Video Game Industry
The scenery of the handheld technology-based market is constantly altering, particularly within the handheld video games market. Increasing sales of smartphones and tablet computers with an amazing progress in gaming potentials on the go is a key cause of the modifications that are heating up the rivalry. Thus, the devoted gaming organizations create the new approaches for dealing with rivalry whilst gaining share from the conventional competitors.
The changeable business strategies of Nintendo, Sony and Microsoft have played a significant role in what each of these companies is nowadays. Their models differ crucially and each of them is deep-rooted in the fundamental business of every organization. Nintendo is a pure video game firm. However, it has taken on the integrated software and hardware approach suggesting both the games and the console. Nintendo tries to make profits with help of console and games. Being quite interested in the amusement sphere, Sony has founded the PlayStation Network. It is the Internet-based console service, where the users may also buy or rent music, films, and other digital entertainment content. Sony has positioned the PlayStation as a multipurpose entertainment console. Therefore, Sony markets PlayStation at a loss and tries to influence the platform and make profits from the games and other amusement content. Microsoft has conventionally targeted “hardcore” game player suggesting better graphics, processing and general performance. Microsoft also provides the Xbox at lower cost and tries to make profits with help of own game sales and via licensing royalties from the independent publishers.
Microsoft and Sony are utilizing a razor-blade economic approach. This strategy concentrates on selling the “razor” at a small value and the “blades” at a much higher value. Such an approach does not obtain much value from the primary product (in our case, video game system), but obtains more value from the recurrent goods the primary product demands to operate (video games).
The consoles are comparatively expensive, and games do not demand a regular replacement. Further, there is the secondary market of the utilized games. This situation has resulted in Microsoft and Sony operating the console businesses at their losses even five years after the goods were launched. Nintendo, in contrast, has integrated its own software and hardware evolvement. As a result, there appeared a business strategy that concentrates on the total platform and the total system generating earnings for the organization.
All the three companies, Sony, Microsoft and Nintendo, count on games in order to earn income from sales of the consoles. However, Nintendo is the only company that does not deeply rely on the intermediary titles. Thus, more internal evolvement and a larger accent on the first-party titles (exceptional to Nintendo gaming practice) will enable Nintendo to work on the “top-down” strategy. The strategy is based on developing the consoles based on games that will run. Establishing the system with a lower evolvement cost, the system that has a function to generate a gaming experience concentrated on both video games and console, Nintendo has developed a product (the Wii) with a good value, easiness of access, and broad based application. The Wii does not only efficiently capture the video games market for the “hard-core” video gamers (it is unquestionably graphically inferior), but has concentrated its own resources and efforts on increasing and then entering the novel markets. That is why Nintendo holds the dominant market share.