Wii Case Study

2470 Words Oct 22nd, 2012 10 Pages
Technology and Innovation Strategy

Individual Assignment: “Nintendo Wii” (09/25/2012)

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Matteo Berzoini ID: 1432814
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1. How attractive is the video game console industry in 2008? 2. As Sony attempts to regain industry leadership from Nintendo, what lessons should Kuzuo Hirai learn from the history of the video game industry? How has the structural attractiveness of the industry changed over time? 3. What are Sony’s strategic options for regaining industry leadership? As Kazuo Hirai, which option would you pursue?

1. The video games industry is the economic sector involved in the development, manufacturing and selling
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Even if choosing a substitute product means facing high switching costs, the entertainment market is able to satisfy a wide range of different needs and tastes, making the threat of substitutions, for the video game industry, high.
Threat of new entrants: The video game sector is a technology driven industry where a huge amount of resources are invested in the R&D department: as a consequence, the initial investment needed to enter the market is almost prohibitive for small and medium sized firms. In addition, all the 3 market leaders have a strong brand power, with a loyal customer base willing to spend a lot of money for their cutting-edge products: raising brand awareness would be a very difficult achievement for newcomers. With very few companies entering in the market during the entire industry’s life and the difficulties highlighted above, we can conclude that the concentration and size of the existing companies would make it difficult, for a new company, to enter and obtain a portion of the market share.

2. The history of the video game industry has been characterized by rapid and frequent changes of fortune, often resulting in radical turnarounds that redefined its benchmarks and standards. To understand this trend, it is important to keep in mind that this industry has been cyclical in nature in

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