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The report by Gamble John is a case study concerning video games from their history to the year 2008. Video games were first developed as early as 1947 when simple games were included by engineers in television projects. In 1958, William A. Hiinbotham from Brookhaven National Laboratory develop a tennis game for two while three graduate MIT students invented Spacewar in 1962. The industry gained prominence in 1985 after the development of Nintendo Entertainment System.

Since the year 2005, not only did Nintendo, Sony and Microsoft equip their video games with powerful micro processor, internet connectivity and hard drives but also enhanced high-definition graphics resolution. Third generation video games such as Sony’s PlayStation 3 (PS3), Microsoft’s Xbox 360 and Nintendo Wii offered users with lifelike and highly sophisticated games which can be played at home or around the world with internet connectivity. In 2008, close to 300 million people in the world used console systems, mobile phones, PCs and handheld devices to play video games with the majority being between 20 and 40 years old.

A fan of video game spends an average of six hours per week while an average American plays video games for at least 75 hours every year. In 2005, the sale of video game surpassed that of movie theater box offices in the United States by exceeding $10 billion to that of box office’s $9billion. Microsoft, Sony and Nintendo collaborated with IBM in developing console processor to manufacture next generation systems which came into the market in 2005 and 2006. In comparison to Microsoft and Sony, Nintendo had a less advanced technogy but by November 2008, it became a surprise winner by selling 20 million Wii units.

Microsoft’s Xbox 360 sold over 17 million while Sony sold just over 10 million. Issues/problems The video game industry is a highly competitive and technology driven with three of the largest company having maintained their position as a result of constant innovation. However, technology alone does not guarantee staying ahead of the competition. Sega managed to outdo Sony and Nintendo in terms of next generation computing abilities but they were forced out of the market in 2001 since they could not achieve success.

Their only two game titles could not influence users to abandon their Sony and Nintendo systems. Another challenge is that the industry requires huge capital to invest in research and development so as to sustain innovation. In 2008, Microsoft spent 15% of its revenue on research and earned its first operating profit in 2008. Sony recorded $2. 2 billion in operating losses in fiscal 2008 due to low sales of PlayStation 3. Moreover, the 24 HD games could not use all the capabilities of PS3 because software developers had to shorten their development times.

Sony were also loosing close to $300 on each PS3 they sold with PS2 outselling PS3 by over 400,000 units during the 2007 holiday. The biggest problem with Nintendo was their inability to meet market demands with many outlets running out of stock. Evaluation of findings Its evident that video game enthusiast get tired of repeating similar games thus a need for innovation. In 1983, consumers had to migrate from simple games to NES systems before moving to the Game Boy which was more techno savvy.

Although Sony’s PS3 was better than PS2, its popularity in the market failed because it had similarities with its old generation game. Graphic oriented players instead opted for Microsoft’s Xbox 360. The increase in numbers of consumers is attributed to increased capabilities of the 21st century game consoles. Nintendo managed to become a market leader by developing popular game titles such as Pokemon, Mario Brothers and Donkey Kong and 35 to 40 percent of the company’s profitability were from software operating profits.

Collaboration of the three companies with IBM and PC manufactures was instrumental in connecting internet to the industry. In 2007, 62% 0f all video game players were online with 76% of Wii players being online. Alternatives in the industry The video game industry has been dominated by the top three companies for many years as a result of innovation and wise management decisions by the companies’ executives. When venturing into this industry, it requires not only enough capital and prowess, but also the ability to capture and retain the attention of gamers.

The first available opportunity is to identify and satisfy the need of customers. It was clear to the Nintendo executives that Wii could not compete with next-generation consoles that Sony and Microsoft were about to launch. However, they were able to recognize that wireless wand controller would catch the attraction of consumers. As the president of Nintendo said, the Wii games enables the user to get more into the game and feel as if he is actually in the field.

Another alternative is developing a game console that would be affordable across the entire population. The success of a company is marked by the amount of sales and online subscription and this call for managers to develop packages which can fit people’s budgets. For example, a game console that is affordable to both an employed individual and a college student will sell quickly than the one which requires second-person funding. To add on, it’s important for the firms to develop technologies that are cost effective and multi-purpose.

Video game analysts discovered that developers were interested with Wii games’ immediate profit than PS3 and they were either “holding off or developing games for Sony” until its installed base expanded. Best alternative Cost effective and multi-purpose technogy is the best alternative. First, companies were able to receive immediate profit while consumers were served with affordable game consoles. In addition, the multi-purpose devices imply that users can easily access old games using the new devices, for example, the Nintendo’s Wii Connect24 online gaming site.

The Wii console offers weather, shopping, and news channels; and Web browser. It also enables people to view digital pictures and develop personalized “Mii” interfaces for individual family members. Conclusion and follow-up requirements Each and every industry in modern day global economy relies on technogy to be efficient and produce high quality products. To become a leading market player and stay ahead of competition, each company must be adaptive to change and be innovative. The video game industry has not been left behind and in actual sense; it is at the center of factors that touch on technology.

The three largest companies in this industry have earned their position courtesy of savvy management decisions, constant research and innovation. To maintain this standard, these companies must meet the ever changing demand of the consumers and provide products that are friendly to the general public because the game consoles are being used by the whole family.


Gamble, J. E. (nd). Game Consoles: The State of the Battle for Supremacy in 2008. University of Alabama, p. 213-271

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