Case 11 - Video Game Consoles Industry Discussion
Case 11 - Competition in Video Game Consoles: The State of the Battle for Supremacy in 2008
DISCUSSION QUESTIONS
1. What are the strategy-shaping business and economic characteristics of the console segment of the video game industry? What is the industry like?
The video game industry is the economic sector involved with the development, marketing and sale of video games. It encompasses dozens of job disciplines and employs thousands 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, but online, mobile and broadband are some of the fastest growing segments. In recent years, the video gaming industry has been growing rapidly and is expected continue to grow in the future.
There are several strategy-shaping business and economic characteristics of the console segment. These include the intensity of competition, the relationship between console manufacturers and game producers, and global economic health. The major business characteristic that shapes strategy is the competition, combined with the large size of the industry. The market is dominated by three global firms - Microsoft, Sony and Nintendo. They are all locked into the same technology cycle, and the dawn of each cycle provides an opportunity for tremendous gains or losses in market share. The strategies of each of these firms are heavily influenced by the competition and the technology cycle.
Description of Economic characteristics
1) Market size & growth rate: More than $35 billion was spent on video games consoles, game software etc. Industry is expected to have more than $51 billion sale by 2010.
2) Number of rivals: There are a lot of game consoles worldwide but there are only 3 leading video game consoles appeal to generate large-volume sales of new units: namely, Microsoft’s Xbox 360; Sony PlayStation 3; and Nintendo’s Wii.
3) Scope of rivalry: Global presence with
DISCUSSION QUESTIONS
1. What are the strategy-shaping business and economic characteristics of the console segment of the video game industry? What is the industry like?
The video game industry is the economic sector involved with the development, marketing and sale of video games. It encompasses dozens of job disciplines and employs thousands 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, but online, mobile and broadband are some of the fastest growing segments. In recent years, the video gaming industry has been growing rapidly and is expected continue to grow in the future.
There are several strategy-shaping business and economic characteristics of the console segment. These include the intensity of competition, the relationship between console manufacturers and game producers, and global economic health. The major business characteristic that shapes strategy is the competition, combined with the large size of the industry. The market is dominated by three global firms - Microsoft, Sony and Nintendo. They are all locked into the same technology cycle, and the dawn of each cycle provides an opportunity for tremendous gains or losses in market share. The strategies of each of these firms are heavily influenced by the competition and the technology cycle.
Description of Economic characteristics
1) Market size & growth rate: More than $35 billion was spent on video games consoles, game software etc. Industry is expected to have more than $51 billion sale by 2010.
2) Number of rivals: There are a lot of game consoles worldwide but there are only 3 leading video game consoles appeal to generate large-volume sales of new units: namely, Microsoft’s Xbox 360; Sony PlayStation 3; and Nintendo’s Wii.
3) Scope of rivalry: Global presence with