Video Games, Consoles, Microsoft and Sony
Entertainment is a big part of the developed countries economies. A greater part of the entertainment is mainly on the video games, software products, which exist solely for the amusement of the users. Video games can run on modern computer platforms but there are also dedicated machines that only run games. The machines are known as consoles (video games), and touches on various aspects of computer hardware and software development (Ellis 22).
This research paper will investigate the video game consoles (Xbox and Playstation) [Prices compared to their cost of production. In addition, the paper will cover ways in which Microsoft (Xbox) and Sony (Playstation) make money in the video game industry
The video game Entertainment and devices businesses are very competitive, having rapid product life cycles, frequent introduction of new game titles and new products. The industry is characterized by cyclic nature, network effects, and first-mover advantages. Competitors in this field vary from small companies to very large, diversified corporations with great amount of financial and marketing resources. Companies compete on the basis of timing of product releases, product quality and variety, marketing, and effectiveness of distribution.
The purchase of video game consoles depends on currency variety, game quality, expected future game variety, and the initial console price. The video game consoles business has competitors with console platforms from Microsoft, Sony and Nintendo who are large and have a large customer base. The lifecycle for gaming and entertainment consoles is about five to ten years. Microsoft released Xbox 360, the second generation console, in November 2005. Sony and Nintendo released their new versions of the video game console in late 2006.
[...] The competitors like Microsoft and Sony use technological differentiation. For example, when Nintendo released the Wii console that had motion-sensing technology which had been absent in other consoles introduced around the same time as the Wii. Sony introduced the PS2 with a unique background compatibility with the original Playstation and therefore attracted many game players. The companies incorporate advanced technological advances which allow them to sell for the entire lifecycle of minimum five years. The technology incorporation raises the production costs of the consoles and makes Microsoft and Sony to subsidize the price for the clients so that they achieve higher installation base. [...]
[...] Nature of the product The three main players in the video console industry are Nintendo, Microsoft, and Sony. Nintendo is the most experienced of the three companies, it was founded in the video game industry in the 19th century and its only business is the videogames. The company is famous for its console named “Wii”, released in 2006. Sony released its first console, the Playstation, in 1995 and was the first console to use games on CDs. Playstation one has had other predecessor; the PS2, PS3 AND PS4. [...]
[...] The success of the video game console is determined by the availability of game for the console, availability of game content for the gamers, reliability of the console, the computational power, and the ability to create new experience through via online services. Although gaming PCs are way better in power and affordability, many games are available only on home consoles. Examples include Nintendo's characters like Link, Mario, Link, and Samus. In addition, consoles are optimized for the television and are not like the PCs which require adjusting settings to acquire a good image (Haugen 152). [...]
[...] Microsoft and Sony also make money by publishing games. Comparison of pricing strategies of Microsoft (Xbox) and Sony (Playstation) against Nintendo (Wii Nintendo's strategy and philosophy is on the platform as a whole and not on hardware or software as different businesses. Sony and Microsoft take the console hardware as a separate entity from the console's associated software's and therefore they are able to make market them independently. Appendix 1 shows the video consoles competition as per the release date and millions of sales done. [...]
[...] Microsoft and Sony also make money by publishing games. Ehen compared to Nintendo, Sony and Microsoft have different philosophies and this has at times worked to the advantage of Nintendo. Is there a future for the video game console? Analysis of market place of PS4 PS4 has sold faster and this is attributed to better supply and distribution chains, and reliable commodity hardware. Therefore, PS4 has proven that there is still market for the video games consoles despite the entrance if portable consoles such as smart phones. [...]
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