Five Forces Analysis of Video Game Console Industry

Topics: Video game console, Video game, Nintendo Pages: 2 (760 words) Published: April 14, 2011
Five Forces Analysis of Video Game Console Industry

Threat of Substitutes: The main substitute for a video game console would be a personal computer. They can both be used for playing different types of video games and be used for entertainment. The threat of this substitute edging out video game consoles is very low, because they are not completely similar. If anything, video game consoles are edging out personal computers in the gaming industry. The threat of substitutes in the video game is not very high. In 2008, this was not a very strong force in the video game industry. Threat of New Entrants: In 2008, the threat of new entrants was not very high. Sony’s Playstation, Microsoft’s Xbox, and Nintendo’s gaming systems were very well established names in the industry. The brand identities of these products were so strong that it would be very difficult for a new player to enter the game at this point in time. Many years prior to 2008 this was not the case. Many new companies tried to enter the market, some, like Microsoft, succeeded, others, like Sega, did not fare as well. In 2008, the Threat of new entrants, is not a strong force in this industry. The cost required to develop and manufacture a product that could be a decent a competitor in this market is too great for a non-established company in this industry to be able to compete. The technology that is needed to be successful at this point is too advanced for new competitors to achieve. Although at times the threat of new entrants might have been a concern for this industry, in 2008, the three current competitors had much to strong a hold on the industry. Bargaining Power of Suppliers: Suppliers do have an effect on the video game console industry. For starters the suppliers who develop the technology for these consoles can also use their products in other electronics including televisions, and especially computers. If the suppliers stop working on new ways to create technologically...
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