Week 5 “Case Analysis: Video Game Console Industry in 2012”
Week 5 “Case Analysis: Video Game Console Industry in 2012”
Grantham University BA490
Business Policy and Strategy
Case Analysis: Video Game Console Industry in 2012 Page 1
Executive Summary The video game console industry is a very competitive segment. This segment requires a keen eye on product development as well as strategic product marketing and a rather large logistics arm to ensure rapid distribution to targeted areas. Video game industry in the US, which is hugely driven by retail sales of software and hardware, registered revenues of USD ~ million in CY'2012. Even so with the advent of new video game players in the industry, the revenues decreased by 11.7% compared to CY'2011 where the total revenues was USD ~ million. Each segment in the video game industry is subject to a gamut of different factors such as price cuts and number of units sold that play an important role in determining their respective revenues. The video game industry in the US has grown at a CAGR of 8.5% from USD 13,300 million in CY'2006 to USD ~ million in CY'2012. (PR, N. 2013, March 7). The video game console industry is still postured to grow despite the already rapid growth from CY’2006 to 2012. Opportunity still exists for new entrants into the video game console industry.
Statement of the Problem
The video game console industry is a very competitive segment. Entry into this market is still feasible. From a cultural standpoint, games have never been bigger. Nielsen found that half of all American households have a console, and the amount of time spent playing games has increased 7% since last year (due mostly to mobile and tablet games). But the current crop of consoles is aging rapidly: Xbox 360 is seven years old; Wii and PlayStation 3 are six. As a result, hardware sales are down 15% over the past year, and software isn't faring much better. Even factoring in projected Wii U sales, NPD analyst Anita Frazier expects
Grantham University BA490
Business Policy and Strategy
Case Analysis: Video Game Console Industry in 2012 Page 1
Executive Summary The video game console industry is a very competitive segment. This segment requires a keen eye on product development as well as strategic product marketing and a rather large logistics arm to ensure rapid distribution to targeted areas. Video game industry in the US, which is hugely driven by retail sales of software and hardware, registered revenues of USD ~ million in CY'2012. Even so with the advent of new video game players in the industry, the revenues decreased by 11.7% compared to CY'2011 where the total revenues was USD ~ million. Each segment in the video game industry is subject to a gamut of different factors such as price cuts and number of units sold that play an important role in determining their respective revenues. The video game industry in the US has grown at a CAGR of 8.5% from USD 13,300 million in CY'2006 to USD ~ million in CY'2012. (PR, N. 2013, March 7). The video game console industry is still postured to grow despite the already rapid growth from CY’2006 to 2012. Opportunity still exists for new entrants into the video game console industry.
Statement of the Problem
The video game console industry is a very competitive segment. Entry into this market is still feasible. From a cultural standpoint, games have never been bigger. Nielsen found that half of all American households have a console, and the amount of time spent playing games has increased 7% since last year (due mostly to mobile and tablet games). But the current crop of consoles is aging rapidly: Xbox 360 is seven years old; Wii and PlayStation 3 are six. As a result, hardware sales are down 15% over the past year, and software isn't faring much better. Even factoring in projected Wii U sales, NPD analyst Anita Frazier expects
References: PR, N. (2013, March 7). The US Video Game Industry Outlook to 2017 - Transition from Console to Online and Mobile Gaming. PR Newswire US. WARREN, J. (2012). NOT YOUR CHILDHOOD 'S VIDEO-GAME SYSTEM. Fast Company, (170), 70-72 D 'Angelo, W. (2013, May 2013). 2013 year on year sales and market share update to May 18th. Retrieved January 27, 2014, from VGChartz: www.vgcartz.com