Elevator Pitch: This case illustrates the strategic challenges currently faced by one of the giants in the video game industry, Electronic Arts. It also surfaces the industry’s characteristics and explains us, that in this fast paced tech-savvy world, you have to keep running just to stay where you are. EA, in 1995 is looking for its next move that would maintain its leading position in the industry. The changes over the past 15 years had led the industry to a very converged sophisticated platform with tons of options (hardware platforms), and it seems hungrier for more innovative technology, creativity and originality than ever before. EA, however, seems to have understood the ‘mantra’ for success and its strategies up till now have paid off. They have treated their developers as ‘artists’ and have replicated the hollywood movie studios concept successfully. They also learned the hard way in 1989, that working only for one platform (floppy disks in the PC market) never gets you too far, and that you have to shift strategies with the shifting times. The question today, seems to be the same as that in 1989. Should they completely change and adopt new platforms, or stick to what they are good at?
1) What are the key characteristics of the video game industry? Compare and contrast with the movie industry. The ‘high-tech savvy’, fast paced video game industry where technology is money, is characterized by short product life spans (12-18 months), innovation, creativity and originality. First mover advantage is huge, and high quality experience rules the success. The movie industry, however, is characterized by ‘nobody knows anything’ rule, where there is no sure formula for a hit. This is different than the video game industry, where market research, trend analysis and incremental innovation can be seen as successful strategies.
2) What has been the EA strategy up until 1995? How is EA’s technology strategy linked to its business strategy? What is the EA...
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