The Video Gaming Industry - Assignment Example

?Video gaming industry has become one of the biggest earners in the past few years, with the total worth amounting to a staggering $ 44 billion The industry is flourishing by leaps and bounds and as per the financial outlook, it is expected that it is keep on following the same trend in the near future. The two giants in the video gaming industry is the Sony computer entertainment, with their popular video gaming console ‘PlayStation’, and Nintendo Corporation Limited, famous for their ‘Game boy’ and ‘Nintendo Wii’. Both these two companies can be regarded as the immediate competitors as they both operate in the same geographical area and attracting similar consumer bases. Highly technology driven companies, both Nintendo and Sony have invested heavily in e-commerce activities which is quite apparent from their websites. Through their websites, both the companies facilitate their user relating to the placing new orders, acquiring customer’s feedbacks in order to enhance their services and also using it as a plat form for releasing new products and features. The report presents an analysis of both the companies in terms of operational and marketing strategy, what models they have adopted in order to generate revenue, striking marketing tactics and methods as portrayed in the websites of the both the companies. Competitor Analysis The method used in the competitor analysis of the Nintendo (Wii and Nintendo 3DS) and Sony (Playstation) is the Michael Porter’s five forces model. According to the model, there are five forces prevailing in the market which affects the competitive rivalry between the components. The analysis assists the companies in identifying the factors keeping which into consideration the company can devise its marketing and operational strategy. This model gives importance to the financial as well operational aspects of a business and sets criteria according to which the company can assess the activities of its competitors and counter them through effective and efficient management. The five forces according to the Porter’s model are as follows [2] The bargaining power of the customer can be regarded as the influence that the consumer base has on the pricing strategy of the company. Currently the Playstation and Nintendo 3DS are sold at prices $399 and $249 respectively. Since Playstation offers a more advanced and high tech gaming experience thus its prices are steeper as compared to its competitor. The fact that bargaining power of customer can cast significant impact on the profitability of the company can be corroborated from the fact that initially the Playstation was sold considerably below its per unit cost, causing a significant decline in the profitability of the company. In order to justify their demand prices, both the companies must communicate with their consumer base and make them aware the latest add-ons the product comes with and assuring them that the prices are justified. This requires innovation and smart marketing tactics. Suppliers of both the companies are the companies providing raw material for the manufacturing of the product. Software houses can also come under this category as they provide important technical expertise in devising interactive user interface. Bargaining power of supplier means that the supplier wants to obtain benefits through increased prices of raw material, reduction in the credit terms etc. This can also affect the financial outlook of the company with increased cost of goods sold and reduced profit margin. Other factors which the model takes into account are the threat of new entrants into the market and threats of the substitute products. The biggest competitor of Playstation in the console gaming market is the Microsoft’s product ‘X-box 360’ which also offers high tech gaming experience. As per the Nintendo president Satoru Iwata said that the battle with Sony is over — referring to that the Wii has won over the PS3 — and that the new enemy is Apple, with its ever expanding mobile lineup. [3] Both the companies should keep into account the products launched by their competitors, and in order to maintain profitability and market share, should come up with innovative and interesting gadgets. The gaming industry market is highly competitive and is becoming the most lucrative venture to invest in keeping in to consideration that it has become a main point of focus of consumer spending. Names such as Apple and Microsoft are constantly coming up with latest gadgets in console and interactive gaming and Sony and Nintendo must follow the same strategy in order to safeguard its market base. Business Model Both the website, Nintendo and PlayStation, implements the following business model Data inputs What decision stages Need arousal Information search and evaluation Purchase decision Who A Teenager Mother & Father (Influencers - Payers Sales and Marketing will assist in making the decision Where During website surfing Online Attractive animation and catchy gadgets How Display prices along with eye catchy pictures of the product Finding the nearest discount electronics and games store Online buying is convenient [4] At the core of every business, lies the question how to generate revenue. Both the website of Nintendo and Playstation follows a mixture of ‘hardware bundle’ revenue model. According to this method the hardware, i.e. PlayStation or Nintendo Wii or Nintendo 3DS are sold through retailers as well as DVD containing games. Both the web-site provides a list of retailers, including online stores through which the products can be purchased. [4] Both the websites of Nintendo and Playstation are interactive market the products in the most apt fashion. For both the companies the customer base primarily comprises of teenagers and a certain groups of adults, when it comes to console gaming. The companies have made their web-site quite eye-catchy by using animation and interactive links. In the PlayStation website, half of the home-page is an animated screen on which advertisement related to the latest ads and gadgets are being displayed. This appears to be eye catchy and is bound to attract consumer’s attention. Interactive links related to companies other products (PSP and PS2) are also being displayed. Below the ads, is the news and events section which inform the users about the up-coming events and promotional activities. The last section of the web-site contains links to support centre through which the consumer can check the products manuals, warranty information and can also register a product they wish to purchase. The site also contains links such as customer feedback and site map, in order to improve the quality of their web-site and also facilitate the customers. As far as the Nintendo’s website is concerned, the home-page does not contain as much information as compared to that on the PlayStations. The web-site does not have any animation on its home-page and much of the information is given on the separate pages of each products. As far as the news releases and the customer feedback are concerned, the web-site is not quite different from the PlayStation. Target audience Segmentation can be defined as dividing a market into various small segments showing distinct characteristics. The segmentation can be based on factors such as age group, gender, usage, geography, language etc. The target audience of both Nintendo and PlayStation, as discussed earlier are primarily teenagers who are fascinated by new gadgets and gizmos. Since PlayStation offers are more refined and high tech console gaming experience, thus it also attracts a great deal of adults as well. Evaluation of each Website Attribute Nintendo PlayStation Company information   There is a link available on the home page of company information. The page relating to the company information does not contain any animation and it provides further links to the History of the company, Procedure manuals, Online stores and Privacy Policy. Prospective investors are usually interested in the company information and there is sufficient information available. The dull outlook of the page can be the only drawback   The page that contains company information of Sony Computer Entertainment is eye-catchy and interactive. The page contains picture of various offices of the company along with a brief history of the products. The eye-catchy page layout can prove to be a big advantage. Product information   On the home page the links related to several of Nintendo’s Products are given such as Wii, 3DS and DS. On each page the product specification is divided into three categories of hardware, software and downloads. The product information includes the price of the product, a brief paragraph relating to how is it worth spending all of the money and the accessories that comes along with it. The information does not appear to be enough as it lacks particulars specification related to the hardware.   On the PlayStation website, the information is divided categories namely Features, Systems, Accessories. Games and media and support. The product information is helpful for the players and is easily understandable. The product information also includes a list of games that can be played. Product information appears immaculate. Registration option  The website does not offer any registration option. Through registration the company would be able to identify the number of customer the webpage is being visited by. In addition, the registration option also assists in increasing the brand loyalty.   A registration option is available on the website which allows the users to register online in order to avail various facilities offered by the company. Negotiation scope Both the websites, Nintendo and PlayStation offers acute and latest marketing tactics in order to persuade the customers to buy their products. The companies, through explaining various advantages and attributes of their latest gadgets and gizmos, try to justify the price that the customers have to pay. PlayStation negotiation scope appears to be strengthen as compared to the Nintendo, and it tries to invoke the curiosity of its consumer base through catchy phrases and state of the art website layout   Ordering process   In addition to the a complete list of online stores, the Nintendo website provides a link to an online store called “Nintendo Store” where the consumers can to do the transaction and purchase their products. The web page does not provide an ordering process which is directly linked to the web site.   The website does not offer the facility of direct placing the order. Rather the website provides a list of stores, both online and retail from which the transaction can be done. This can be termed as the affiliate marketing where the website uses the services of other website in order to market their products and services. This can be a drawback as the consumer would not find it to be convenient to be rooted to other webpage. The company can increase its revenue by devising an ordering process for its own website Payment options   Since the companies do not offer the transaction services on their own website, and rather route the consumer to the other online stores, the payment procedure of that particular website applies. Payment is usually done through credit card.   Delivery options   Both the companies have acquired the services of online websites and the delivery options and procedure are set accordingly. It must be the responsibility of the company that they devise the delivery procedure themselves so that they are able to resolve the customer’s queries in case of any issue.   After sales support   The Nintendo websites offers a support service to its consumers related to each and every product. The after sale support service increases the consumers’ confidence in the company and also assists in enhancing the brand loyalty among the consumers. The only shortcoming in this service provided by the Nintendo is that it does not provide an option for the consumer to post their problems; rather it tries to resolve the customer’s queries through FAQ’s.   The PlayStation website offers a support link on every product. The website has maintained a blog which is interactive and the customers can post their queries and questions which are answered by the experts at the Sony Corporation and also by the other users who have had the same issues. The customer service of PlayStation appears organized and helpful as compared to its competitor. Community links  The website does not offer community links on its homepage. This can be a major drawback.   The PlayStation website provides community links which consolidates the useful links and other sister website in one place. The consumer can find it useful as it provides all the relevant information pertaining to the products and services that has been offered. Performance   The performance of both these website can be measure through various means. This can be done by counting the number of downloads that have been made from the webpage. Both these websites, Nintendo and PlayStation, offers games which are downloadable from the website and thus the companies can assess the feasibility of their website by assessing what percentage of their revenue from selling these games are actually coming via their website as in comparison with the sales made at their outlets. In addition, the performance of the website can also be assessed by the numbers of forms that have been filled up by the people during the visits to these websites. Another way of measuring the performance of the website is through installing such features in the website that allows calculating the average time spend by the consumer on the website.   Ease of use   The website interface is interactive and quite easy to use. The information is evenly distributed throughout the page. The links are interactive and comes alive when the cursor moves to them.   The webpage, although very eye-catchy and aesthetically rich, takes a considerable amount of time to load. This is due to the animation and graphics used in developing the web page. The links are scattered all around the page and does not follow a predefined pattern. One of the most important features that a website needs to possess is the ‘quick downloadable’ feature. No matter how rich the graphics and animation has been incorporated, if the webpage takes a great deal of time in uploading, the customer would feel distracted. Aesthetic The web site has used the color scheme of silver and blue with color striking links. The links are aligned in a definite pattern and purposefully.   The PlayStation has used black and various shades of blacks as the color scheme in accordance with the color of PlayStation. Although the images and interactive button are eye-catchy, the information is clamored across the page which makes it difficult for the viewer to comprehend. Innovation  The website offers a virtual tour of a number of its products which allows a user to experience each and every feature of the product online before actually purchasing it.   The PlayStation home webpage offers animation and interactive buttons which is one of its nature. The website has devised a blog where the details related to all the latest releases are incorporated in order to get the consumer be acquainted with them. The website also offers an option to update the software that has been purchased from the company. Conclusion Both the websites of Nintendo and PlayStation offers sate of the art web designing and aesthetics that are noteworthy. On one hand where Nintendo offer organized and subtle graphics on its website, the PlayStation raises the bar by incorporating innovation and premium support service. In order to make the website feasible for the core operations of the company, it is of prime significance that main attention is given to the fact that the customer feels convenient and attracted in doing the shopping online and is offered useful and relevant information. References [1] “Games Industry Worth $44 bln in 2011”.next-gen.biz. Future Publishing Limited, n.d. Web. 11 May 2011. [2] logisticafe.com, Web. 11 May 2011. [3] “Nintendo names Apple as its biggest competitor” digitalbattle.com. Digitalbattle.com, n.d. Web. 11 May 2011. [4] Sabiha Ghellal, Sony Network Services “Deliverable D4.2: Business and Revenue Models”. Iperg.sics.se. Integrated Project on Pervasive Gaming, n.d. Web. 11 May 2011. [5] Nintendo.com, Nintendo Corporation. Web. 12 May 2011. [6] Playstation.com, Sony Computer Entertainment. Web. 12 May 2011. Read More

 

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