The Success of a Video Game Console - Assignment Example

Running Header: VIDEO GAME INDUSTRY AND COMPETITION Student’s Name: Instructor’s Name: Course Name & Code: Date of Submission: 1. What key factors determine the success for video game console producers? The various factors that are likely to influence the success of the video game console producers include: 1. Product quality: Many buyers in the video game market carefully analyze video game consoles; they do so to look for defaults and make comparison of materials used in the manufacturing of a particular video game. The most important point to note here is that what matters to majority of the consumers is the quality of the product. Quality is the key determinant of whether a video game console producer will succeed. The cheaper the video game console the lesser the demand, thus affecting the success of a producer. 2. Video game console producer must produce games that are appealing; they must be attractive to win the attention of the target consumer. The producers who have likable products are likely to attract more and more consumers, therefore, increasing the success probability of success to that particular video game console producer. 3. The success of a video game console producers also depends on the consumer’s age and gender. Marketing strategies that producers use must be directed towards boys as they are the one who get interested too much in playstations and other video games. Therefore, marketing strategies is a crucial determinant of success. 4. Fredrick, Agnes and John (2005), asserts that technology is advancing at a high rate; there is need for video game console producers to advance with technology. Many consumers prefer modern and up to date products. For a producer to succeed the video game consoles must be competitive and technologically advanced to fit in today’s market. For example manufactures of 3D and HD video games which are the latest generation of games stand a high chance of winning the video game market. 2. What does your strategic group map of the video game industry (all segments) look like? Which strategic groups do you think are in the best positions? The worst positions? Strategic group map of the video game industry Three market segments exist in the video game industry; they include the game consoles, consoles that are hand held and wireless devices. These segments have varying characteristics though they have a major contribution in the market and contribute too much in the video game competition. Handheld Consoles This are basically mobile devices used for mobile gaming; Nintendo’s hand held devices has for a long time dominated in this market segment. A good example of hand held device includes: Nokia N-Gage mobile version released in 2003, the Play Station Portable Slim from Sony which entered the market in 2008 and the Nintendo’s DSi-XL. The market has become too competitive leading to release of even more complicated and advance mobile video games. Much of these mobile video games are in the sixth generation an indication of how the video game market is growing. Game Consoles A video game console is a synergistic entertainment improved system of a computer or the computer itself; it creates video signals to be used with exposing device such as a television or a monitor to enable video game display. Nintendo, Sony and Microsoft are the key players in the video game console markets today. A good example includes the X-Box 360 from Microsoft, the Wii from Nintendo and Sony’s Play Station 3. These three key players directly compete with each other. Sony has shown to advance in technology more than the rest, whereby, it competes with Microsoft in teens and adult games. On the other hand Nintendo encounters less competition as it is mainly involved in production of games for younger group. Wireless/Cell phone Devices The cell phone devices are advancing with the emerging new technologies. At first, most of the cell phones had fewer games and other technological features. This have improved due to innovations and inclusion of more advanced video games; thus leading to the usage of cell phones as gamming gadgets. Nokia, Motorola, Samsung, and Sony Ericson are the leading players in the cell phone market. Due to advancement in technology, there has been improvement of cell phone features such as cameras and internet which allows the carriers to play online games. Many wireless and cell phone manufacturers are competing on the basis of using current technology to accommodate the consumer preferences. As indicated by Anderson and Dill (2000), Technology has also made it easier for pirates to duplicate games; this affects the sales as well as the profits for a particular company as it is not able to sell more copies as anticipated. Pirated copies also retail at a cheaper price causing a blow to the real manufacturers. There occurs another challenge of game compatibility with a console. Consumer’s preferences have been changing, whereby, compatibility and performance of video games with latest consoles becoming an issue of consideration 3. How is the video game system industry changing? What are the underlying drivers of change and how might those driving forces individually or collectively change competition in the industry? Changes in the video game system industry Video game industry is positively changing; there is improvement in technology as well as increasing number of population playing these games. Many young generations and the older generation are playing games compared to the previous years. Publishers, Manufacturers, developers, as well as retailers play a key role in driving the video game industry. Underlying drivers of change in the video game industry Retailers These are mainly the distributors of video games. The main retailers involved are the computer stores, online renting and specific video game stores. The retailers play a vital role in ensuring that video games reach the consumer at the right time and at a competitive price. They also act as advertisers and advisers to the consumers; this helps a consumer to make decisions on what game to buy. They play a major role in ensuring that sales target is met, thus boosting the video game industry. Some retailers are very choosy in what games to buy. This affects the demand of video games, especially when the consumer preferences are not met by the video game developers. Retailers actually are the determinants how predictable the market is; thus enabling the game developers to get a clear picture of the video games targets in numbers. Developers Developers of video games are key players in the success of the video games created. Due to the complications experienced in the video games production as well as in their features, game developers have over a long time been relying on the publishers and manufacturers. The developers spend a lot of money in paying for the essentials that are provided by manufacturers of consoles. Creativity is a key determinant of the success of any video game developer. Consumers mainly rely on the providers for creative and modern games. Therefore it is very crucial for video game developers to keep the market satisfied in both quality and quantity of video games consoles. Publishers The role played by the publishers in the video game industry is very vital. Majority of the manufacturers are mainly funded by the publishers; they also play a big role in advertising as well as distributing the video games. Game development process is also improved by the existence of able publishers who support independent developers. These roles are crucial in determining the success of the video game industry (Flew, Terry & Humphrey 2005). 4. What is competition like in the video game system industry? Which of the five competitive forces is strongest? Which is weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants? Competition in the video game system industry Video game industry is facing a very significant competition, this competition is acting as a driving force towards innovation and new inventions; the consumer preferences is also changing, therefore, enabling game producers to pull up their socks and create more attractive video games. The major forces for competition include, market entry threat, the supplier’s power, i.e. the power and the strength of the suppliers to make a bargain. The other crucial driving force is the power possessed by the buyers and the competitor’s rivalry; the competitor’s rivalry plays a big role in influencing the consumers on what product to purchase. Weak suppliers’ bargaining power makes some producers of video game to become more selective thus reducing their success rate in the video game market. A good example is the Nintendo’s choices of the video games to produce. The other competition force that has a likelihood of bringing strong effects in the market includes the entry barriers; fresh competitors will have a negative impact to the main established producers. This has adverse effects on the performance of the existing video game producers. In addition when the buyer’s bargaining power is weak the producers are affected because they entirely depend on the consumers. This happens to be the weakest competitive forces in the whole industry of computer games. On the other hand the rivalry within the competitors such as the Nintendo, Sony and Microsoft is very strong; this enhances creativity in the market to outdo each other. 5. What are the strategy-shaping business and economic characteristics of the console segment of the video game industry? What is the industry like? The video game industry has for along time been dominated by software, hardware and technologies that enable computer games to play. There is evidence of video game positive growth generation after generation. The development of video games consoles is capital intensive and requires a lot of efforts from the developers as well as the publishers. The video game industry is widely getting mature day in day out; the video game console mainly contain many devices used in computation and in specific they are made in special designs such that the games can also be played online as well as offline. In the first generational games, they were mainly stored in discs that were interchangeable; currently they can be stored in the form of compact discs (CD) as well as the digital versatile disc (DVD). A good example of the latest generation video games include: the Wii from the Nintendo Company, the Xbox 360 from Microsoft Company among others. The changes in technology have resulted in increasing the complexity of the video games consoles industry. The key players in the video game industry ensure that the games they provide in the market are not compatible with other video game providers. This rivalry helps in increasing competition and innovation as well as creativity so as to win a huge market share in the video game industry. The market’s network has been facing very many externalities which consequently, make the competitors to aim at reaching the peak of the systems each particular Company produces; this is meant to attain market domination. Those companies which cannot withstand this competition are forced to leave the video game market. According to Paul (2005), due to very stiff competition in the video game industry, various players in this market have continued to dominate. Sony, Microsoft and Nintendo, among other competitors almost share this market. Their percentage in the market varies with seasons mainly due to the techniques and quality of video games each provides for the ready market. Each video game provider has a target population. Nintendo for example targets the middle class, especially the children. On the other hand the main targets for Sony are professionals and their children. In addition the video game industry is clearly dependent on the technology advancement and the ability of the video game producers to utilize creativity. The sixth generation video game consoles are marked by improved features, majority of them are unique in that the players are eager to get any new brand in the market. This is the main reason why video game consoles providers and publishers must keep the market updated with the latest technology and modern video games. The games industry has changed with the changes in consumer preferences, whereby, even the older generation is welcoming video games unlike the early days when the video games were left for young children. References Anderson, C. A., & Dill, K. E 2000, “Video games and aggressive thoughts, feelings, and behavior in the laboratory and life”, Journal of Personality and Social Psychology, vol. 78, no. 2, pp. 772-790. Fredrick, M., Agnes, V & John, M 2005, Video game consoles, VDM Publishing House, Germany. Flew, Terry; Humphreys, Sal 2005, "Games: Technology, Industry, Culture". New Media: an Introduction (Second Edition).Oxford University Press. pp. 101– 114.  Paul S 2005, Kids playing more videogames, Video Business, vol. 25, no. 11, pp. 132. Read More