Evaluating Supply and Demand: Xbox One and PlayStation 4 - Essay Example

Consumers are not going to want to pay the same, higher prices for games that cannot, now, be played on new and innovative consoles. With an introduction to better gaming technology, demand decreases for old consoles and increases for new and revolutionary gaming devices. In business, the threat of substitutes always can negatively impact sales and profit when there are alternative gaming options (mobile games) at a lower price. Lower price increases demand along the law of demand. If PC game availability increased during a period where demand for old EA games is low, it would lead to an EA game surplus and the company would not be able to offset the costs of manufacture when consumers are not demanding these products.

At the same time, lower-priced mobile games are more attractive to consumers when referencing the law of demand and it is likely that many consumer segments would turn toward mobile gaming as an alternative. As a result, sales and revenues would decline and profit would be reduced as EA attempted to offset production costs by increasing the supply of PC games that are not selling. Marketing theory indicates that consumers are drawn to innovations such as the Xbox One and PlayStation 4. Even though demand is less than expected for these innovative products, as a matter of high pricing, consumers are not interested in older consoles such as the PS3.