Console Showdown Nate Jones Jeremy Pexton Ben Davies Scott Eddington JoDee Sherwood

1. Console ShowdownNate JonesJeremy Pexton Ben DaviesScott EddingtonJoDee Sherwood

2. Contenders • Sony PlayStation II • Nintendo GameCube • Microsoft X-Box

3. Sony PlayStation II • Background of PlayStation • 1995 • Current leader • Used CD’s, not Cartridges

4. Sony Today • 90 million PS1 consoles sold • In 2001 PS2 was introduced to the market • 20 million sold and downward compatable • Large Game base

5. What is to Come • Continue to be the first to introduce the best • CD • Graphics • Speed • Broadband Internet Connection • External hard-drive

6. Five Forces Analysis • Threat of New Entry • Difficult of establishing a relationship with game makers • Limited storefront shelf space • Sony knows the entertainment market • Sony has a large capital base • Sony has the most market share Bargaining Power of Suppliers Sony is the biggest name Game makers can choose with whom they work Game makers are making higher profit margins on games produced today Rivalry of Competition Sony has the largest market share Technology is becoming more advanced X Box capacities and features surpass PlayStation II’s On-line gaming industry is booming Nintendo is focusing on youth markets, while Sony and Microsoft are focusing on young adult to adult markets Bargaining Power of Consumers Very little influence Quantities and prices are set by Sony Threat of Substitutes Technology of competition matches that of Sony CD’s are cheap and easy to make X Box console has more features No loyalty between game makers and manufacturers

7. Nintendo GameCube • Background • Fist to enter market • Sucked up revenues for many years • Largest revenues from handheld systems • Large customer base • Introduces systems later in the game

8. Nintendo Today • Going back to basics • Newer release, slower performance • Price $199 • Family games • Handhelds

9. What is to Come • Continue to cater to families and the younger crowd • Cheaper consoles • Dimmer future in gaming consoles • Bright future in handhelds

10. Five Force Analysis +Threat of New Entry Difficulty of establishing a relationship with game makers Limited storefront shelf space Nintendo has long reputation in the gaming market Nintendo has a near monopoly in the hand held niche of the industry -Bargaining Power of Suppliers Cartridges hard to design for: GameCube switched to easier, and cheaper to produce optical disc storage Game makers can choose with whom they work: want the larger base of consoles Game makers are making higher profit margins on games produced today Licenses have been relaxed to woo designers to produce games To sell a new console, must have a library of hit games. Game makers are Kingmakers Publishers can play console makers off each other for better deals In-house game production a low threat +Bargaining Power of Consumers Big Hits drive the market: If there’s a lot of hit games, then the console will sell Quantities and prices are set by Nintendo -Rivalry of Competition Sony has the largest market share Technology is becoming more advanced X Box and PlayStation II capacities and features surpass Game Cube On-line gaming industry is beginning to boom GameCube is cheapest ($199 vs $299 of Xbox and PlayStation II) Nintendo is focusing on youth/family markets “Easy to play, yet entertaining”, while Sony and Microsoft are focusing on young adult to adult markets. -Threat of Substitutes Arcades are cheaper than ever before Computer games becoming more popular and technologically advanced On-line gaming becoming popular

11. Microsoft's X-Box • Background • New to the industry • Grow into a star

12. Entry and Pricing • Entry end of 2001 • Priced at $299, $375 to make • Better system capabilities • On line gaming • Microsoft has deep pockets

13. What is to Come • Improved games, superior to Sony’s PlayStation. • Microsoft needs to be free of further anti-trust suits • High speed Internet infrastructure to reach all • The Xbox must be accepted in Japan • Watch competitors to see if they are staying on top as far a compatibility goes. • Trends toward entertainment unit consolidation and home theatres continue.

14. Five Forces • +Threat of New Entry • +Barriers to entry high: high cost to develop technology (Microsoft has deep pockets) • +High level of strategic alliances within industry • +High Brand Loyalty • +Distribution channels already in place for Microsoft • +Technology learning curve advantage for Microsoft • -Plausible entrants: Major electronics manufacturers, PC Manufacturers, Compaq, Palm, etc. • -Government may intervene (antitrust) • +Bargaining Power of Consumers • + Buyers are non-concentrated single entities with few formal organizations for leverage • +Cost of switching suppliers low to moderate cost (everyone wants a contract with Microsoft) • - Component Suppliers are relatively few in number (increases buyer power) • +Bargaining Power of Suppliers • +Intel has long term relationship with Microsoft • +Games sell consoles; Microsoft is counting on game manufacturers to utilize the capacity of the Xbox. • +NVidia-Intel views NVIdia as a threat due to its capability of making high quality chips. This gives Microsoft more leverage by pitting the two against each other. • +ATI threatens Nvidia, further leveraging Microsoft • +The other hardware (besides chips and hard drive) components in the Xbox are highly undifferentiated and switching costs would be minimal. • +Bandai, Electronic Arts, LucasArts Entertainment, Sega Entertainment and Ubisoft competing for Xbox games • +Rivalry of Competition • -Sony PlayStation 47% Market Share. • -Sony adapts easily, PS2 added an expansion interface in response to Microsoft’s built in Ethernet port. • -Nintendo GameCube, GameBoy 28% Market Share • +Sega dropped out of console business and is focusing on software. Aims to be the largest gaming software manufacturer • +Sega formed a strategic alliance with Microsoft to produce Sega games for Xbox • +Advertising partners such as WWF and Taco Bell. • +Microsoft has largest advertising budget. • -Threat of Substitutes • -PC’s with built in gaming and online capabilities are growing rapidly • +Increased popularity in handheld computers will force manufacturers to look closer at adding gaming capabilities to handheld computers

15. As a whole

16. Game makers • Hard to work with cartridges • Tied to a leash • Financial clout • New freedom with compact disks

17. The Present • 6 billion in 2001 • Quality • Innovation • Brand name • Strong market

18. Tactics • What is important • Graphic quality • Speed • Realistic appearance • Challenge • Ie: Nintendo’s Luigi’s Mansion • Movement in a 3D envornment • Relastic

19. Tatics • Build on previous hit games • Mario Brothers • Zelda • Pac-Man • Changing games environments • Co-branding with major league sports

20. Future • Competition has loosened grip on licensing • Sell games to all consoles in the market • Online gameing • Better games with better graphics

21. Victor is X-Box • Money • Power • ideas

22. Questions??