Responding to the Wii Case Study

The home console videogame industry has been rapidly evolving ever since its introduction in 1972. In the industry’s infancy, Magnavox was the only manufacturer involved, however after sluggish sales, the Odyssey system was pulled from the market shortly after its introduction. The next major player to enter the scene was Atari. The company launched its first systems in an arcade format in 1972 before venturing into the home console market in 1974 with the Pong system. The system only had a set number of games that were hardwired and there was no option to add more games.

In 1976, Fairchild Camera introduced the Channel F, an 8-bit system. While it was a short-lived product, it altered the industry forever as it introduced a system that used interchangeable cartridges for games, and it also began the first videogame generational cycle. As a result, Atari changed its approach and also introduced a system that operated on interchangeable games. Its new system was the Video Computer System 2600, and it dominated the first generational cycle until its conclusion in 1983. The industry reached a peak in 1982 before it crashed in 1983. The crash was blamed on the proliferation of cheap and uninspired gaming software. By 1985, the industry had lost 97 percent of its annual sales volume, and Atari was sold at a loss in 1984.

The industry was quiet until 1985 when Nintendo entered the home console industry with the Nintendo Entertainment System, also an 8-bit system. In order to avoid the game proliferation that haunted Atari, Nintendo decided to develop only a couple of hit videogames per year in-house and also required any third-party developers to get authentication from the company. Nintendo continued its second generational dominance through 1988 despite Sega and NEC’s introductions to the industry.

Sega introduced its new system, the Genesis, in 1988. This was the first of the 16-bit processor generation. By having first mover advantage and being...