Innovation and New Product Development Case Study

Console War VII

OR

Abstract:
The popularity of video games is on the rise. The top players in the video games console market in the US, Sony, Microsoft and Nintendo, are busy bringing out their latest versions and the market is heating up. Sony is the undisputed leader in the market and its Playstation I and II are very popular amongst the gaming population. Nintendo, who was the leader for the first ten decades of the gaming industry, has lost share rapidly and been delegated to third position as a niche player targeting the younger gamers.

Microsoft though a late entrant in this market, has come out with the Xbox which managed to end up in the second position. Though Microsoft incurred losses in the sixth generation of console wars, it is determined to strengthen its position. So, in 2005, it released the latest version of its console Xbox 360 looking to increase its share by virtue of being the first mover in this round of console wars. Sony and Nintendo are expected to release their latest version by the end of 2006.

The case details the various generations in the video gaming industry and gives a brief history of the top three players. The latest moves by Sony, Microsoft and Nintendo are discussed in detail, along with the implications of the first mover advantage which is expected to be in favor of Microsoft in this latest round. The case also raises the following questions: Will Microsoft gain mileage from its first-mover advantage? Will Sony be able to retain its dominant position and sustain its growth in this industry?

Pedagogical Objectives:

• Understanding the video game console industry in terms of First mover advantage
• Production Efficiency Methods: Economies of Scale, Learning Curve Effects, The Experience Curve
• Pricing Strategies
• Co-branding Techniques.

Keywords : Sony; Play Station; Microsoft; X Box; Nintendo; Game Cube; Wii; Video Gaming Consoles; Entertainment Media; HDVD; Blu-ray; Innovation Management Case Study; Branding; Gaming Industry; Loss leader Pricing; First Mover Advantage