• 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

    The marketing mix is in relation to product, price, promotion and place. After deciding upon a competitive position and a subsequent marketing warfare strategy I must consider how I will use the four Ps to implement the strategy of Guerrilla to attack the weaknesses of competitors whilst remaining defensive.

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

    the company has been able to bear the frequency of the shifts in the inflation rate as well as the fluctuations in the exchange rates which affects the operations of any company.

  1. 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.

  2. NHS change management

    All these concerns popped up and people started defending their behaviour. Solution: This problem has been analysed by the white paper and proposal called "a duty of partnership" on all organisations in the NHS (D. Plamping, 1998) has been suggested.

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

    The main purpose of the literature review is that it will explain the research concepts related to the research work. The main purpose of this research work is to know how the Olympics 2012 will benefit London's image as the major destination.

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

    This is cost that all firms will have to spend money on as it something that all business have to do in their workplace. This PEST factor could also be significant to Ginsters as it could directly affect their ability to achieve the aim / objective of becoming the becoming

  1. SWOT and Pestel analysis for Carlton Forum leisure centre

    +3 +2 +4 The scoring for the reduction of carbon foot print is low due to the fact that the impact after reducing this isn't very beneficial to the companies operating within the leisure industry. It will lower the cost of operating and would also show the community that the

  2. Coca Cola Evaluation

    This promotion is use by Coca Cola to set it aside from their competitors like Pepsi as they don't offer it. Another ways in which Coca Cola has successfully met the profit objective is the pricing they set their products at.

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