- According to “The Video Game Industry. An Industry Analysis from a VC Perspective” (2005) by Nik Shah, “video games are large and growing market”. (1) The author claimed that there are only selected areas, which contain some investment opportunities. He exemplifies these statement by analyzing prospects of such areas as online games and platforms, mobile gaming, developing new software toolkits etc. Nonetheless, successful market entrance depends not only on identifying key performance areas, but combining different strategies to reach profitability. Here we would like to identify keys of success of Atari, Nintendo Strategy, 3Do approach and approach developed by Sony. In short, success of the companies was called forth by similar factors. They are price for hardware and software within reach of many families; availability of software, ported over to home systems and offering better functionality. Nintendo Strategy’s success was a result of the combination of factors: quality control, new product design, introducing complementary products and great competitive advantage gained due to network effects. To my mind, the combination, mentioned for Nintendo Strategy seems to be too favourable to be real, as the company, being a monopolist, gained significant powers over valuable assets in the industry, retailers, suppliers and game developers. The main advantage of Sega was a chance to attract those developers and retailers, who were already seek and tired of Nintendo. Making use of Nintendo missteps also helped Sega to gain extra market share and, therefore, become more profitable. Specific Sony’s success factors lied in building in-house game development capability, attracting independent developers, targeting different demographics and creating games, ideal for it and lining up lots of retailers. Concluding, I would like to mention that success is most often predetermined at doing something different – developing a new strategy, finding a new target or entering the new level of functionality.
- Losing market share is one of most important threats’ to companies’ development. Despite the fact that in literature you can find reasons, why not to increase or even decrease your business’ market share (e.g., to avoid antitrust issues, price war, increasing expenditures on promotion(Quick MBA, 1999), losses we will consider were not called forth by the will of those, owning or managing the business. The main reasons for losing market share and, therefore, experiencing a decrease in profitability are producing poor quality products, lack of attention to developing technical advancements, delaying launching of new products or advancements (which equals not meeting customers’ wants and expectations), failure to assure availability of products, having too high developmental costs and being unable to find effective ways to reduce them. Particularly these factors contributed to some companies losing shares and new companies being able to enter the market successfully and get significant market share with their new products and advancements.
- This case gives us an understanding of the factors, which underlie both success of the companies and their future losses in market share. Combining this knowledge, we get the chance to use the experience of our business predecessors to develop and commercialize technology-based products and not only ensure successful market entrance and profitability of our business, but use takeaways to avoid losing market share and profitability. For instance, we should always remember that it is worth concentrating not only on developing new products, but permanent reconsideration of the strategy, not to forget to make use of network effects and pay special attention to complement products.
Works cited
Quick MBA “Marketing”, 1999.Web. 20 Feb. 2012
Shah, Nik. “The Video Game Industry. An Industry Analysis from a VC Perspective”, 2005. Web. 20 Feb. 2012
