The growth rates have grown since Nintendo has entered new target segment. There is an ample opportunity for the improvement and advancement in technology. Despite the increasing intensity of competition, the video gaming industry as a whole had continued to grow even in the face of the downturn in the world economy. The video gaming industry responded so well in the times of economic strains of 2007 and 2008 that some industry experts suggested that it was possible that the industry was resistant to recession. In general the population still wants to be entertained in times of economic trouble.
The industry is at the position of rapid growth in the business life cycle.
• Number of rivals
There are two major rivals of Nintendo namely Microsoft and Sony. The industry is dominated by these three large firms which are huge in sizes.
• Scope of competitive rivalry
All the three firms are a multinational corporation. They have a lot of funds, expertise and resources in many parts of the world which they can bring in to consolidate their position in the market or to expand their market. So there is a very high competition in the industry as all the rivals are of equal size. Over the years companies have continued to turn profits from their new products but never gained a significant edge over one another.
• Buyer needs and requirements
As the industry is driven through societal trend as well, all the three companies are keeping a detailed eye on the buyer’s need and requirements. The final buyers are mainly looking for the best graphics and good collection of games. The graphics prompts the gamer to choose one brand over another.
• Production Capacity
There are not too many competitors in this industry. PlayStation 3 and Xbox 360 are produced at surplus capacity which has been pushing the prices and profit margins down. While the Wii still faces some global shortage because Nintendo is not able to produce it in high numbers.
• Product innovation
The video game console industry is characterized by rapid product innovation. The product life cycle is very short in this industry as this it has a very high technological change and rapid product innovation is required to survive in this industry. For the purpose of product innovation all the rivals have invested heavily in R&D. The companies have fought over bits and pieces of market share, tossing the majority control of shares from competitor to competitor and from console to console. The companies can overtake their key rivals by being first-to-market with next generation products as Nintendo has done. But if the new product is not well differentiated then it is expected that the competitor can release a relatively similar product within several months. Microsoft got the edge over its rivals because it launched Microsoft Xbox 360 one year before from the release of seven generation console by rivals.
