Essays on Strategy Shaping Economy and Business of Video Game Console Industry Case Study

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The paper "Strategy Shaping Economy and Business of Video Game Console Industry" Is a wonderful example of a Management Case Study. An overview of the video game industry is categorized based on its software, hardware, infrastructure and enabling technologies. These subsectors have varied development and interest levels for undertaking business enterprise investment. The video game console industry has proved to be maturing, extremely competitive and capital intensive. The video game industry is vastly taken to be maturing on a daily basis, quite competitive with its practices and structure; it is similar to other media but with a higher level of complexity.

Video game consoles consist of computing devices specifically designed to play online and offline games. Earlier on they were stored on interchangeable discs or varied cartridges but currently, they are on a format based CD/DVD. The unpredictability of the video game console industry’ s structure is as a result of changing technology and business preferences made earlier by the firms. Each firm comes up with a system incompatible with others; this encourages a standard-based industry leading to an oligopolistic market at the hardware level.

The market faces a lot of network externalities therefore each competitor strives to attain its system’ s peak point thus dominating the global market while those notwithstanding are forced out. The video game industry is extremely centralized. Based on market analysis in 2000, Sony had 47% coverage, Microsoft and Nintendo had 28% and Sega had 23% (quit console business in 2001 due to stiff competition) as illustrated by Flew, et al (2005). Sony targeted video game professionals and their children, while Nintendo targeted the middle-class segment who were mostly children.

The video game industry is marked by opportunities and enormous growth in technology. Nonetheless, the industry greatly depends on corresponding resources; console reliance on video games and its uniqueness. The industry’ s achievement also depends on compatibility with older versions of the console and the ability to adjust to evolutionary strategies rather than sticking to obsolete ones. Competition in the video game system industry The classic competitive forces in the video game industry are categorized in to: 1) Threat of market entry: the risk of new entry by prospective competitors. 2) The Power of Suppliers: The bargaining power strength of suppliers 3) The Power of Buyers: The bargaining power strength of buyers4) The Threat of emerging substitute: the competitive force of substitute products5) Rivalry among existing competitors: the degree of rivalry among established companies Weak suppliers’ bargaining power The makers of video game consoles such as PlayStation, XBOX, and Nintendo are very choosy on which game developer to employ in accordance with the kind of game to be produced. Entry barriers are enormously strong It is extremely probable that threats from fresh competitive ventures will have  a negative impact on core producers’ yield.

The availability of the internet is quite fundamental as it gives the opportunity to any company to do brand awareness and to push its product to the market. Weak buyers’ bargaining power It is the weakest competitive force in the video game console industry. The feature of bargaining power depends on what the video game console has in relation to what the customer needs. Currently, Electronic Arts have been adamant in producing supplementary style games thus losing some potential customers. However, with a greater variety of sports games, they still enjoy a market leader in most video game consoles.

Rivalry among existing competitors

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