Why Nintendo Has Dominant Market Share

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Why Nintendo Has Dominant Market Share The varying business models of Nintendo, Microsoft, and Sony have played a large role in what each company is today. Their models vary significantly and each one is rooted in the core business of each company. Nintendo is a pure video game company and as such it has taken on an integrated hardware and software approach – offering both the console and the games. Nintendo attempts to make money both on the console and the games. Sony with significant interests in the entertainment industry has established a Playstation Network – an online console service where users can also purchase or rent music, movies and other digital entertainment content. Sony has positioned the Playstation as a multipurpose entertainment console. As such Sony markets the Playstation at a loss and attempts to leverage the platform and realize profits from the games and other entertainment properties. Microsoft has traditionally targeted the “hardcore” game player offering superior processing, graphics and overall performance. Microsoft also offers the Xbox at below cost and attempts to realize profits through its own game sales and through licensing royalties from independent publishers. First, lets look at each firm’s current console and analyze the relationship between production cost and the value captured. Microsoft In 2007, Microsoft CFO Chris Liddell reported though Microsoft’s overall revenue increased 13 percent during its first quarter, cost of revenue increased 49% in that same time frame – an increase primarily attributed to the Xbox360. Microsoft attempts to produce relatively smaller quantities of the Xbox360 because each console costs approximately $715 to make. Each console records of a loss slightly upwards of $300 per console sold.[1] Sony With the PS3, Sony has created the most advanced video gaming console to ever hit the market.

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