Electronic Arts vs Activision Blizzard - Essay Example

Kotick undertook an in-depth market analysis before developing and formation of Activision Blizzard hence the company was able to penetrate the market and overtake Electronic Arts in terms of revenues. By understanding the weakness of the company, the management team can manage and eliminate threats that were responsible for the decline in the company's fortunes. Through SWOT analysis, Electronic Arts would be able to craft a strategy that helps it to distinguish itself from its competitors hence the ability to compete successfully in the video market (Griffin, 17).

A company’s relative position within its industry determines whether its probability is above or below the industry average. In normal circumstances, there are two basic types of competitive advantage a firm can possess. These include low cost or differentiation. This competitive advantage coupled with the firm’s objectives, results in three generic strategies for achieving above-average performance in an industry: differentiation, cost leadership, and focus. When a firm loses its competitive advantage, its performance within the industry will decline. This is the same case witnessed with Electronic Arts.

Electronic Arts lost its commanding market share as a result of its failure to differentiate its products. Its main focus was on computer games software. With the help of Kotick, Activision Blizzard’s main strategy while entering the market was to differentiate its products from that of its competitors. By 2003, Kotick has bought nine studios, but his concept of the video game was different from that of EA, which was determined to make production more efficient through the centralization of designers and programmers into regional offices. Kotick allowed every studio to operate independently, and draw up its financial statements, and the paychecks of studio heads reflect company-wide profits and losses. This strategy paid off thereby propelling Activision Blizzard to overtake EA in market share and also revenues by 2012. As a result, EA lost its leadership in the video game market to Activision Blizzard (Griffin, 77).

Miles and Snow's Typology theory state that all organizations and companies tend to adapt their strategies to market trends. According to Miles and Snow's Typology theory, there are four main types of organizations namely: defenders, prospectors, analyzers, and reactors. Activision Blizzard falls under the analysts and the prospectors. Activision Blizzard is a risk taker because their products are ever-changing. To maintain market leadership, Activision Blizzard keeps the prospector-style of business which is to have a small but reliable staff, decentralization of the production locations, and consistent market research. In addition, Activision Blizzard maintains low production costs and they use data to beat their greatest competitors. This is demonstrated by how Activision Blizzard beat EA out of the market by a landslide in 2012.

Traditionally game adverts have focused on showing the game. For a small company, it is advisable to devise a marketing breakthrough as opposed to showing the game and the players. To make a brilliant move, the small company should focus on advertisements that are not shot from the audience's perspective (Griffin, 12). As opposed to Activision Blizzard or EA, a small video game company should focus on the communal experience of sharing interactive entertainment. That will be more captivating than the image of some monster, gangster, or footballer on the screen. To keep up the pace with these two big companies, then the small company should focus on proper branding. For a small company, brand experience consists of appearance, voice, and the ability to solve problems.

As a video game player, Activision Blizzard's strategy was the main motivating factor that made me play more of its games. This is because the company invested in creative software developers. The key to ensuring efficient video-game was managing the complex of essential resources better than the competitor (Griffin, 67). When the company moved to LA, Kotick recruited experts who could furnish the resources and a connection with the passion that its customers brought to the video game industry. This ensured high standards of video games to the advantage of the users. An individual who has not played a video game before will be motivated to start playing due to the quality produced. The videos produced by Activision Blizzard are of high quality and hence easily saleable to the public.

As much as EA has been performing poorly off-late, there is still hope that these misfortunes can be changed through proper strategic planning. The company’s challenge is to attract visibility and the company should achieve this through leveraging a multi-prolonged approach that involves email marketing, social media, and search engine optimization. These strategies will help the company regain its market leadership. These strategies can only be achieved through a well-established strategic plan. The company’s strategic goals include:
1. Generate over $4 billion in sales by the end of year 1.
2. Increase sales by 30% by the end of year 2.
3. Land 4 custom consulting game development projects within 12 months.
4. Retain existing customers.
5. Create appeal for casual gamers and increase the turnover
6. Attract new customers.
Achievements of these goals will increase the company’s market capitalization, and revenues hence improving the company’s image among investors.  Read More