...Five Forces Analysis of the Video Game Industry The video game industry is the economic sector involved with the development, marketing and sale of video and computer games. It includes video game consoles, game software, handheld devices, mobile games and online games. The video gaming industry has been growing exponentially in recent years with Sony, Microsoft and Nintendo competing for the higher profits in the market. This essay will analyze each of the five forces acting on the industry: threat of new entrants, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers, and the competitive rivalry among existing firms. Then it will be determined if the video game industry is still an attractive industry for Sony. The video game industry has high entry barriers because of its high research and development costs, and capital investment needed to start a business in the console industry. The cost required to develop and manufacture a product that could be a decent competitor in this market is too great for a non-established company in this industry. The technology that is needed to be successful is too advanced for new competitors to achieve. For this reason, the threat to Sony, Microsoft and Nintendo of new entrants, was not very high in 2008. Additionally, Sony’s PlayStation, Microsoft’s Xbox, and Nintendo’s gaming systems were very well established names in the industry. The prestige of these products was so strong that it...
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...The video game industry is the economic sector involved with the development, marketing and sale of video games. It encompasses numbers of job disciplines and employs a lot of people worldwide. It includes video game consoles, game software, handheld devices, mobile games and online games. Console is the largest segment in the industry. In recent years, the video gaming industry has been growing rapidly and it may grow in the future. The three main competitor companies in this industry are Microsoft, Sony and Nintendo. Microsoft is a multinational computer technology corporation that specialize in software such as Microsoft Windows operating system and the Microsoft Office suite. But what is more important they are best known for their consumer products Xbox. Sony is one of the biggest manufacturers of electronics, video, communications, video game consoles, and information technology products for the consumer. The latest generation of its console game products is the Playstation 3 which replaced Playsation 2.Finally Nintendo is one of the largest Japanese technology companies well known for its console games. Its latest and the most successful console Wii was able to outshine Microsoft’s’s Xbox and Sony’s PS3. Analysis of the competitive industry Organizations view competition in an industry as a crucial issue that needs to be analyzed. In terms of economic theory (cited by Johnsons et al.) industry may be defined as “a group of firms producing the same principal products”...
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...The Video Game Industry An Industry Analysis, from a VC Perspective Nik Shah T’05 MBA Fellows Project March 11, 2005 Hanover, NH The Video Game Industry An Industry Analysis, from a VC Perspective Authors: Nik Shah Nik.Shah@Dartmouth.edu Tuck Class of 2005 Charles Haigh Charles.Haigh@Dartmouth.edu Tuck Class of 2005 • The video game industry is poised for significant growth, but many sectors have already matured. Video games are a large and growing market. However, within it, there are only selected portions that contain venture capital investment opportunities. Our analysis highlights these sectors, which are interesting for reasons including significant technological change, high growth rates, new product development and lack of a clear market leader. The opportunity lies in non-core products and services. We believe that the core hardware and game software markets are fairly mature and require intensive capital investment and strong technology knowledge for success. The best markets for investment are those that provide valuable new products and services to game developers, publishers and gamers themselves. These are the areas that will build out the industry as it undergoes significant growth. • A Quick Snapshot of Our Identified Areas of Interest • Online Games and Platforms. Few online games have historically been venture funded and most are subject to the same “hit or miss” market adoption as console games, but as this segment grows, an opportunity...
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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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...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 completely took over the industry and continued to...
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...•Microenvironmental Analysis •PESTLE Analysis •SWOT Analysis •Porter’s 5 Forces Analysis •The Industry Life Cycle •Nintendo’s Key Success Factors Presentation Overview (1/2) •Analysis of Key Uncertainties •Analysis of Future Trends •The Scenarios & Implications •Conclusion •References A Brief History of Video Games Atari to Wii Introduction (1/2) • Video games have been around since the 1940s. • Over the decades, game machines continuously evolved to become powerful machines capable of stunning visuals and graphics. • In the mid 2000 to 2007, social media, smartphone and tablet technology entered the gaming scene. • Casual games become the norm attracting previously non-gamers into the market. Introduction (cont 2/2) • As the dominant force of the mobile and gaming market, in the next coming 5 years, where does Nintendo see itself competing with threats from smartphones and other gaming platforms taking up its share of the market? • Scenario planning : To make strategic decisions that will be a sound foundation for all plausible and possible future scenarios. Company Profile (1/3) • Founded in 1889 in Kyoto, Japan by Fusajiro Yamauchi. • Manufacturer of Hanafuda “flower” cards • Expanded in 1960s by Hiroshi Yamauchi. • Following the crash of the cards business, Nintendo entered the toy industry upon discovering Gunpei Yokoi, a mechanical engineer. Company Profile (2/3) • 1970: Yokoi teamed up with Shigeru Miyamoto to create games – The Father of Modern Video Gaming...
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...GameStop’s aggressive growth in the industry against the risk of emerging technology and the changing taste of consumers. Executive Summary: The objective of this analysis is to design a strategy that will continue GameStop’s growth as the largest retail gaming store in the industry despite threats from alternate methods of gaming and changes in consumer taste. Analysis will show that the retail gaming industry is an unattractive industry since the bargaining power of buyers and suppliers are high, barrier into the industry are low, and competitors are numerous. GameStop uses a broad differentiation strategy by offering a wide selection of new and used games and consoles. Its marketing strategy and reputation gives the firm a sustainable competitive advantage but its research and development give the firm a competitive parity. The environment of the retail gaming industry possesses the threat of technological and sociocultural risks. GameStop can address these risks by merging with online social media sites and contracting with its suppliers to increase barrier for new entrants in the industry. April 20, 2013 Introduction After the acquisition of EB Games, GameStop rose as the leading video game retailer in its industry. In an effort to sustain their position, GameStop will have to tackle several technological and sociocultural issues that have arisen from its competitive environment. The strategic objective we wish to accomplish in this analysis is to formulate a viable strategy...
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...cap Current Price Dividend Dividend Yield Valuation (per share) DCF Analysis Comparables Analysis Target Price Current Price Summary Financials Revenue Net Income 2008A $3,026,000,000 -$107,000,000 $8.14 - $13.14 ATVI / NASDAQ 0.625 1,271,000,000 16,067,500 14,476,690,000 $11.39 N/A N/A $15.25 $4.74 $12.10 $11.39 Covering Analyst: Sean Golin Email: sgolin@uoregon.edu The University of Oregon Investment Group (UOIG) is a student run organization whose purpose is strictly educational. Member students are not certified or licensed to give investment advice or analyze securities, nor do they purport to be. Members of UOIG may have clerked, interned or held various employment positions with firms held in UOIG’s portfolio. In addition, members of UOIG may attempt to obtain employment positions with firms held in UOIG’s portfolio. Activision Blizzard, Inc. BUSINESS OVERVIEW university of oregon investment group http://uoig.uoregon.edu Activision Blizzard, Inc. is located in Santa Monica, CA. They are responsible for creating and publishing video games and accessories. These games are distributed and available on a wide range of platforms across the globe. Additionally, Activision Blizzard maintains and operates Battle.net, a online-game service in which players can connect via the internet and play with each other online. Activision Blizzard has created some of the most recognized and successful game franchises including, Call of Duty, Guitar Hero, Tony Hawk, Spider-Man...
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...Blakeman, Daniel DeMaiolo, Carla Hill, and Mason Shattuck Industry Analysis: Dominant Economic Features Definition of Software Publishers Industry According to the United States Census Bureau, Electronic Arts would fall under the Software Publishers Industry (NAICS code 511210, SIC 7372). The definition of this industry is as follows in the North American Industry Classification System: “This industry comprises establishments primarily engaged in computer software publishing or publishing and reproduction. Establishments in this industry carry out operations necessary for producing and distributing computer software, such as designing, providing documentation, assisting in installation, and providing support services to software purchasers. These establishments may design, develop, and publish, or publish only” (United States Census Bureau, Software Publishers Definition). Electronic Arts (EA) does, in fact, make up one of the world’s largest independent developers, publishers, and marketers of video games. Market Size, Growth Rate, and Industry Life Cycle According to research provided by Thompson, author of the EA case, in 2005, the video game industry made up a $35 billion global market (Thompson 2007). In 2005, the United States alone made up $7 billion in sales out of the $35 billion. The United States also had 228.5 million unit sales which included video games played on PCs and games played on video game consoles as well as handheld gadgets (Thompson 2007). The market...
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...MACRO AND MICRO ENVIRONMENT ANALYSIS FOR NINTENDO Macro Environment Macro environment is said to be the most general layer of the environment. This consists of broad environmental factors that have an impact on the organisation. The PESTEL framework helps us to identify the future trends which might impinge on Nintendo and therefore identify the key drivers of change. On the other hand the five forces framework helps to understand how the competitive dynamics within and around the video game industry are changing. The two frameworks are discussed below: PESTEL Framework: This categorises environmental influences into six main types, namely: political, economic, social, technological, environmental and legal. A PESTEL analysis on the video game industry is carried out below: Political: Factors such as taxation policies, foreign trade regulations and social welfare policies influence the video game industry. Video games have a tendency to play with the emotions of people which inturn can threaten peace and law, a country being multicultural. Therefore Government has the authority to control the contents of the video game frames. Economic: Places such as U.S and Japan are largely dominated by the video game business. Therefore contributing towards the GDP of their countries. Interest rates have not much impact on the video game business as they manufacture their own units. The disposable income of the consumers in the video game industry has an effect on their buying...
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...Blakeman, Daniel DeMaiolo, Carla Hill, and Mason Shattuck Industry Analysis: Dominant Economic Features Definition of Software Publishers Industry According to the United States Census Bureau, Electronic Arts would fall under the Software Publishers Industry (NAICS code 511210, SIC 7372). The definition of this industry is as follows in the North American Industry Classification System: “This industry comprises establishments primarily engaged in computer software publishing or publishing and reproduction. Establishments in this industry carry out operations necessary for producing and distributing computer software, such as designing, providing documentation, assisting in installation, and providing support services to software purchasers. These establishments may design, develop, and publish, or publish only” (United States Census Bureau, Software Publishers Definition). Electronic Arts (EA) does, in fact, make up one of the world’s largest independent developers, publishers, and marketers of video games. Market Size, Growth Rate, and Industry Life Cycle According to research provided by Thompson, author of the EA case, in 2005, the video game industry made up a $35 billion global market (Thompson 2007). In 2005, the United States alone made up $7 billion in sales out of the $35 billion. The United States also had 228.5 million unit sales which included video games played on PCs and games played on video game consoles as well as handheld gadgets (Thompson 2007). The market...
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...Activision Blizzard Analysis Activision Blizzard (ATVI) is a leading international publisher of interactive software products and downloadable content. Being a main player in the video games industry, the company has acquired several essential business strengths that made it succeed for a number of years. From making products carrying popular brand names, the company also takes pride of its product lines and innovative staff. Despite their strengths, Activision Blizzard has also encountered different problems that need to be addressed. These include the reduced slate of titles on a going-forward basis as well as the growing competition in the industry. To address these business concerns, it has been recommended that the company should consider limiting its product portfolio as well as conducting its target markets. This should help the company stabilize its financial status through sales generation and cost reduction. Company structure: Activision Blizzard organizational structure is base on 3 business segments. Activision Publishing, Inc. develops and publishes video games on various consoles handheld platforms and the PC platform. Activision also develop digital downloads to their game titles through retail channels with certain third-party publishers. Blizzard Entertainment, Inc. is well know to online gamer through Battle.net. Battle.net. host all Blizzard develops multiple award winning titles online such as Diablo, StarCraft, and World of Warcraft. The World...
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...EXECUTIVE SUMMARY Founded in 1993 and headquartered in New York City, Take-Two Interactive Software, Inc. are a global publisher, developer and distributor of interactive entertainment. Take-Two also distributes software, hardware and accessories in North America through its Jack of All Games subsidiary. The company has approximately 2,100 employees working in 15 countries, and Take-Two’s common stock is publicly traded on NASDAQ under the symbol TTWO. The company markets its interactive entertainment for customers here in the United States and internationally. They offer their products under the labels, including Rock star Games; and 2K, which publishes its titles under 2K Games, 2K Sports, and 2K Play. It also develops and publishes action and adventure products under the Grand Theft Auto brand, as well as other franchises. Take Two’s products are designed for console gaming systems, such as PlayStation 3 and PlayStation 2, Xbox 360, and Wii which is a handheld gaming systems that consist of DS, 3DS, and PlayStation Portable and personal computers including smart phones and tablets. The delivery of its products is done through physical retail, digital download, online platforms, and cloud streaming services. The company sells its software titles to retail outlets in North America, Europe, and Asia through direct relationships with retail customers and third-party distributors. ...
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...In 2004, Nintendo had a number of strategies available to change the company position in the market. It had become more than clear that following the same tactic would not allow them to overlap its competitors. In order to growth further, Nintendo could integrate the opportunity to reduce costs and expand into other markets at the same time. Secondly, and maybe most promising, they could explore different consumers segments, which would enable Nintendo to reach market opportunities that had been ignored by Sony and Microsoft so far. VERTICAL INTEGRATION After analyzing its core competences, the costs, benefits and risks involved, Nintendo developed a strategy based on internalizing as much as possible gaining substantial influence in the final products. This allows the company to outsource primarily activities in which either they possess a low level of core competencies and/or transaction costs show clear disadvantages in internalizing. Nintendo follows a fabless production model (derived from “fabrication-less”) which means that all production processes are outsourced to external suppliers and production factories and then sent and assemble in Nintendo-owned factories. By avoiding investing money on expand vertical, the company reduce their transaction cost by outsourcing the manufacturing and still manage to maintain lower retail prices than competitors. This result in a different vertical integration compare to the previously existing model allowing Nintendo to succeed...
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...Situation Analysis 1-2 SWOT analysis 2-3 Appendix 3 Executive Summary It is a well-known fact that the gaming industry is advancing at an amazing speed in present-day society. The global video gaming industry in 2009 was estimated at US$52.5 billion, and video game revenue is expected to jump to US$86.8 billion in 2014, according to PricewaterhouseCoopers. Singapore video games industry grew from $87 million in 2005 to $285 million in 2007(reference??), Zynga, creator of popular facebook game- Farmville, achieved around US$300 million in revenue last year.It is also becoming noticeable as overseas game developers are also entering Asia, including Singapore. Ubisoft and LucasArts have both opened studios in the region, and MIT has opened the Singapore-MIT GAMBIT Game Lab to educate the local population in preparation for industry jobs. And the government is in on the act, too -- with Contact Singapore, an agency designed to recruit industries, including the game industry, to the country. Key significant points and swot analysis ?? must add it in. Introduction Sony Corporation of America, based in New York, NY, is the U.S. subsidiary of Sony Corporation, headquartered in Tokyo, Japan. Sony is a leading manufacturer of audio, video, communications...
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