3. Industry Analysis
i. Barriers to entry
4. Government policies
5. Risk factors
6. Short term and long term strategies
3. Industry Analysis:
BARRIERS TO ENTRY:
Currently, the market for video games is growing; this market grew over the same period two years ago. However, all video game firms have to deal with increased competitive pressures. Every single day, a dozen of videos games are produced and, of course, substitutes for console gaming are growing rapidly. Moreover, Government become more and more concerned about the violence in games will affect the teenagers, the control of video games contents is strengthened. With all that factors, the barriers to entry of game industry is very high. If firms want to enter the market, they need to have a lot of experience with video games and consumer electronics and significant name recognition or specific strategies to receive customers’ acknowledgement.
There are two main competitors that Sony has to compete with: Nintendo and Microsoft. Sony, Microsoft and Nintendo are the big bosses in video games industry, with approximate market share of 56% / 27% / 17% in the US (1.8$ billion market) and 67% / 19% / 13% worldwide(4.6$ billion). In the late 1980, Sega and Nintendo popularized consoles, but only Sony and Microsoft have been enter successfully, although other have tried (3DO, Atari, etc.). Sony join in five main industries: Electronics, Game, Financial Services, Pictures, and Joint Ventures. Since no other business dealt with all five segments, Sony had faced intense competition across sectors but with their technology know-how and marketing resources, they gained the advantage to enter the market...