Week 2 BCG analysis

For this week we were asked to give our analysis of the video game market, and from what I read, it is clear to see how the BCG analysis applies to the gaming industry.

There are various reasons why there has been a decline in video game sales. Like most technologies, there is a significant price reduction after a period of time in which average consumers are likely to take advantage by just waiting for that price drop before making a purchase that falls under entertainment expenses. Also, “many console and PC game sales are also being cannibalized by digitally downloaded games and alternative entertainment sources like Apple Inc.'s iPhone, which offers thousands of games that can cost only 99 cents or even nothing at all.” (http://online.wsj.com/article/SB124865158612682399.html) In light of the recession, this shows that consumers want to save their money, and can still get their fix for games without having to spend a couple of hundred dollars. So, experts say that because of this, consumers can “expect Sony to cut the price on its PS3 by about $100 this year, leading to price cuts by Microsoft on some of its Xbox 360 models. The PS3 starts at about $400, compared with the equivalent Xbox 360, which costs about $300. Though Nintendo has said it won't cut prices on its $250 Wii this year, it is expected to do so indirectly by bundling games with the console.” (http://online.wsj.com/article/SB124865158612682399.html)

The question mark company, Nintendo, has a solution to the issue. “The low sales might also be evidence that we are simply at the end of the current console cycle — which makes Nintendo’s decision to roll out the successor to the Wii next year look like a smart move.” (http://popwatch.ew.com/2011/09/09/videogame-sales/)

 Nintendo has the opportunity to be a Star by lowering the cost of the Wii by including games for those who enjoy gaming, but don’t have to have the latest and greatest. And for those tech savvy gamers, who are willing to spend substantially more, a brand new console will be rolling out for them to wait in line for. This would not be the first time Nintendo has come out on top. “When gaming collapsed in the early ’80s, Nintendo was the savior by reviving the concept of the home game console and unleashing the creative genius behind classics like Super Mario Bros. It came through again with the intuitive, inviting Wii.” (http://www.nytimes.com/2012/10/07/arts/video-games/video-game-retail-sales-decline-despite-new-hits.html?pagewanted=all&_r=0)

 While IPhone and other downloadable games are giving the gaming industry major competition as far as convenience and saving money, they still can’t compare to interactive feeling that only consoles can provide. And there’s always a demand for that.