Atari Rapid Growth
Atari’s rapid growth is attributed to the decision of its founder to transform the traditional gaming machines into a smaller home machine. Bushnell compressed the coin-operated Pong game into a smaller home system. The Atari 2600 was the most successful home based gaming system that used cartridge.
How Did Ninitendo Successfully Recreate the Home Video Game Business Following the Atari - Era Boom and Bust?
After the boom and bust of the Atari, Nintendo focused on a diversification strategy. Initially, the company focused on the production of playing cards before the diversification to the production of the video game business. As such, the organization acquired a licensing to produce video games from Magnafox, which led to the successful introduction of the video games in 1977. Additionally, the organization started home video games at a lower cost, which was referred to as Family Computer Famicom and it sold at half the price of other competing video games in the market. The new machine had many advanced features as compared to the Atari machine, which meant that it could handle complicated game than what Atari offered. Additionally, the organization established its operations in the global market starting with the US, which gave the company a significant headway in the industry. As such, the recreation of the video games after the boom and Bust of the Atari was purely based on innovation by Nintendo that led to the introduction of superior games and its expansion strategies to the global market
Atari Rapid Growth
Atari’s rapid growth is attributed to the decision of its founder to transform the traditional gaming machines into a smaller home machine. Bushnell compressed the coin-operated Pong game into a smaller home system. The Atari 2600 was the most successful home based gaming system that used cartridge.
Why the 1982-85 Collapse
The collapse of 1982-85 is primarily attributed to the upsurge in the number of new entrants in the gaming industry. Atari was hit by this development that saw several of its producers and programmers defect to start companies and develop their games. The company had a huge inventory of unsold games and a surplus of 20 million cartridges by the end of 1982. The price of a cartridge dropped from $30 to $4 in 1983 driving the company into deep losses. By 1993, five-hundred new games that significantly affected the demand in the gaming industry. The company was forced to dispose of six million Extraterrestrial games from its unsold inventory due to the increasing difficulty to introduce new games in the crowded market.
How Nintendo Rebuild the Industry
Nintendo rebuild the industry by making a superior game machine and adopting strict quality control measures. With this great machine, there was a need for a good marketing strategy that would attract consumers in large numbers. It focused on developing good games that were insightful and less traditional. Most games lacked depth and character and the company, therefore, sought to bridge this gap that led to the development of the Donkey Kong, Mario Brothers among others that saw the company sell more than 70 million units worldwide. The company licensed other companies such as the Bandai, Capcom, Hudson, and Namco to help meet the needs of the expanding market.
The company adopted a strict control on the quality of its machines and the nature of the games produced. All licensed companies were restricted in pricing and monitored the quality standards. Conversely, the company prohibited the inclusion of violent and sexual material in the video game programs.
Nintendo Strategy in Recreating Home Video Game, Capturing Value and
Industry players believed that the gaming industry had officially died, hence influencing the exit of the gaming giants such as Fairchild, Mattel, Coleco, and Warner. This left the market largely unattended, an opportunity that Nintendo exploited fully. Nintendo’s first step was to license video game technology from the Magnavox Company that allowed it to develop and introduce a home video game system that was based on the Pong variation. The company’s primary strategy was to create a machine that has superior processing and graphics capabilities at a lower cost. The family computer (Famicom) was built and sold for $75, half the price of other machines. Famicom had a 2,000 byte RAM, 8-bite processor, and a graphics processing unit. This machine could handle complex games compared to Atari machines that had 256 byte RAM.
Sega Gain Market
Sega developed a more powerful technology (a 16-bit system) that gave game developers the power to develop more appealing games, giving it a two-year head start in the production of 16-bit machines ahead of Nintendo. The company created Genesis that had higher animation and graphic abilities and a high-quality sound at a lower price of $150. Sega gave less restrictive licensing terms compared to Nintendo and promoted the inclusion of media defined morality in the development of games.
3DO Strategy and Flows
3DO’s strategy was to develop a superior gaming machine that included a 32-bit microprocessor and CD-ROM game storage that would guarantee better performance. This specs would be attractive to game developers that would be motivated to make better and exciting games. Although this strategy puts 3DO’s systems ahead of other machines, it failed to address the cost of acquiring the technology that was remarkably higher than other competing products.
Success of Play Station over 3DO
Play station outperformed 3DO because it used the same high specs in its console, but at a significantly lower price of $299 unlike 3DO’s $500. The price was further reduced to $149 by March 1997 at a $9 royalty per disc for game developers. Marketing of the product was largely dependent on the nature of the games. The company provided about 4,000 development tools and solicited 12,000 retail outlets where in-store trial equipment were installed to help jump start demand.
Why Microsoft Entered the Gaming Industry
Microsoft’s entry in game business was influenced by the concerns that the Sony would take over Web-browsing functions from personal computers.
Offensive and defensive reasons
The company’s experience in developing PC operating system gave it an advantage in terms of technological knowledge and availability of development tools. Microsoft had been in the PC gaming industry for long controlling about 10% of the market by 2001. Microsft introduced a more powerfull gaming console that outperformed play station one. It included a 128bit Pentium 3 733 megahertz processor. Xbox was introduced as a calculated move to counter the potential threat from Sony that could wrestle away the Web-browsing functions of the personal computer in the future (Hill, 2008).
Lessons Used To Launch Xbox and Play Station 2
Both companies valued the significance of continuously developing new technologies that enhance the gaming experience. Additionally, the marketing strategy for the two products was sensitive to the competition and fair pricing of the products.
Lessons Learned In the Introduction of Xbox, Wii, and PlayStation 3
The success of Xbox and PlayStation 3 is attributed to the company’s ability to provide high quality gaming products at a lower cost simultaneously. Wii on the other side saw an opportunity in the massive casual gamers that needed less sophisticated and inexpensive gaming products.
Tassi, P. (2016, January 31). Why Haven't Video Game Consoles Died Yet? - Forbes. Retrieved from Forbes Magazine: http://www.forbes.com/sites/insertcoin/2016/01/31/why-havent-video-game-consoles-died-yet/#6c200f274962
Console games have persisted longer than was expected, with Sony introducing PS4, Xbox One for Microsoft, and the Wii U for the Nintendo. The sales of these new versions have surpassed the expectations that were based on the prediction that most gamers would shift to PC and mobile gaming (Tassi, 2016). Although the PC gaming has relatively established a strong presence, it co-exists perfectly with the console platforms. For casual players, PC is readily available at work and home and is still far expensive when compared to consoles. The same applies for the hardcore gamers who have to spend a lot of money to assemble high-end gaming PCs. During the past few years, mobile gaming has expanded exponentially, especially after the introduction of the smartphones. However, the mobile platform cannot replicate the experience provided by the gaming consoles. Therefore, the mobile gaming has become a reserve for the casual players giving it the largest audience in the gaming industry. Developers are eyeing the set-boxes such as the Apple TV and the Amazon Fire that may replace the consoles. However, TV box doesn't pose such a significant threat to the existence of the consoles since they depend on the mobile platform that is less desirable to the gaming enthusiasts. Steam machines, on the other hand, are like gaming consoles that take the form of the PC, hence breaching the gap between the console and the PC platform. However, this technology is so expensive that one would rather have a gaming PC or a console.
Tsukayama, H. (2016, April 20). Microsoft is killing off the Xbox 360. Retrieved from The Washington Post: https://www.washingtonpost.com/news/the-switch/wp/2016/04/20/microsoft-is-killing-off-the-xbox-360/
Microsoft has officially stopped the production of the Xbox 360 that has sold at least 84 million units. This is a strategic approach that will allow the company to shift its focus on the Xbox One that is fairly competing with Sony’s PS4. To accommodate older consumer, the Xbox has inbuilt compatibility with the Xbox 360 titles. The console’s backward compatibility will also allow Microsoft to continue generating money from those who want to hold to the Xbox 360. New games and accessories will last as long as consoles are available on the retail shelves. Software updates, online support, and Live services for the Xbox were officially terminated. Xbox One has already sold 21.11 million units globally compared to Play Station 4 that has sold 40.75 million units (Tsukayama, 2016).
References
Hill, C. W. (2008). The Home Video Game Industry: Atari Pong to The Nintendo Wii. Washington DC: University of Washington.
Tassi, P. (2016, January 31). Why Haven't Video Game Consoles Died Yet? - Forbes. Retrieved from Forbes Magazine: http://www.forbes.com/sites/insertcoin/2016/01/31/why-havent-video-game-consoles-died-yet/#6c200f274962
Tsukayama, H. (2016, April 20). Microsoft is killing off the Xbox 360. Retrieved from The Washington Post: https://www.washingtonpost.com/news/the-switch/wp/2016/04/20/microsoft-is-killing-off-the-xbox-360/
