• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

5 forces analysis of the Video Game Industry

Extracts from this document...

Introduction

´╗┐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. ...read more.

Middle

If anything, video game consoles are edging out personal computers in the gaming industry because of their superior graphics and game experience. There is also a high switching cost to costumers because they would have to spend more money if they decide to change their video gaming experience from a video game console to a personal computer, making the threat of substitutes low. In 2008, the bargaining power of buyers did not play a huge role in the video game industry. There was a large number of very intrigued buyers who were willing to pay the requested amount of money for the video gaming consoles. Therefore, Sony, Microsoft and Nintendo faced low pressure from their buyers. On the contrary, suppliers did have an effect on the video game industry. Software suppliers, who develop the technology for these consoles, have a low switching cost as they can use their products in other electronics including televisions, and especially personal computers. Therefore, they impose a high bargaining pressure on the video gaming companies. ...read more.

Conclusion

All these factors resulted in Nintendo?s Wii dominating sales and surpassing Sony?s by an impressive ratio of 2:1. With the competition in the video games industry getting more intense, the next steps of the video game companies become more crucial for their positioning on the market. Due to the low product differentiation, the next market leader will be the platform provider that manages to offer an innovative gaming experience and a wider population of buyers that include all demographics. Although the industry is being totally dominated by Nintendo?s console, the industry is still considered to show a relatively high level of profitability for other companies. Therefore, Sony should not leave the market, but they should implement new strategies in order to gain a competitive advantage. Sony?s strategy should focus in developing a console with higher technology than its competitors, an innovative gaming experience that would attract more clients and a range of games directed towards the interests of a wider target group that includes females and older people. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Case Studies and Analysis section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Case Studies and Analysis essays

  1. Unit 9: Marketing Strategy

    customer for Fabulous Frostings would not reap the same benefits as a Tesco club card holder receives free trips to Alton Towers etc. Questionnaire The first piece of primary research will be my questionnaire; I have attempted to cover all aspects of the 4 P's in my questionnaire to find out what my potential customers want in a business.

  2. SWOT Analysis

    The sales of YHS Company are also less than F&N Company (Graph 1). Although YHS Company has launched new exciting flavours and new beverages in 2004, its product lines and depth are still less than F&N Company. Table 3 shows that F&N Company has variety of brands products.

  1. What are the micro and macro environmental forces which may pose direct or indirect ...

    The rate at which the economy of that particular country grows determines the purchasing power of the consumers in that country. Hence, if a franchise operates in a particularly economically weak country, their products shall cost higher than the other existing products in the market, then these franchises must take on certain adjustments to maintain the economies of scale.

  2. SWOT analysis of Disneyland Paris

    This means Disney needs to provide a wide range of staff that speak these languages or use universal symbols on the sign posts at the resort to suit and satisfy all their customers' needs and differences. If Disney was not able to provide this, both their customers and staff could

  1. The main purpose of this research is to know and analyze whether the Olympic ...

    Advance bookings are available for the Games. 2.3.5 Special offers Special offers are not much efficient in marketing. The special offers are not be considered as promotional schemes in providing the audience what they required. 2.3.6 Torch Relays, Test Events and Live Sites The communities all around UK should support

  2. PEST is a planning tool which is used by a business to evaluate and ...

    original Cornish pasty which is made beef, potatoes, onion and Swede, wrapped in puff pastry. Meat is seen as a food product that should be eaten moderately when someone is trying to lose weight, this could mean that people who are trying to lose weight to become healthier will be less likely to eat meaty products.

  1. NHS change management

    of the water and it is visible for everyone such as goals, strategies, products and services and second the informal part of the organization which is under the water and invisible such as values, beliefs, organizational culture and norms. "A psychological contract represents the mutual beliefs, perceptions, and informal obligations between an employer and an employee.

  2. SWOT and Pestel analysis for Carlton Forum leisure centre

    company is acting responsible in regards to pollution, this can help build a good reputation. Thus also appealing to potential buyers and inverters Bad weather conditions -3 -3 -9 Although it is not very likely that weather conditions would become that bad that it stops consumers spending time within the

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work