Bargaining Power of Suppliers and Buyers of Video Games

The United States aerospace and defense industry is the largest of its type in the world.

All you really need to know is that both the PS4 and the Xbox One represent a significant leap over their predecessors. Some people in the industry are suggesting that the Xbox One and PlayStation 4

The release of the next-generation gaming consoles has left the gaming industry is in frenzy. With so much demand for the consoles it feels as though people are ready to give away their legs to get either the PlayStation 4 or the X-Box One. With two of these monstrous gaming devices available, the decision to just choose just one console seems to be, for some, a life and death decision. Many people, as a result of not conducting the proper research, fail to realize how easy of a decision this is. In this much anticipated console race, the PlayStation 4 has a clear advantage over the X-box One and as a result, it is the console that consumers should look to buy.

As sales of Nintendo’s Wii and DS dominate the PlayStation 3 and Xbox 360, and PlayStation Portable, respectively, the pressure continues to mount on Sony and Microsoft to move to the next level in the ongoing console wars. Sales of the Wii in 2008

With all these elements concerning the gaming industry. PlayStation 4 continue to outsell its competition. Which is the Xbox One as well is the Xbox 360 and the Nintendo. In turn makes it the number one gaming console worldwide. Sony has committed to cultivating it's gaming system for the next generation to enjoy the product. Sony PlayStation 4 has no pressure with it status in the gaming industry with it significant prices, and design. With gives reasoning to buy the console.

The video game industry is the economic sector involved with the development, marketing and sale of video and computer games. It includes video game consoles, game software, handheld devices, mobile games and online games. The video gaming industry has been growing exponentially in recent years with Sony, Microsoft and Nintendo competing for the higher profits in the market. This essay will analyze each of the five forces acting on the industry: threat of new entrants, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers, and the competitive rivalry among existing firms. Then it will be determined if the video game industry is still an

But this time, the critical hardware was completed as planned. IBM completed its chip design by Dec, 2004. ATI finished its graphics chip in November.

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.

However, analysts expect growing consumer incomes, the late-2012 release of the Wii U and the 2013 release of Xbox One and PlayStation 4 to lead to a 4.3% revenue growth in 2014.

Overall, the market response to these three consoles has been surprising. Nintendo Wii, has outsold its rivals and more surprisingly, Sony’s PS2 has outsold PS3. This has let Microsoft and Sony with the enormous challenge of competing with a rival possessing two key advantages: a lower cost console and a product with a sound response in the market.

“To become a leading global provider of networked consumer electronics, entertainment and services.” That’s the mission of Sony, producer of the Sony Playstation. Sony, information and

Nintendo appears to have implemented a market-penetration pricing strategy. The Wii at a cost of $250 is 50% less than the 20-gigabyte PS3 (smaller hard drive machine). At this lower price, it is easier for the product to penetrate the market due to affordability in most segments. This aligns with the assumed company’s aim of maximising market share in the current and new segments. To achieve this, Nintendo ensured that the Wii was less costly to manufacture. Moreover, a higher sales volume may lead to lower unit costs and higher long run profits. Conversely, Sony is believed to have a market-skimming pricing strategy. The company invested $2 billion in technology, so this strategy aims at recovering the maximum amount of revenue to cover the high costs incurred in the early stages of the product life cycle. Additionally, Sony has a strong brand due to the success of their previous machines (PS2 and playstation) and the high price assists in communicating the image of a superior product with quality.

1. What, if anything, should Sony do to turn around the sales of the PS3?

Herman et all (2002) points out that history of video games begins from 1971 year, when Nutting association released 1500 machines with Spacewar video game. At the beginning it was too difficult to control the game process and playing machines had huge dimensions. But by the time with new technologies they become more compact and easier to play. According to the information given by Herman et all (2002), the period between the years of 1978-1981 is called ‘golden age’ of video game industry. In this period the arcade games ‘Football’ and ‘Space Invaders’ were released. All previously known sale records were broken by these two games with nearly equal wages. In this time interval great breakthroughs in the field of graphics were achieved,

Therefore in this case if Sony were to increase the price of the PS3 they would expect to make lower total revenue. This is because the predicted demand for PS3s would be expected to drop more than the percentage increase in price could cover.