Five forces analysis of video game console industry Free Essay Example

Threat of Substitutes: The primary alternative to a computer game console would be a computer. They can both be used for playing different kinds of video games and be utilized for home entertainment. The hazard of this replacement edging out video game consoles is very low, since they are not totally similar. If anything, computer game consoles are edging out desktop computers in the video gaming industry. The danger of substitutes in the video game is not extremely high. In 2008, this was not an extremely strong force in the video game market.

Danger of New Entrants: In 2008, the risk of new entrants was not very high. Sony’s Playstation, Microsoft’s Xbox, and Nintendo’s video gaming systems were effectively developed names in the industry. The brand identities of these products were so strong that it would be extremely tough for a new player to enter the game at this moment in time. Numerous years prior to 2008 this was not the case. Lots of new companies attempted to enter the marketplace, some, like Microsoft, was successful, others, like Sega, did not fare also.

In 2008, the Hazard of new entrants, is not a strong force in this market. The expense required to develop and manufacture an item that might be a decent a competitor in this market is undue for a non-established business in this industry to be able to contend. The technology that is needed to be successful at this point is too advanced for brand-new competitors to attain. Although at times the risk of brand-new entrants may have been a concern for this market, in 2008, the 3 current competitors had much to strong a hold on the industry.

Bargaining Power of Suppliers: Providers do have an effect on the video game console market. For starters the providers who develop the innovation for these consoles can likewise use their items in other electronic devices consisting of televisions, and particularly computers. If the suppliers quit working on brand-new ways to create technically innovative parts that business can utilize in their video game consoles, the industry would be extremely negatively affected. Providers are also working on advances for and are offering their products to competitors as well.

Without the suppliers the video game industry would struggle. On the other hand the individual companies do have some ability to develop their and manufacture their own products and technologies. Because of this the bargaining power of suppliers plays a moderate role in the industry. Bargaining Power of Buyers: In 2008, the bargaining power of buyers did not play a huge role in the video game industry. Buyers were very intrigued by these products and were willing to pay fairly high products to get them.

In the future that may not always be the case, since prices are often fueled by demand, if the draw to video game consoles drops significantly then the power of buyers will have a greater role. In 2008, there were an abundance of buyers, more than the supply could meet in many cases. Buyers like their brands and they trust the products that are being made so they are generally willing to pay a fairly high price for these products. Intensity of Rivalry Among Competitors: In the video game industry, this is a very strong force.

For years in the industry no one company could hold the most popular console for more than one consecutive generation. The rivalry among competitors is very strong. Each holds its own powerful brand identity, and Sony, Microsoft, and Nintendo all want to be leaders in the industry. They each may have their different approaches to getting on top, but they all have the same ultimate goal. Microsoft and Sony mainly focus on creating consoles with the most advanced technologies appealing to more experienced gamers. While Nintendo tries to appeal to a much wider audience.

Summary: In 2008, the video game industry was a very attractive industry to be in. Companies that had already made a name for themselves in this industry were doing very well. The most prominent factor in the industry at this time was rivalry among competitors, which can in many ways be beneficial to success.

The other factors were not that strong, creating few barriers to success in the industry. The video game industry was prospering as buyers were excited about the products and the companies in the industry were very receptive to the different demands of the buyers. The video game industry was very successful during this time.

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