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Industry Analysis

Although, there are only three entities in the video gaming console industry, Nintendo, Sony and, Microsoft, there are many elements involved. The convergence of information technology, telecommunications, media and, entertainment has brought prominent social and technological changes upon the industry. These companies have to constantly be innovating and altering their products to meet the demands of the technological advances. Consumers of these products are very much conscious of the image branding that is affiliated with the products. Success in the consoles has historically been the result of establishing a large title base for a system’s launch through an established net- work of developers with licensing agreements. All of these elements combined which compose the console gaming industry, results in a high barrier of entry.

There is immense competition amongst Nintendo, Sony and, Microsoft in regards to there gaming consoles, in which, results in threat of product substitutes and intense rivalry. Against Nintendo’s Wii, the XBOX 360 and the PS3 are more targeted for “gamers”. They have superb graphics technologies and a much wider array of more technical and advanced games. XBO 360 and the PS3 also serve more as an entertainment hub than the Wii by, providing HD DVD and BLU Ray DVD playback and also the ability to store movies and music on their hard-drive. On the other hand, the Wii, is more user friendly, purposely, for a much wider demographic. The Wii is designed for all most ages where the XBOX 360 and the PS3 are for a demographic of males in there late 20’s and thirties with sufficient disposable income. Since Nintendo has been around for a while they have a more brand recognition and loyalty because of their famous games such as Super Mario Bros and Mario Party, just to name a few. Also, the Wii has motion detectors so one can operate the Wii with movement with one’s body and hands for more interaction. The Wii also focus’s on more realistic gaming rather the fiction gaming, to relate to a wider demographic. The Wii also incorporated the promotion of physical fitness and health with the launch of Wii fit. All these elements combined are competitive advantages that Nintendo grasps.

There is fairly high buyer power because the Wii, XBOX 360 and, the PS3 all had price decreases. The XBOX 360 and the PS3 had more significant price slashes because they were more expensive compared to the Wii. The price cuts resulted in increased sales. The industry overall has high supplier power because the XBOX 360 and PS3 use third parties for their software and for some there hardware as well. XBOX 360 and PS3 usually loose money when they sell as there console because all of the advanced chips and technology that is incorporated in the system. Microsoft and Sony make money off their accessories they manufacture and, the games, which are produced by third parties, which results in higher prices for the consumer. Nintendo manufactures the their own software’s and their own hardware’s. This results in real low supply power for Nintendo because they don’t use third parties for the production or manufacturing. This results in lower prices for Nintendo users. History

Nintendo was founded as a playing card company in 1889, originally named Nintendo Koppai. Based in Kyoto, Japan. They manufactured a playing card game called Hanafuda. In 1956, Nintendo entered U.S., to talk with the Playing Card Company, which was the major playing card company in the U.S. at that time. Nintendo gained access to Disney's characters and put them on playing cards to drive sales. In 1966, Nintendo moved into the Japanese toy industry with the Ultra Hand, which was an extending arm tool. Regardless of some lucrative toys, Nintendo resisted meeting the prompt expansion and developed turnaround required of the toy market. Nintendo was not able to keep up with their competitors and decided to take another direction. In 1975,...
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