Case Study 1: Nintendo's Video Game Industry?
It is interesting to consider the video game industry as an example of strategies used by the different firms to compete and stay among the greatest sellers of video games and consoles since those strategies evolve as technology evolves. However, despite the fact that this industry seems a bit different from the more classic cases, it is safe to say that like any other type of firm, the goal of video game producers is to increase their sales and thus, gain a certain kind of monopoly power over the whole industry. In this way, it seems important to analyze the profitability of the video game industry using known indicators like Porter’s five forces.
First of all, we can look at the competitiveness in this industry …show more content…
Here, it seems relatively strong since there were not so many firms selling consoles meaning that there will be a high demand for a small number of producers. Moreover, despite really expensive arcade machines, the amount of substitutes was fairly low.
The bargaining power of buyers however was weak since they were a lot of buyers who had no real influence on the industry. In this way, the level of competition in this industry was lowered.
As we have seen it, the threat of potential substitute before the introduction of the Wii was fairly weak indicating a low level of competition.
Finally the rivalry among producers was also weak since only a few sellers owned the market, there were no real exit barriers and competition based on prices in this industry was not really a strategy adopted by the firms in this …show more content…
While Sony or Microsoft were still focusing on classical advertising techniques, Nintendo tried to reach directly new customers by paying individuals who could talk about the new Nintendo consoles to friends or family. The marketing team also sponsored video makers mainly on YouTube to present the different consoles and games of the brand. This allowed the company to expend and reach out to even more potential customers. These new advertising techniques were really smart since the audience didn’t even necessarily considered those actions as being part of a massif marketing strategy. Seeing Nintendo in places where the general public never expected it was a powerful method to sell more consoles than the competitors. Another element that helped Nintendo appeal to the public was the idea of letting independent video game makers entering the market and selling their games on Nintendo’s platforms. This allowed the customers to have access to a wider range of games on Nintendo consoles and thus increased the sales of the