XBox Strategy Essay

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X-Box Strategy - Industry Analysis & Competitors ========================= 1.Game industry analysis Video games industry is seen as a maturing, competitive industry with practices and structure similar to other medias such as the movie industry, however, with a higher level of complexity. The volatility of its structure in console video games is a direct result of technological and business choice made early by the firms. Each firm releases a system incompatible with the others, this created a standard-based industry leading it to be an oligopolistic market at the hardware level. The markets are subject to significant network externalities thus each competitor hopes to reach the “tipping point” at which their system dominates the market and others are eventually forced out. The industry is very centralized. There are three main players on the market in 2000: Sony with 47% , Microsoft and Nintendo with 28%, Sega with 23%. However, Sega quit console business in 2001. (see comparing of main competitors in Annex1). The competitors worked in different segments: Sony in top-price segment (price 299$), segmented on professionals and their children, whereas Nintendo was targeting the middle-price segment(199$) mostly children. The industry is marked by massive growth and opportunities led by technological innovation. However, this industry depends a lot on complementary resources especially the console dependency on the video games and its exclusivity. Also, the industry’s success depends on the compatibility with older versions of the console and the ability of adapting evolutionary strategy rather than a revolutionary one. In addition, in this industry the ability to turn lead-time into a cost advantage is a key aspect of the innovator’s advantage. This fastest growing segment of the entertainment industry amounted to 20 billions USD in 2000 with

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