Game Console Industry 5 Forces Analysis
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In essence, video game consoler is regarded to be the interactive computer or else midfield computer system, which produces the video display signal. Video game console began in 1947and since then; the industry has grown rapidly due to the existence of advanced technology. For the past years, the overview global market of video game console has been remarkable in that; in 2008, about three hundred million people in the entire world play video game on consoles systems, mobile phones, PCs and handheld devices. There have been changes in the competitive landscape been contributed by advanced technology. In this regard, this paper seeks to analyze the competitive structure of Video game console using the porter’s five forces analysis.
Rival Sellers
In essence, game console company is faced with a strong rivalry competition. As the industry develops, every game console company implements the latest graphic technology in their products. If the company fails to apply, the advanced technology into their products decline in the market share is guaranteed. Additionally, many console companies tend to explore new functions, which are not just video games thus, imposing a threat in the industry (Gilespie, 2007).
New Entrants
Generally, threat of new entrants is low. In facts, the threats of new entrants were not very high. Microsoft’s Xbox, Sony’s Play station and Nintendo is gaming were established names within the market. About three hundred million of people globally played video games on console systems. With this in mind, it is worth noting that, the cost required to develop as well product, which can fit in the decent competitor, is too expensive. Additionally, the technology required is too advanced for new competitors to achieve thus creating high barrier to entry. To meet such technology, the new competitors are required to invest a lot of capital in the product design as well as development.
Substitute Products
A threat of substitutes of the game consoles is high in that; the advanced technology has pulled the old console into online games. There has been growth in mobile phone industry along with handheld system. Many people tend to play games with portable electronic devices thus handheld system and mobile phone been highly preferred. Despite those devices are not comparably well, they fit in the modern world in addition, more affordable.
Supplier Products
The main suppliers to the video game console industry are technology manufacture and assembler along with software developer. In the attempt of securing competition, suppliers are forced to cut down their process to remain competitive and exit in the marketplace altogether. In doing this, it will eventually lead to intense competition within the same industry (Gilespie, 2007).
Buyers bargaining power
In fact, buyers have an effect in the video game console industry. Due to advanced technology, buyers are informed thus imposing a threat in the video game consolers. There is high switching to other products, which in this case may be preferable. In facts, many people tend to play games with portable electronic devices thus handheld system and mobile phone been highly preferred. In such incidence, for the business to maintain clients there will be a need of lowering the cost in order to attract them to become users. In achieving this, it may lead to lowering prices, which eventually will decrease total sales and profits.
References
Gilespie,A. (2007). Foundations of Economics. New York: Oxford University Press
Utomo, W.S. Case Analysis Competition in Video Game Consoles: The State of the Battle. Retrived from: https://mail.google.com/mail/h/1wc5bq1e4yn6a/?view=att&th=12fe3d0eb8d0a03b&attid =0.1&disp=vah&realattid=f_gnlkpjkf0&zw
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