Wii Case Analysis

Executive Summary

The video game industry has immensely evolved over the past four decades. From the emergence of the Atari in 1972 to the release of the Wii in 2006, video games have become a large part of today’s society. Many companies have developed products to garner customers and capitalize large parts of the market. Sony is a successful example. The company dominated the market in the mid-90’s with the release of the Playstation and Playstation 2 game consoles. However, as more companies entered the market and released more popular and fun video game systems, Sony found itself under pressure to regain the superiority it once experienced in the marketplace. As such, the company is contemplating various strategies on how to respond to the domination of the other competitors, namely Nintendo’s Wii product.

Analysis

In 2008, the video game industry is dominated by three key players: Sony, Microsoft, and Nintendo. All three competitors are challenged to gain market leadership and growing profits in the game console industry. From the start, the industry has been categorized by uncertainties and frequent changes. The high bargaining power of customer and intense rivalry of competitors as highlighted in the Five Forces appendix, makes the video game industry unattractive during late 2008. There is lack of security for companies in terms of competition and technology. Costs continue to rise in an effort to produce consoles with the most advanced features and technologically equipped enhancements.

Nintendo delayed the release of the 16-bit Super NES to avoid negatively impacting the sales volume and market share of the 8-bit NES. If Nintendo had proceeded with releasing the Super NES two years prior when the original announcement was made, it would have intruded on the existing market for the NES. Rather than appealing to a new customer segment and increasing market share, the 16-bit Super NES would have appealed to the current market, resulting in reduced...