slowing due to the slumping economies and expensive hardware (Androvich, 2008). The rapid growth in videogame and interactive entertainment industry has been attracted lots of entrepreneur who would like to enter this profitable industry. Based on the report of DFC, PC was the top platform for games in 2007, with online game revenue alone eclipsing USD 7 billion on year 2006 and not including retail sales. The DFC also stated the total PC game revenue is expected to reach USD 19 billion by year 2013 (Androvich, 2008). In Malaysia, there were 15 million subscriber of internet and it was 62.8% out of the total population in 2008 (Internet World Stats, 2008). It was more than half of the citizens of Malaysia have used the internet and this has brought a great opportunity to the entrepreneur who would like to join this industry to be one of the online game service providers to share the profit since the number of internet users was increasing each year. It did not showed that the number of the online game subscribers but there is a business opportunity for the entrepreneur to start-up their business through online. Table 1.1: Internet Usage and Population Growth of Malaysia Year No. of Users Total Population % 2000 3, 700, 000 24, 645, 600 15.0% 2005 10, 040, 000 26, 500, 699 37.9% 2006 11, 016, 000 28, 294, 120 38.9% 2007 13, 528, 200 28, 294, 120 47.8% 2008 15, 868, 000 25, 274, 133 62.8% (Source: http://www.internetworldstats.com/asia/my.htm [2009, November 1]) A study showed that customer satisfaction is the immediate factor affecting the consumer retains loyalty (Cronin, Brady, and Hult, 2000). Most of the studies showed that higher levels of customer satisfaction will lead to customer loyalty. â€Å"A minor change in satisfaction could lead to a substantial change in loyalty increment† (Bowen and Chen, 2001). However, most of these studies were in offline environment. Wind and Rangasamy (2001) found that online environments offer more opportunities for interactive and personalized marketing. Eventually, these opportunities may influences customer satisfaction and customer loyalty in the online environment if compared to the traditional market or offline environment (Shankar, Smith, and Rangaswamy, 2003). The main purpose of this study is to identify the factors affects the customer satisfaction towards online game services and which could lead to customer loyalty. It is including the service quality, transaction cost, experience value, and technology acceptance factor. These four antecedents of online game service satisfaction and loyalty will test associations based on the model that has been constructs. 1.2 Background of the Research In this century, computer might be a need for a person if compared to the olden days where there was a limited growth in technologies. Now, computer seems like a tool which can do everything for you such as searching information, payment, shopping, and so on. This powerful electrical appliance has gain a well response from the citizen of the world. It has many functions can perform through computer and one of the most popular functions of computer is gaming. In the earlier 2000s, most of the games were played offline since the limited internet connectivity and expensive prices to have an internet connectivity. However, this situation has changed due to the technologies advancements and the industry has achieved economic of scale. To more understand what online games is, it is a must to brief its history. The very first online gaming activities were introduced in the late of 1960s and early of 1970s. Later, they started gain more popularity within 1970s to 1980s when dial-up Bulletin Boards became popular and the users started playing online game over them. Clyde and Thomas (2008) stated that the development of arcade game in the 1970s, and video and computer games in the 1980s; digital games have become an influential part of popular culture. The bulletin boards provided a multi-user platform which allowed few users to play at the same time. Now, it has been transformed to MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world presently (Bizymoms.com). At one time, games were used for educational purpose rather than entertainment (Clyde and Thomas, 2008). However, due to the changed in the perception of game role and the culture, it becomes an entertainment but there is still has some of the game designers and educators used it as educational purposed such as learning typing skills and so on. In the year of 1990s, due to the growth of internet technologies of Flash and Java, it has led to the increasing usage of the internet and the millions of new websites mushrooming across the World Wide Web. When enter to the millennium year, technological giants such as Sony, Microsoft and Ninetendo came out with advanced gaming consoles has changed the features of online gaming completely (Bizymoms.com). The people all around can play a same game with each other virtually at the same time. Currently, online gaming industry is growing each year and it has a great expansion in future. The online game service is one of the most competitive industries among the entire industries. The new and the existing online game service provider are delivering their best services to gain more market share to sustain its organization. To penetrate the market, the firm must meet the customer expectation which may lead to customer satisfaction. Eventually, it may bring customer loyalty. 1.3 Research Problem Customer is the one who contribute the profit to the firm because they are the one who are using the product or services. However, consumers are becoming wisely now a day when they would like to use certain product or services. They will tend to purchase the product only if the product can meet their expectation which might lead to satisfaction. To meet the customer expectation, it is a biggest challenge for the firm. Other than that, the growth of the online game has brought some a major problem to the service provider which is how to retain the existing online game users and will not shifting to other service provider or loyalty to the current provider (Yang, Wu, Wang, 2009). In order to survive in this competitive industry, many practitioners and academicians in this field have focused on how to improve online services to attract potential buyers as well as the current customers (Jun, Yang, and Kim, 2004). There are some of the factors to achieve customer satisfaction. However, the key factors especially in online game services which are able to make the customer satisfied with the products and services still under study or unknown (Dick, Wellnitz, and Wolf, 2005). If the key factors have been determined, the provider might be able to gain the competitive advantages which trying to meet the customer expectation. This research is emphasizing the customer satisfaction and loyalty in online game service. Specifically, it is trying to identify the key factors affects online satisfaction and online loyalty in order to guide the online game service provider to improve their service quality to garb more potential customers and retain the existing one. 1.4 Research Objectives The objectives were formed based on the research problem and there are formulated to achieve the main goal of this study which is to examine the factors of affecting the online game satisfaction and loyalty. To determine service quality has a positive impact towards online game satisfaction. To determine transaction costs has a positive impact towards online game satisfaction. To determine technology acceptance factor has a positive impact towards online game satisfaction. To determine experience value has a positive impact towards online game satisfaction. To determine online game satisfaction would have a positive impact on online game loyalty. To determine service quality, transaction cost, technology acceptance factors, and experience value will affect online game satisfaction and eventually online game loyalty. 1.5 Justification of the Study This study is significant for several reasons. First, it can identify the gaps between customer expectation and perception about online game service provider in order to guide them to provide better services. â€Å"It is commonly known that there is a positive relationship between customer loyalty and profitability† (Bowen and Chen, 2001). It is correct once the customer is loyal to the company because they will visit the firm after a purchase and some even recommend to their friends. In the online environment, the online satisfaction also grabs much attention from all of the researchers because to meet a customer expectation is the toughest challenges to the company. Also, it brings the profitability and the survival of the company. Online game service provider should concern about the medium which may influenced the online game satisfaction and online game loyalty. The importance of the study is to keep the online game service improvement in order to achieve the customer satisfaction from time to time. In online environment, the customer can easily compared the alternative than offline customer especially products and service (Shankar et al., 2003). As in online environment, the user is free to search the information to the product that they demand. As well as online game, there is large amount of online game service provider. Therefore, the user can easily compared the features of the game and service quality that provided by the firm. Once the factor has a positive impact on online satisfaction has been determined, the service provider is able to strengthen their weaknesses in order to sustain its market share. Besides, the study is providing guidelines for the service provider to develop their future or long-term plan. The importance of the online game satisfaction will give a direction to the service provider to plan for their future such as strategic plan. It also helps the company to gain competitive advantages in this industry. Commonly, most of the studies regarding to customer satisfaction and loyalty were did for offline environment and only limited for online environment. However, consumers still have some same characteristics in making decision when they would like to purchase a product. As the study has identified the factors affect the customer satisfaction and loyalty, the firms are able to fulfill the users need and wants. This action is trying to meet the customer satisfaction and eventually customer loyalty. Once the customer become loyal, the company may survive in this competitive market. On the other hand, it is also will benefit the user to gain a better service from the online game service provider once they have responded to what they are percept towards the online game service provider that they currently subscribed. Also, the service provider is able to understand what kind of service quality that the users perceived and expected. It will leads to a win-win situation if both of the parties could perform what they are request and give. 1.6 Definition of Important Terms There are some important terms in this study: Online satisfaction, online loyalty, service quality, technology acceptance factors, transaction cost, and experiences value. Online Game Satisfaction Online game satisfaction is customer satisfaction towards online game service. Oliver (1980) defines customer satisfaction as customers evaluation of a product or service with regard to their needs and expectations. It is just in virtual environment perspectives. Online Game Loyalty Online game loyalty is customer loyalty towards online game service. It can be defined as â€Å"a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviuor† (Oliver, 1997). Service Quality Parasuraman, et al., (1988) defined service quality as â€Å"a global judgement, or attitude, relating to the superiority of the service†, â€Å"and explicated it as involving evaluations of the outcomes (i.e., what customer actually receives from services) and process of service act (i.e., the manner in which service is delivered)† (Jain, and Gupta, 2004) Technology Acceptance Factors It is also known as technology acceptance model (TAM). Davis (1989) proposed TAM to explain and predict user acceptance of information systems (IS) or information technology (IT). In short, it is explaining â€Å"intention to use a technology† (Schepers and Wetzels, 2007). Transaction Cost It is a theory â€Å"seeks to explain why firms exist and how firm boundaries were determined† (Watjatrakul, 2005). Experience Value It refers to â€Å"shopping efficiency and making good product performance and functionality† (Wu and Liang, 2009). Wu and Liang (2009) added â€Å"its perceptions are based on interaction involving either direct usage or distant appreciation of goods or services†. MMORPG (Massively Multi-Player Online Role-Playing Games) It is known as a virtual environment where it allows multiple geographically distributed users interact with each other at the same time (Papargyris and Poulymenakou, 2005). Besides, it is â€Å"offering an alternative channel for players to communicate, share experiences, socialize, and eventually from virtual communities† (Chee, Zaphiris, and Mahmood, 2007) Online Game Service It is a service provider who provides a server for the online game user to get into the network to interact with each other by playing games. 1.7 Organization of the Report This study will be constructed into five different chapters and there are: Chapter 1 is presenting the introduction and a brief overview of the study. The problems of the study, objectives of the study, significance of the study, and the chapter outline of the research are stated in this chapter. Chapter 2 provides an extensive review of international journals, reports, and articles from online and offline resources. Besides, all the reviews in this chapter are related to the problem of the research that will guide to construct the conceptual foundation and hypothesis of the study. Chapter 3 is describing the methods used in conducting this study in detail. Besides, it also presents the development of the research framework which proposed the relationship between dependent variables and independent variables. Next, the methodology applied is provided, sampling procedures, hypothesis development, data analysis and measurement. Chapter 4 presents the findings and data analysis of the research. It analyses and discussed the data collected in the research using the research instrument which has been developed in chapter 3. The hypothesis will be tested and it is also presents the results of statistical analysis used in this study (t-test, ANOVA, and etc.). Chapter 5 is presenting the conclusion and recommendation. There is also discussion of the studys implications, recommendations, limitations and suggestion for the future research. CHAPTER 2 LITERATURE REVIEW 2.1 Introduction Chapter 1 has discussed and highlighted the important issues which related online game service satisfaction and loyalty. All of these issues that mentioned in the chapter 1 are playing an important role for online game service industry in order to understand the expectation of the user and eventually grab more market share. As a result, to more understanding these issues, an examination of literature on related study were carried out. Generally, literature review provides the theoretical basis for the development of the research framework of this study, which will be discuss in the next chapter Chapter 3. This chapter consists of the following subject areas: (1) Definition of key terms; (2) online game satisfaction; (3) online game loyalty; (4) the factors might affect online satisfaction and loyalty; and (5) summary of literature review. 2.2 Definition of Key Terms 2.2.1 Online Game Service As technologies have became more advance, people have more rely on the technologies and they even expect technology will do all the things for us. Now, most of the people are prefer online rather than offline when they would like to purchase or acknowledge a transaction. In the olden day around 1980 where the technology has a limited growth, people can only play games in offline environment such as TV and handheld game console (Nintendo). In the late 1980s computer game was invented and started popular. Currently, computer games have been transformed into MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world (Bizymoms.com). Besides, the multi-player online role-playing games also known as Net games (Lo, Wang, and Fang, 2005). Generally, net game can be divided into three which is web games, network games, and online games. The below is the definition of this three types of net games. Table 2.1 Types of Net Games Types Definition Players Web games Games which use a website as an interface. Players must register to play. Network games Games which allow multiple players to use their own PCs to interact via Local Area Networks (LANs) or the internet. Also, many of these closely resemble PC games. Players must purchase and install game software. However, it does not require any fees beyond those for internet connections. Online games Games where require players to connect to the service provider and log in to a server. Player must subscribe to the service provider and select a role to interact with other virtual roles. Source: Lo, 2008 Online game is requiring player to log in to a server in order to play the games. It is means that the players must have internet connection to connect with the service provider. After the player subscribe to the games, the user has to select a role to interact with the rest of the subscribers. The special characteristic of online game is the user can continue to play their role after they have log out for few days. The player can keep continue playing where they have stopped when they have log out last time with the experiences and assets are remain. Online game user must install a client program for internet connection and online game providers to attend the online game (Lo, 2008). This program is inexpensive and sometimes even free. However, there are some need additional fees are paid to the Internet Service Provider (ISP) (Lo, 2008). Commonly, the charges of online game is based on the time where the player spent to playing games and usually it is prepaid which pay before they play the games. Due to the technology advancement and the cheaper price for paying the internet connectivity, consumers are more easily to connect to the internet and playing online game. This golden business opportunity has been attracted lots of firms entered to this industry. Online game service is the company which provides a server for the players in order to play game with others. The company main activities is improve the performance of the online game also maintenance of the server to avoid any shut-down or system down of the server. There are some features have attracted lots of people subscribe to online game and the number of players is keep increasing each day. The online games allow the player to build the role based on their preference, beliefs, goal, or other factors and most of the time the players play it in a team (Klang, 2004). The features in the online games has play an important role in order to gain more subscriber and also some other factors. 2.3 Online Game Loyalty In general, loyalty can be defined as faithful. However, in terms of customer loyalty, it is hard to define (Bowen ad Chen, 2001). Dennis (2003) stated that loyalty is the feeling where a customer has about a brand. This could be explained as the customer has a positive perception about the brand and this brand will always come in the first of the mind of this particular consumer if compared to the other firms which have offer the same service or product. Edvarson, Johnson, Gustafsson and Strandvik (2000) define loyalty as a customers intention to repurchase from the same firm again. On the other hand, loyalty can be measured in three distinctive approaches and there are behavioural measurements, attitudinal measurements, and composite measurements (Bowen and Chen, 2001). Behavioural measurements can be defined as consistent, repetitious purchase behaviuor as an indicator of loyalty. For example, if the customer is often and repeat visit the same firm and purchase the product from the firm can be said as loyalty under the behavioural measurement. Next, attitudinal measurements can be defined as used attitudinal data to reflect the emotional and psychological attachment inherent in loyalty. Lets put it in a situation where a consumer holds a favourable attitude toward an online game service provider, but it is not necessary that consumer will subscribe o this service provider. It might be expensive to the consumer but the consumer will recommend it to others since he holds a favourable attitude towards the service provider (Toh, Hu, and Withiam, 1993). Composite approach is the combination of the first two dimensions and measure loyalty by customers products preferences, propensity of brand-switching, frequency of purchase, recency of purchase and total amount of purchase (Pritchard and Howard, 1997). This approach is valuable tool to understand customer loyalty in several fields such as retailing, upscale hotels and airlines (Pritchard and Howard, 1997). Many of the researchers and also in common think that loyalty is generating positive and measurable financial results (Dennis, 2003). In short, there is a positive relationship between loyalty and profit (Bowen and Chen, 2001). When a company is able to retain 5 percent more of its customers, consequently, profits will increase 25 percent to 125 percent (Reichheld and Sasser, 1990). The impact of loyalty has played an important role for the profit of the company. Based on the reasons mentioned above, online game loyalty (customer loyalty) is the independent variable for this study. On the past studies showed that online customer loyalty is result from customer satisfaction with the e-commerce channel. Also, the online satisfaction has the positive impact on online loyalty is the proved in the context of electronic commerce (Anderson and Srinivasan, 2003; Rodgers, Negash, and Suk, 2005. As proposed by Yang et al. (2009), online loyalty is the final result of their study. For this study, online loyalty is defined as a customers favaourable attitude and commitment towards online game service provider that results in sustaining in the same service provider which based on the study of Yang et al. (2009). Hence, this study is proposing online loyalty as the dependent variable. 2.4 Online Game Satisfaction Satisfaction is the â€Å"overall customer attitude towards a service provider† (Levesque and McDougall, 1996). Oliver (1980) defined customer satisfaction as customers evaluations of a product or service based on their needs and expectations. In the other way, it is an emotional customer anticipates and what they receive (Zineldin, 2000). Customer satisfaction could be the big challenges for all the firms and to satisfy the customer expectation is not an easy job because customers are human being who has a complex mind. As a human being, we have different characteristics and different expectation. Some people might expect a basic service from the service provider but some might expect a high service from the service provider. When people would like to defined something which involve human attitude, it is hard to find a common or universal definition. Gerpott, Rams, and Schindler (2001) proposed satisfaction is based on the customers estimated experience of the extent when the service provider is able to fulfill customers expectations. There are some benefits of customer satisfaction and the major benefits of customer satisfaction is stay loyal longer (Zineldin, 2000; Hansemark and Albinsson, 2004). Besides, Hansemark and Albinsson (2004) stated that satisfied customer are relatively less price sensitive, tend to purchase additional products, and they are relatively hard influenced by the competitors. They proposed many company view customer satisfaction as the crucial to a companys survival and must be satisfied those customer all the time as the company has been promised them. In general, much research no matter in offline environment or online environment, customer satisfaction is not really a new concept and lots of research efforts have been made to understand its antecedents and consequences (Bai, Law, and Wen, 2008). To assess a firms productivity and its marketing performance, the measures of perceived quality, satisfaction and loyalty was being used (Cortina, Elorz, and Villanueva, 2004). Besides, the great number of study of customer satisfaction is because its potential influence on consumer behavioral intention and customer retention (Cronin, Brady, Hult, 2000; Yang et al., 2009). A study of online retailing stated that satisfied customer tend to have higher usage of service and have stronger repurchase intention (Kim, Jin, and Swiney, 2008). Also, this particular customer will often recommend the product or service to their friends than those who are not satisfied (Zeithaml, Berry, and Parasuraman, 1996; Kim et al., 2008). Anderson and Srinivasan (2003) have investigated the impact of satisfaction on loyalty in the context of e-commerce. They concluded that online satisfaction has an impact on online loyalty. However, they also stated that the relationship is just moderated both by consumers individual factors and firms business factors. However, the relationship between online satisfaction and online loyalty also has been found in numerous studies (Yang et al., 2009; Kim et al., 2008; Anderson and Srinivasan, 2003; Rodgers et al., 2005). Hence, this study is going to propose online satisfaction might have a positive effect on online loyalty. 2.4.1 Online game satisfaction as a mediator Online game satisfaction will be the mediator between the online game loyalty and its determinants which are service quality, transaction cost, technology acceptance factor, and experience value. As proposed by Yang et al., 2009, service quality, transaction cost, and experience value will influence on online game satisfaction. However, this study is going to propose another antecedent which is technology acceptance factors which based on the studies of Lin and Sun, 2009; Hsu and Lu, 2003. In this model, online game satisfaction is a function of the four antecedents operating in a situation and helps to explain the influence of the antecedents on online game loyalty. As prior mentioned that online satisfaction has an impact on online loyalty, but, there are some factors might influence online satisfaction before it comes to online loyalty. To achieve the online satisfaction, the online game service providers have to meet the expectation of the consumer in some of the aspects as the four antecedents. Yang et al., 2009 stated that rare research examines the moderating effects of customer satisfaction in an integrated loyalty model and less formally tests that online game satisfaction in the online game service environment. Therefore, in this study, it proposes online game satisfaction as the mediator between the four antecedents and online game loyalty. The below table is to shows that the selected empirical research on determinants of customer satisfaction and loyalty (online). Table 2.2: Selected empirical research on determinants of customer satisfaction and loyalty (online) Independent Variables Key References Context Service Quality (SERVQUAL) Yang et al., (2009) Lin and Sun (2009) Lee and Lin (2005) Santos (2003) Online Game Service Online Shopping Online Shopping e-Service Quality Technology Acceptance Factors Lin and Sun (2009) Hsu and Lu (2003) Online Shopping Online Game Transaction Cost Yang et al., (2009) Liang and Huang (1998) Online Game Service Electronic M