Home Video Game
1: Why the rapid growth of Atari? Why the 1982-85 collapse? How did Nintendo rebuild the industry? What was its strategy?
After Bushnell settled on Atari, his first built was the simplest game, which people knew the rules immediately, and this game could be played with only one hand. Then, Bushnell talked his way into a $ 50000 line of credit from a local bank to start his business. By 1974, 100,000 Pong-like games were sold worldwide, and although Atari manufactured only 10 percent of the game, the company still made $3.2 million that year. Atari had a rapid growth because it is a new industry, and Atari does not have any competitor at that time. So, Atari is the only company in this home video game industry, and it has a huge power of supplier with no competitors and substitutes. After 1976, about twenty different companies were crowding into the home videogame market, Atari still has more than 50% market share in the industry. Until 1978, Atari estimated that total demand would reach 2 million units.
In 1982, Atari lost $500 in the first nine months of the year. Part of the blame for the collapse was laid at the feet of an enormous inventory overhang of unsold games. With more and more new games hit the market, the average price would goes down and the profits goes down as well.
Nintendo established a commanding worldwide position by the end of the decade. The first step of Nintendo was to license video game technology from Magnavox. Then, Nintendo tried to develop its own video game machine (Famicom) that combined superior graphics processing capabilities and low cost. In the US, Nintendo established a subsidiary named as Nintendo of America (NOA) by 1980, and Nintendo repositioned the market in U.S. NOA spent about 2% of sales budget for advertising and also sought out promotion partner, and it practiced careful inventory management in releasing its new games. In conclusion, Nintendo made an innovative new game system which had some competitive advantages
After Bushnell settled on Atari, his first built was the simplest game, which people knew the rules immediately, and this game could be played with only one hand. Then, Bushnell talked his way into a $ 50000 line of credit from a local bank to start his business. By 1974, 100,000 Pong-like games were sold worldwide, and although Atari manufactured only 10 percent of the game, the company still made $3.2 million that year. Atari had a rapid growth because it is a new industry, and Atari does not have any competitor at that time. So, Atari is the only company in this home video game industry, and it has a huge power of supplier with no competitors and substitutes. After 1976, about twenty different companies were crowding into the home videogame market, Atari still has more than 50% market share in the industry. Until 1978, Atari estimated that total demand would reach 2 million units.
In 1982, Atari lost $500 in the first nine months of the year. Part of the blame for the collapse was laid at the feet of an enormous inventory overhang of unsold games. With more and more new games hit the market, the average price would goes down and the profits goes down as well.
Nintendo established a commanding worldwide position by the end of the decade. The first step of Nintendo was to license video game technology from Magnavox. Then, Nintendo tried to develop its own video game machine (Famicom) that combined superior graphics processing capabilities and low cost. In the US, Nintendo established a subsidiary named as Nintendo of America (NOA) by 1980, and Nintendo repositioned the market in U.S. NOA spent about 2% of sales budget for advertising and also sought out promotion partner, and it practiced careful inventory management in releasing its new games. In conclusion, Nintendo made an innovative new game system which had some competitive advantages