Gaming Consoles Life Cycles

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Gredler / Moravska / Wegendt Case 17 Microsoft X-Box Live! 1 Table of Content A. Basic facts 1. Microsoft 2. Video Gaming Indurstry 3. Competitors + 5 year life cycle 4. Xbox (Xbox 360 + Xbox Live!) B. Case Study Questions: 1. 2. 3. 4. What Stage of the product life cycle is Microsoft´s Xbox currently experiencing in comparison to other game console market products? Discuss how Microsoft is trying to implement a groth strategy in the games console arena. (using the Ansoff Matrix) What are the key sucess factors of launching the Microsoft Xbox Live! Plattform? (using the marketing mix 4-Ps framework) What are the key weaknesses of Microsoft Xbox Live! Business model? 2 Basic Facts Microsoft • Dominates in its core markets of operating systems (PC) and desktop application software almost has monopoly power High revenues and profits have been healthy and steady Sales of PC software will not last forever! One day growth will stop That’s why Microsoft now has to look for new ways of future growth. It has decided to enter the video-gaming industry • • • • + + 3 Basic Facts Video-gaming industry: • • 2002 Console and hardware sales nearly 33% of the market The video-gaming industry is characterized by a 5-year cycle: the games console has roughly a 5-year life cycle before being replaced with new, improved technological hardware Very competitive area: many industry giants have come and gone: Sega has retrenched from games console market due to Sega Dreamcast flopp in 1999. Now they are only games developer The console industry sells its products at prices that are below costs and makes only money through the sales of games in the form of licensing fees • • 2 veterans are the Strongest competitors: 4 1995 2000 2006 2002 2006 Basic Facts History of popular games consoles (roughly 5-year life cycle) 1/3

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