1 / 18

Console Wars

Console Wars. Strategic Competition in the Seventh Generation of Video Game Consoles (2005-2011) Andrew Rawson Edinboro University of Pennsylvania May 30, 2014. Data. Monthly sales figures, NPD Group Collected from news publications, press releases

khuong
Download Presentation

Console Wars

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Console Wars Strategic Competition in the Seventh Generation of Video Game Consoles (2005-2011) Andrew Rawson Edinboro University of Pennsylvania May 30, 2014

  2. Data • Monthly sales figures, NPD Group • Collected from news publications, press releases • Average monthly sales in previous two years • Holiday-season phenomenon

  3. Leadership Models in Oligopoly • Stackelberg • Firm A moves before Firm B; Firm A gains advantage • Bertrand (price competition) • Firm A and Firm B move simultaneously, “split advantage evenly” • Cournot (quantity competition) • Move simultaneously, no advantage

  4. Prelude to War • Sony PlayStation 3, Microsoft Xbox 360, Nintendo Wii • Blu-ray vs. HD DVD • Core vs. Casual

  5. Seventh Generation - Launch • Unveiling • Microsoft Xbox 360: May 12, 2005 • Sony PlayStation 3: May 16, 2005 (E3) • Nintendo “Revolution”: May 17, 2005 (E3) • Launch • Xbox 360: November 22, 2005 ($300, $400) • PlayStation 3: November 17, 2006 ($500, $600) • Nintendo Wii: November 19, 2006 ($250)

  6. Seventh Generation - Launch (cont.) • Microsoft’s advantage • One-year head start over Sony • 85 Xbox 360 titles available by PS3 launch (14 titles) • 607k units sold in last 40 days of 2005 alone • Sony’s advantage • PS3 equipped with Blu-ray player • Built-in WiFi

  7. Launch Strategies • Incumbent vs. Entrant • Microsoft moved first, sold 3.4 million units before Sony sold their first • Supply-line issues resolved before competition began • Network effect • Larger user base more attractive to developers

  8. Launch Strategies (cont.)

  9. Nintendo Factor • Casual vs. Core • October 2007: Xbox 360 Arcade ($279) • Nintendo supply-line issues

  10. First Price Cuts (2007) • Apr. 29: Microsoft releases Xbox 360 Elite • July 9: Sony expands storage of low-end model (effective price cut) • Aug. 6 • Sony expands storage capacity of high-end model • Microsoft cuts prices of all three models • Low-end to high(-$30, -$50, -$30) • Nov. 2: Sony cuts all prices by $100

  11. First Price Cuts (2007) Impact • Monthly market sales shares • June 2007 • Microsoft: 29%, Sony: 15% • First move: July 2007 • Microsoft: 23%, Sony: 21% • Retaliation: August 2007 • Microsoft: 34%, Sony: 16% • No change in long-term game

  12. First Price Cuts (2007) Impact (cont.) • Sony cuts and the “Nintendo Factor” • Nov. 2007 • Microsoft: 34%(-2%), Sony: 21%(+9%), Nintendo: 45%(-7%) • Sony still lagging behind • Microsoft maintains long-game Stackelberg leadership

  13. The Great Escalation of 2008 • Announcements of future cuts • July 13 (E3): Microsoft announces storage increase for August 1 release (effective price cut) • July 15 (E3): Sony announces price cut of high-end model (-$100) to $400 for Sept. 1 • Surprise retaliation • Sept. 5: Microsoft cuts prices of all models (Xbox 360 Elite now $400)

  14. The Great Escalation of 2008 (cont.)

  15. Battle of the Motion Controllers • Playstation Move • Released Sept. 19, 2010 • ~$80 with optional navigation controller • Microsoft Kinect • Released Nov. 4, 2010 • $149.99 • Bundling

  16. Motion Controllers (cont.)

  17. Battle of the Motion Controllers (cont.) • Strategies • Stackelberg competition? • Targeted markets differ

  18. Conclusion • Early Stackelberg competition • Consoles “equalized” • Moved in different directions in end-stages

More Related