What are the key success factors (KSFs) in the video games hardware industry?
The KFC in the video games industry includes; marketing, technological advancements in hardware, and coordinated launch:
Marketing
Marketing is one of the central aspects of success in the video games industry. It entails the building of a strong advertising campaign by the market leaders. Again building consumer awareness as well as the establishment of brand strength was a key aspect of the success of Sony, Nintendo, Sega, and Atari.
Technological Advancements in hardware
A wide variety of software unlike the application software for computers used in businesses, consumers of video game consoles seeks a variety. A small variety restricts the market appeal drastically.
Coordinated Launch
Typically, timing relates not only to the market launch but also the capacity to coordinates all the aspects of the market launch. Consequently, the marketing launch requires a continuous release of the console as well as a range of game titles. It also requires coordination of promotion and advertising.
To what extent has this been a “winner-takes-all” industry in the past?
“winner-takes-all” industries refer to those industries that are liable to face dominance from a single firm that scoops the significant part of the industry’s profit pool. In the past, there was a precise tendency of the video game industry towards dominance in the global market by a single firm. Again, in terms of profitability, the propensity for a single company to take most of the industry gains is even more apparent. The usual aftermath is for the market leader to generate high gains while everyone else is making losses. The only occasion when market leadership was being shared was during 1992-5 when the splitting of the world market for consoles between Sega and Nintendo happened. Moreover, between 1997 and 2000 when Nintendo was across second to Sony. Hence, in terms of profitability, the affirmation points to the leader of the market appropriation most of the gains of the industry. Thus, Nintendo was more profitable during 1991-1992 when it was dominant in the world market.
What factors have changed the dynamics of competition and the basis for competitive advantage in the industry during recent years?
Typically, an attribute of consoles’ past two generations is that no single company has emerged more influential. In the 7th and 8th generations, firms such as Microsoft, Nintendo, and Sony have split the market. The aspects that have contributed to change in the dynamics of competition as well as the basis for competitive advantage during recent years include;
- New technological opportunities
- The peculiar case of the Wii
- The emergence of mobile gaming
- The growth as well as segmentation of the market
- Console’s multifunctionality
- The shift of balance of power between software and hardware producers
Looking ahead, which factors will determine the competitive advantage in the video during the coming years?
The following factors will ascertain the competitive benefit in the coming years;
Parents as gaming advocates
Make strategy recommendations for:
– Sony [students with last names beginning A–F]
Typically, the past two generations of video game consoles for Sony have been difficult. The other issue is its video games business mainly in its corporate strategy. Sony is a well-known consumer electronics firm with a strong stress on hardware as well as movies that have been impacted by the application of internet technology. I recommend that Sony should synergize among its different businesses. For instance, the links between its movie business and video game business which might evolve hence expanding the development of the video games as well as ensuring that the video games consoles become a multipurpose home entertainment devices that not only support interactive video, TV and audio streaming but also other home services.
– Microsoft [students with last names beginning G–P]
The fundamental issue for Microsoft is its strategic objective in bits video game operations. Microsoft has created Xbox as one of its strategic alternatives to hedge against the decline of the personal computers where it viewed the main vehicle for home entertainment as well as internet access to be video game consoles. Microsoft requires to exploit its distinctive strengths and also remedy its weaknesses to build its Microsoft market position in video games. Again, Microsoft has also had weaknesses in its video games business relative Sony. To overcome this, it may require internal developments. Besides, it may cement its relationships with the leading developers and publishers.
. Nintendo [students with last names beginning Q–Z]
Nintendo lacks the strategic and financial strengths that Sony and Microsoft derive from their businesses despite its success with Wii. Nintendo, therefore, needs to innovate some new ways to enable it to enhance the ease of use as well as the overall gamer encounter. It also requires to concentrate on its casual gamer segment and also to develop games and hardware that are appealing to the customers. It should focus on its customers or rather lose them. Consequently, Nintendo should launch more hybrids and continue with the notion of a home entertainment center with Wii. It could also look into virtual reality to introduce additional value to a challenging video game industry with consoles.