Video Game Console Industry

1233 Words Oct 31st, 2012 5 Pages
1. How attractive is the video game console industry in 2008?
In 2008 the video game industry is dominated by three major players and their respective gaming consoles. First of all there's Sony with its PlayStation 3 launched by the end of 2006. Then there's Microsoft with its Xbox 360, launched in the end of 2005; and finally Nintendo with the "Wii" in late 2006. These three players are struggling to gain market leadership in the game console industry. The video game industry, off from an uncertain start in 1972 has been marked by quick and frequent changes of fortune amongst the various players in the market. The market was characterized by rapid growth as well as unexpected down turns such as the one in 1983 where the industry lost 97%
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Nintendo's progressive growth and dominance with 8-bit NES and Sega's subsequent leapfrog followed by Sony's rise and Sega's fall with dreamcast, and ultimately Microsoft's entry. Price of consoles has remained high over the years, with the only exception of Nintend's low priced Wii console. Entry barriers have gradually increased with rising costs of developing a new console being affordable only to large companies and excluding smaller entrepreneurial firms.
The customer base for this kind of industry is gradually expanding year after year as the gaming community now increasingly comprises those in the middle ages.
Substitutors present a low to medium threat; however they are currently increasing in number, a part from PC gaming, the advent of iPad and other more specific portable consoles could constitute an important substitution threat.

3. What are Sony's strategic options for regaining industry leadership? As Kazuo Hirai, which option would you pursue?
Sony must determine what kind of consumer audience it wants to target in the future and consequently whether it wants to:
- Pursue the new segments of gamers that Nintendo unlocked with the Wii, or - Focus on current PlayStation as ultimate hub for living room by adding more features and technology.
The first option seams appealing since Nintendo Wii's success is a clear example of the potential of the new
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