Responding to the Wii

Porter’s Forces

When analyzing the video game industry, it helps to understand whether it is profitable as well as

whether barriers to entry are low. There are three main forces which express how difficult it is to succeed

in the video game industry. The main three include competitive rivalry, threat of substitute products, and

the bargaining power of buyers. The rivalry among existing competitors, the bargaining power of buyers,

and the threat of substitute products are all extremely high. Not only do buyers have the option to choose

between the three main competitors, but they also have the choice to play games online through

Facebook, Zynga, etc. On the other hand, the threat of new entrants and the bargaining power of

suppliers are low. New competition would not be able to compete against the three main companies

(Nintendo, Sony, and Microsoft). Also, all of the main companies have strong policies and well-formed

contracts set in place which gives them advantage over suppliers. The 6th

complimentors of the industry. In the case of the video game industry, the force of complimentors is

high. This is due to the number of complimentary items which are available for the products in this

industry.

Driving Forces

There are 5 main driving forces in the video game industry which have been behind the change

and evolution of the industry over time. These driving forces include technological change, product

innovation, changes in the industry growth rate, changes in the personal computer industry, and changes

in the industry’s consumers. Technology in the industry constantly changes, producing consecutive

generations of progressively powerful hardware systems, classically at lower costs. Along with this,

pr...

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... was locked in at 18-30 years old because of the complexity of the

controls and the graphic nature of their bestselling games.

Conclusion

Carol adding in chp.

Recommendations

In order for Sony to stay relevant as an industry leader, the company needs to focus its strategies

on targeting more market segments. Due to the competition that Nintendo has presented, Sony needs to

target similar markets such as young children as well as the older generation. Sony should stay on course

with the present technology they possess by maintaining the high quality graphics and high technological

advancements that PlayStation is known for. By taking advantage of the motion sensor technology, Sony

will be adequately competitive against the current main players in the industry such as Nintendo’s Wii.

generation console the Wii. Keeping to tradition, Nintendo chose to