Let’s analyze the gaming console industry Essay

We can define two types of supplier the hardw ar supplier and the software supplier. The hardware suppliers providing the elements require to build the comforts energise a paltry bargaining power because there have very minuscule switching costs and there are a lot of them. On the other hand, the software suppliers (developers) have a luxuriously bargaining power because they choose and set the conditions to work with each console. founding Barriers Entry barriers are high because of high R&D costs and the high capital investment mandatory to start a business in the console industry.Internal Rivalry There is high informal rivalry among competitors because the core participant merchandise is growing slowly, competitors have high exit barriers and the products developed operate obsoletes in less than 5 years due to the fast progress of technology. The players in the industry are Sony, XBOX and Nintendo. Buyer Power The bargaining power of buyers is high because there are man y options with very low switching costs. Substitutes Low substitute power because they are not very similar (like TV or other entertainment device) and dont fulfill the same exact purpose.Sony has few competitors due to high barriers-to-entry and startup costs but buyers and suppliers (game developers) have high bargaining power and low switching costs. Sony should address a new market as Nintendo did. We could call this market the casual players market. In order to repulse in this new separate, Sony willing have to develop a more interactive way of utilize their console without dropping the numerous features to avoid losing their core player market share.The key of success for Sony is to hold a new technology such as Nintendo did with Wii that will enable the company to target a broader market and not only the males from 16-36 years old. The advantage of entering those two markets with one console is that Sony will enter a bigger market with bigger returns and consequently bi gger economies of scales. Also, entering the casual player market is crucial for the company to avoid falling behind its competitors in both markets since this new segment will enhance the brand exposure and recognition.The risk associated to this option is to turn this high performing console in a low performing console (as Nintendo did) and lose the core players customers that are very important to Sony financial stability and growth. A big challenge for this new console will be to shock costs in order to make it more accessible to customers, since the casual players market will emphatically be guided by price. Vis-a-vis the Five Forces, if Sony were to pursue this option, the company will be competing in the core player market and on the casual player market.On the casual player market the substitutes will have more power. Sony will compete with other activities such as ceremonial occasion TV, watching a movie and others living room activities. The main purpose of this market is entertainment in command while the core player market is about playing video games. Update Sony and Microsoft had already use advanced interactive technologies. Nowadays, Microsoft has the most advanced software and hardware that dont need controllers anymore, on the nose your body.