...1. How attractive is the video game console industry in 2008? In 2008 the video game industry is dominated by three major players and their respective gaming consoles. First of all there's Sony with its PlayStation 3 launched by the end of 2006. Then there's Microsoft with its Xbox 360, launched in the end of 2005; and finally Nintendo with the "Wii" in late 2006. These three players are struggling to gain market leadership in the game console industry. The video game industry, off from an uncertain start in 1972 has been marked by quick and frequent changes of fortune amongst the various players in the market. The market was characterized by rapid growth as well as unexpected down turns such as the one in 1983 where the industry lost 97% of annual sales volume in 3yrs. The industry appears to exhibit five to six year cycles of competition which concur with advancement of underlying technology. Nearly all-technological leaps from one generation to the next were marked by a change in leadership. Currently, the market is lead by Nintendo with 60% operating margin, compared to Sony's -9.7% and Microsoft's even worse -33.7%. In recent years, Nintendo has managed to overthrow both Sony and Microsoft despite having a console which is significantly less technologically advanced. There is a low risk of potential entrants due to high sunk costs (as demonstrated by Atari's "ET" flop), large capital requirements and very high economies of scale needed especially since product is sold...
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...Video Game Consoles Video Game Consoles Video Game Consoles Name | Varun Punjabi | Class | PGDM - Communications | Subject | Marketing Management | Roll No | 39 | Scope: The Indian video games sector in 2011 was driven by the urban middle class/upper-middle class population, who adopted both static and handheld games. Rising income levels, increased availability of international brands such as Sony PlayStation 3, Nintendo Wii and Microsoft Xbox 360 as well as growth in retail chains were primary factors driving the demand for video games in India. An industry worth 25 billion dollars globally, the 9th generation of video game consoles will see tremendous advances especially with the inclusion of virtual reality compatible hardware technology. ------------------------------------------------- ------------------------------------------------- Video Game Consoles: Interesting Trivia ------------------------------------------------- ------------------------------------------------- - 2 out of 5 gamers are women ------------------------------------------------- - 65% of US households have atleast 1 video game console ------------------------------------------------- - The average age for gamers is 32 ------------------------------------------------- - An average gamer spends 18 hours playing video games. ------------------------------------------------- - Sony Playstation 2 sold 138 million units worldwide making it the best-selling console...
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...*CASE STUDY 11* Competition in Video Game Consoles: The State of the Battle for Supremacy AUTHORS: Christian Kostadinov 29114042 Ivaylo Baldev 29114047 Sofia 2010 Competition in Video Game Consoles: The State of the Battle for Supremacy Objectives in front of the case study The main objective that stands in front of our project is to clarify the present situation on the market of video console games. To present the strategies of the three main rival firms-Sony, Nintendo and Microsoft, to see their advantages and disadvantages, to see what their mission statement is, to see who are their customers and in which market segments the companies are trying to penetrate or have already penetrated. At the end we are going to try to predict the future development of the battle. We are also going to compare them in the above mentioned spheres, with the help of a competitor analysis. Conclusions are going to be derived after every paragraph. In order to do that we are going to use different methods including- SWOT analyses, PEST analyses etc. There were two different variants how to structure the text- first to include the PEST and SWOT analysis in the text for every firm or second variant to add it after the analysis. The second way was chosen because we decided that using this method it will be easier to compare the firms. Additionally we are going to present the information in the most understandable way by a PowerPoint Presentation. Content: 1. Introduction...
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...Five Forces Analysis of the Video Game Industry The five forces that drive industry competition, a model established by Michael Porter, are; threat of substitution, threat of new entrants, bargaining power of suppliers, bargaining power of buyers, and intensity of rivalry. The video game industry must deal with all five of these forces. The analysis of the strength of these five forces within the video game industry will help to draw a conclusion as to whether or not it is an attractive industry for Sony to be in. The threat of substitutes in the video game industry is relatively low. Most customers are looking for a console that they can play games on and there really isn’t much else to choose from. One could say that computer gaming, although still technically video games, is a potential substitute. Almost every household in America at least has one computer, so it is much easier for customers to just purchase games for their computer rather than buy a new console altogether. Computer gaming is not much of a threat to the video game industry because customers seek the different type of gaming experience that the consoles offer that a computer cannot, such as motion control for the Wii, and special controllers for the Xbox and the PlayStation 2. Clearly the threat of substitutes is not very large in the video game industry. The threat of new entrants in the video game industry is moderate. The three key players in the video game industry are Microsoft, Sony, and Nintendo...
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...reasons of success 8 Swott : 8 Operational Segmentation 9 Why marketing communication campaign was a success? teddy 10 V. CONCLUSION: Recommendations for Sony and PSP 10 Introduction: A portable console is a video game console designed for ease of transportation. It differs from the old « classic » console in its compact design, bundling the screen, control buttons and the speakers. During the 1970s and 1980s, several companies such as Coleco and Milton Bradley offered a combination of portable and non-portable (requiring a support to be raised) electronic games. The original portable models were limited to a single game built into the machine itself and thus not meeting the multiple gaming capabilities of current portable machines. Milton Bradley Microvision introduced in 1979 is considered as the first real portable console with exchangeable video game cartridges. The Nintendo Company has dominated the handheld market since the release of its Game Boy in 1989. Nintendo is often seen as the company that made this console, popular. Unlike the PC market, the console manufacturers are not as numerous and diversified. By 2001, the global game consoles market had risen to more than 20 billion dollars. The story seems to have proven that the gaming console market can’t accommodate more than 3 major players simultaneously. Namely, Sony, Nintendo and Microsoft have driven the competition to Sega out of this overlay saturated market. What this last decade tends...
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...business in Kyoto, Japan and, decades later, expanded to video game production. Nintendo released its first game console, the Nintendo Entertainment System (NES), in 1985 (Nintendo, 2013). The NES became an instant hit and set Nintendo to be a pioneer in the game console industry throughout the 1990s. Gradual Decline Nintendo enjoyed tremendous success as it continuously released new consoles: Nintendo 64, Game Boy, Game Boy Advance, GameCube, and more. However, the company faced increasing competition in the early 2000s from Microsoft’s Xbox and Sony’s PlayStation consoles and its market share started to decline. In 2003, Nintendo’s share price fell sharply when Sony announced its PlayStation Portable (PSP), threatening the monopoly that Nintendo held on the portable console market (Kendall, 2009). Change in Strategy In an industry that competes based on delivering the latest technology, Nintendo’s newly promoted president, Satoru Iwata, took the company in a new strategic direction to restore the company’s former glory. Challenging the long-time video game market of boys, young men, and “serious gamers,” Nintendo decided to change their strategy and target those outside their traditional demographic: women, seniors, and families (MaRS, 2010). Rather than focus on the latest graphics processors, hardware design, or engine speed, Nintendo took a new “fun and social” approach to gaming and released the Wii console. This new gaming system was based on body motions...
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...Esmir Hadzic 661035592 Intro to Management 2/4/14 Five Forces Analysis of the Video Game Industry As in every industry, there are five competitive forces that determine the intensity of competition between the different players. These competitive forces are; the threat of entry of a new company in the industry, the threat of substitution by another product, the bargaining power of the buyers, the bargaining power of the suppliers, and rivalry among currently existing competitors. These competitive forces are easily seen in the video game industry, as there is already immense competition in the industry due to the similarities between the few major companies at play. Sony, Nintendo, and Microsoft are the three large players in the present day video game industry. Sony Computer Entertainment Inc. has been a dominant company in the industry for over a decade with the PlayStation 1 and PlayStation 2 platforms; however, it is struggling to stay at the helm of the industry due to the presence of these competitive forces. The threat of entry of a new company in the video game industry is a relatively weak competitive force for Sony. The video game industry is already dominated by three major players (Sony, Nintendo, and Microsoft), thus the possibility of a new entrant in the industry is very low. Nintendo was established well before Sony as a major player, and Microsoft came into the industry in 2001 with the original Xbox. When Sony came in with the PlayStation 1, they...
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...The console video game craze started off in November 1977, the year the Atari 2600 was released. It sold for 200 dollars and was an instant hit. The killer app for the system was the game Pong. This game consisted of a ball bouncing back and fourth on the screen, the player had to hit the ball with a paddle and the other player or computer would return the ball in the same manner. Atari offered many other games but none were as popular as Pong, until space invaders came along. Released in Japan in 1978 and 1979 in the US, Space Invaders became a world wide craze. According to an article found on http://retrogamer.merseyworld.com “kids stopped listing to music, playing sports or going to the movies, they played Space Invaders. Space Invaders Greatly increased the popularity of the Atari 2600, video games became the new hot thing. Everything was going great for Atari until 1984 when the Atari 5200 was released. The system was a flop and it seemed to kill the video game industry in the US. While the US video game craze seemed like it was over, a new craze was starting in Japan. In 1983 a little company named Nintendo released a console named, Famicom. The system sold for 100 dollars in Japan and was very popular; however it was not released in the US due to the video game crash of 1984. In late 1985 The Famicom was released in the US as the NES (Nintendo Entertainment System). By February 1986 the NES had already sold over 30 million. The original US set came with two controllers...
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...for Video Game Supremacy John Sterman, Khan Jekarl, Cate Reavis As Sir Howard Stringer, CEO of Sony Corporation, settled in for his flight back to Japan from New York, a number of pressing issues occupied his mind about Sony’s future. At the forefront, Sony’s next generation video game console, the PlayStation 3 (PS3), was set to launch worldwide on November 17, 2006, a mere week away. Despite PlayStation 2’s (PS2) dominance in the last generation of gaming consoles, Stringer understood that past successes were no guarantee of future success in the intensely competitive game industry. Microsoft had launched the first volley in the last console war by releasing the Xbox 360 in the fall of 2005. Within one year, almost 4 million Xbox 360s had been sold worldwide, giving Microsoft a significant head-start in the race for market dominance. Meanwhile, Nintendo, a competitor thought to be dead due to the lackluster sales of its previous console, the Nintendo Gamecube, had generated significant “buzz” around its new entry, the Nintendo Wii (pronounced “we”). Targeting more of a mainstream audience than Sony and Microsoft, the Wii, scheduled to launch just two days after the PS3, posed a serious threat to Sony’s market share, particularly due to its $249.99 retail price, half the price of the PS3. Stringer also knew that there was much more at stake than winning the console war. The next generation of the DVD market was at stake as well. In addition to being a gaming console, the...
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...differentiation strategy with its seventh generation console the Wii, while simultaneously deciding to focus on serving buyers comprising of a narrow market niche. Rather than building a console with new graphic features and technological capability in to the console itself, the company concentrated on pioneering a daringly different video game controller. The bold new approach allowed Nintendo to tap into an entirely new demographic and to engage new players of video games. Combining these two strategic approaches propelled the company to become the market leader in sales of the third generation video game consoles, far surpassing Sony’s PlayStation 3 (PS3) and Microsoft’s Xbox 360. Nintendo is currently facing two significant problems: 1. The immediate concern is that the company is unable to meet the demand for the Wii console which continues to sell out in stores. 2. The long term issue that needs to be addressed is whether the company can identify and invest in innovations that would allow Nintendo to continue to expand in the market, while resisting a significant attack from its competition. In order to analyze the issues in detail a SWOT, PESTE, financial, and competitive analysis were performed. The findings indicated that the company differentiates itself from the competition with a high emphasis on product differentiation; it is quite susceptible to competition; and that the release of the Wii console has improved its financial status immensely from a revenue...
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...VIDEO GAMES CONSOLE The games console industry is divided into three periods. The first period is the growth of the industry to the advent of the 32 bit era. The next period is the developments and trends during the PlayStation era and the third is the likely development of the industry over the next few years BRIEF HISTORY OF THOSE PERIODS and THEIR REVENUES (The Evolution of the Game Console Industry) In 1994 , the first time that consumer electronics giant Sony had bravely attempted to enter the highly competitive games console market. Going under the catchy, self–explanatory name PlayStation, this 32–bit, CD–based system hit Japan in December and faced tough competition from 'The Big Two' in the form of Sega's fundamentally similar Saturn, and Nintendo's upcoming Ultra 64. By May 1995, barely six months after the release of PlayStation, over 1 million Japanese gamers had become converts. Games like Toshinden, CyberSled, Jumping Flash!, and a host of other, decidedly more obscure titles (our favourite is Chou Aniki – Kyuukyoku Muteki Ginga Saikyo Otoko – literally 'Super Older Brother – The Galaxy's Absolutely Invincible Strongest Man') helped to propel sales, impressing players with their advanced 3D visuals and diverse gameplay. By October, worldwide PlayStation shipments had reached 9 million, and with the arrival of huge sequels such as Tekken 2, Ridge Racer Revolution and Wipeout 2097. In a year that saw cosmologists announce that the expansion...
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...Market evolution & Competitive Set I. Emergence of HC market 1966-1975: Atari, First home video game system (Odyssey, Pong) 1976-1979: Atari, rapid development of Home console market (first console of multiple games, VCS, many companies enter market) 1983: collapsed because of multiple consoles and poor quality software II. Focus on high quality 1983-1988: Nintendo Famicom system, focused on producing fewer but higher quality games; security chip was installed into every console to ensure that only Nintendo-approved games could be played on the system; used up to 30 different suppliers and completed final assembly to keep confidentiality; added an exclusivity clause that prevented licensees from producing games on competing consoles for two years; tight grip on retailers, 1990: Nintendo represented more than 90% of the U.S. home console market. Approximately 30 million NES units had been sold, about one for every three American households 1991: Super Nintendo’s lack of backwards-compatibility prevented Nintendo from taking full advantage of its existing catalog of games III. Game development mid-1990s : Sega -- Strong internal game development coupled with relatively favorable terms for software licensees (in comparison to Nintendo) paved the way for an extremely competitive library of titles for the Sega Genesis IV. Three dimensional machine, more functionality 1994: Sony PlayStation, fully three-dimensional machine, opted for the compact-disc format...
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...Nintendo’s Strategy for the Wii— Good Enough to Beat Xbox 360 and PlayStation 3? 12 C A S E ASSIGNMENT QUESTIONS 1. What are the defi ning business and economic characteristics of the video game console industry? What is the industry like? 2. What is competition like in the video game console industry? Do a fi ve-forces analysis to support your answer. Which of the fi ve competitive forces is strongest? Which is weakest? Would you characterize the overall strength of competition in video game consoles as fi erce, strong, moderate to normal or weak? Why? 3. What forces are driving changes in the video game console industry? Are these driving forces acting to make the industry more or less competitively intense? Are the driving forces acting to make the industry more or less profi table in future years? 4. What 3-5 key factors determine the success of video game console developers like Nintendo? 5. What is Nintendo’s strategy? Which of the fi ve generic strategies discussed in Chapter 5 is Nintendo using? What are some of the recent offensive and/or defensive strategies that Nintendo has employed? Have these tactics been successful? 6. Is it fair to characterize Nintendo’s introduction of the Wii as a blue ocean strategy? Why or why not? 7. How well is Nintendo’s strategy working in terms of the fi nancial performance it is delivering? Should shareholders be pleased? Why or why not? What 2-3 weaknesses do you see in Nintendo’s fi nancial performance? 8. What...
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...to home video game consoles. It was a market leader until the launch of Sony’s Playstation and Microsoft’s Xbox. However, the launch of Wii in 2006 brought back Nintendo’s former glory and is now the company’s best-selling console. Wii focused on two things to transcend their competitors, PS3 and Xbox. First, as a low-price leader, they have a more favorable benefit-tocost ratio and second, they focused on “the fun of playing rather than cold tech specs”. With Wii being an instant smash hit in the market, how will Nintendo sustain this momentum and secure the future full of uncertainties? Point of View: Nintendo Management, year 2008. II. Issue Identification: How will Nintendo sustain the demand for its product, Wii, from non-traditional users while at the same time targeting the hardcore gamers into the brand? III. Situational Analysis Social: Escape from reality. Video gaming let the users stray away from reality, making them feel like they are really in the game having fun and not worrying about the harsh realities of life. Fun and sense of accomplishment. For some, gaming is a way to relieve stress and to have fun during leisure time. For others, video games are played seriously with aims of accomplishing the game successfully. Media for socialization. Video gaming usually involves not only one person. It is a catalyst of socialization, giving the users some bonding time. Alternative from physical activities. Friends or families who like to have fun consider video gaming as...
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...as Nintendo Koppai. Based in Kyoto, Japan, the business produced and marketed a playing card game called Hanafuda. In 1956, Hiroshi Yamauchi visited the US, and this is when he realized the limitations of the card business and hence moved on to different arenas of the gaming world. In 1963, Yamauchi renamed Nintendo Playing Card Company Limited to Nintendo Company, Limited. During 1963 and 1968, Nintendo set up a taxi company, a "love hotel" chain, a TV network, a food company and several other things. All these attempts at expanding and diversifying the business failed, except toy making, where they had relatively prior experience with from selling playing cards. In enormous debt, Nintendo was trying to withstand the Japanese toy industry; it was still small at this point. Due to the short product life cycle of toys, innovation and constantly new product development was vital. This was the beginning of a major new era for Nintendo. In 1970, Hiroshi Yamauchi discovered the hidden talents of Gunpei Yoki, a maintanace engineer at the factory, who built what was later called The Ultra Hand which soon turned into a huge success, selling approximately 1.2 million units. Yokoi was soon moved from maintenance to product development. Nintendo’s first step into the video games industry was in 1975. At the time, home video game consoles were very rare, even the seminal Atari Pong console had not yet been produced. The early 1980s Nintendo created some of its most famous and infamous...
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