September 23, 2010
Market Equilibrium Process Paper
With advancements in technology the video gaming industry is now as popular as it has ever been. High definition graphics and fluent controls give the gamer a feeling of being literally inside the game. Prices for quality games can be very expensive; brand new games for top consoles like the Playstation 3 or Xbox 360 are usually $59.99. Sporting games are very popular games for these consoles; developers are in constant competition with one another to gain supremacy. EA sports and 2K sports have been in competition for over 8 years for football and basketball video gaming supremacy. For years if you wanted to play a licensed NFL or NBA simulation style video game you would buy Madden Football and NBA LIVE, both made by EA sports. It had been this way for years so the market for these games had reached an equilibrium price and quantity. According to McConnel, Brue, and Flynn, “Equilibrium price is where quantity demanded equals quantity supplied”. I knew that if I was going to pay this price for one of these games it would be there. In 2001 a new developer, 2k sports, put out their own simulation style basketball and football games to compete with EA sports. These games were licensed by the NFL and NBA as well, and could use player names and league logos. The developers at 2K sports also offered the game $20 cheaper than the traditional powerhouse NFL Madden and NBA Live. Consumers began to take notice of the two new football and basketball games at a lower price, and once word of mouth spread that the games quality of play was not far off from its counterparts, if not better, the market began to change for EA sports. “Changes in demand might change because of fluctuations in consumer taste or incomes, changes in consumer expectations, or variations in price of related goods” (McConnel, Brue, & Flynn, 2009). With new competition EA sports now has a change in...