Five Forces Analysis Video Gaming

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Five Forces Analysis of the Video Game Industry The five forces that drive industry competition, a model established by Michael Porter, are; threat of substitution, threat of new entrants, bargaining power of suppliers, bargaining power of buyers, and intensity of rivalry. The video game industry must deal with all five of these forces. The analysis of the strength of these five forces within the video game industry will help to draw a conclusion as to whether or not it is an attractive industry for Sony to be in. The threat of substitutes in the video game industry is relatively low. Most customers are looking for a console that they can play games on and there really isn’t much else to choose from. One could say that computer…show more content…
The main suppliers in the video game industry are the game makers. These companies pay a royalty fee to the company that makes the console. Game makers have the decision to make certain games exclusively for one console if they are paid enough money, for example Halo made for the Xbox, or make them available on many different platforms. This threat is also moderate for the game industry. The larger the variety of games as well as the better the quality the more likely a customer is to buy one game console over another. The fourth force is that of the bargaining power of the buyers. In the video game industry the buyers do not have very much power, thus making this a weak threat. The buyers do not have much power because the video game industry does not consist of many players. The lack in the customers’ choices means that they are willing to pay a little more money to get such an item. The fifth and final force is that of the intensity of rivalry. This is the strongest force in the video game industry. Nintendo was very strategic in targeting an audience that Microsoft and Sony neglected. While Microsoft and Sony focused on the typical gamers, males ages 18-34, Nintendo focused on a broader audience “everyone” when creating their Wii. In the video game industry rivalry Microsoft and Sony are battling for the same market, while Nintendo has much of its audience all to itself. This is why
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