Entering the Economic Models of Game Console Manufacturers

This paper deals with the video game console market. We are not interested here in portable consoles nor in PC games. Our work focuses on the role of core competencies in console wars, analyzing the way these competencies are activated within the firms' business models. The home console market also exhibits crossed network externalities, which requires console manufacturers the ability to conciliate the interests of both developers and gamers. From a strategic point of view, core competencies are closely related with market performance. Today, Sony's and Microsoft's business models are quite similar. However, Microsoft and Sony remain far behind Nintendo and its Wii, which suggests that core competencies do not discriminate on performance as much as the positioning choices made upstream when the strategy is crafted. The link between core competencies, economic model and strategy is at the heart of this study.video game console, business model, core competencies, two-sided market, platform.

Game Over? How Video Game Console Makers are Speeding Toward an Antitrust Violation

There has been a recent trend in the video game industry that console makers (Sony, Microsoft, and Nintendo) have been acquiring video game developers to make games solely for their console. With a surge of acquisitions, these three console makers have rapidly increased their market share of the console video game industry. But in doing so, have they started to run afoul of antitrust law? Do these three console makers now have enough market power to exert control over the video game industry like a monopoly? This article seeks to answer these questions, while also suggesting several steps that console makers can take now to avoid the head-ache that is an antitrust violation in the future

An Empirical Analysis of Indirect Network Effects in the Home Video Game Market

We explore the indirect network effect in the market for home video games. We examine the video game console makers' strategic choice between increasing demand by lowering console price and by encouraging the growth of software variety. We also explore the existence of an applications barrier to entry in the console market, and find that there is little evidence for such a barrier. Finally, we assess the applicability of the model to out-of-sample situations, to look at whether our model and previous similar models can generalize to other markets for purposes of marketing or antitrust inquiry. We find that the model generalizes reasonably well to the Japanese market for the same generation of gaming systems, but poorly to previous generations in the US market

Market study: Tactile paging system

A market survey was conducted regarding the commercialization potential and key market factors relevant to a tactile paging system for deaf-blind people. The purpose of the tactile paging system is to communicate to the deaf-blind people in an institutional environment. The system consists of a main console and individual satellite wrist units. The console emits three signals by telemetry to the wrist com (receiving unit) which will measure approximately 2 x 4 x 3/4 inches and will be fastened to the wrist by a strap. The three vibration signals are fire alarm, time period indication, and a third signal which will alert the wearer of the wrist com to the fact that the pin on the top of the wrist is emitting a morse coded message. The Morse code message can be felt and recognized with the finger

A Multigeneration Diffusion Model for IT-Intensive Game Consoles

The video game industry has attracted more and more attention not only from technology giants such as Microsoft but also from software developers and private investors. Information technology dictates how game console producers compete in the marketplace. Intensive IT competition in each console generation has shifted the market balance. Competitors jockey to position themselves as the first-mover within a generation or to wait and enter the market with cheaper and more advanced technologies. To capture the characteristics of IT-intensive products, we propose a multigeneration diffusion model that captures both cannibalization and competition effects. We apply the model to analyze game console diffusion with real shipment data for three game consoles from two companies: Sony and Microsoft. We analyze two scenarios: one with only Sony¡¯s products, and one with both companies¡¯ products. We find that the cannibalization between Sony¡¯s products is minimal, and Microsoft maintains a strong competitive edge that has challenged Sony¡¯s market position. The results also explain how Sony has maintained its position as the market leader over the last two generations. This research sheds light on the nature of an IT-intensive game console competition between companies and generations

"Indirect Network Effects and the Product Cycle: Video Games in the U.S., 1994-2002"

This paper examines the importance of indirect network effects in the U.S.video game market between 1994 and 2002. The diffusion of game systems is analyzed by the interaction between console adoption decisions and software supply decisions. Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later. The paper also finds a degree of inertia in the software market that does not exist in the hardware market. This observation implies that software providers continue to exploit the installed base of hardware users after hardware demand has slowed.

Externalities of the Microsoft’s Network Goods

This paper aims to make a public statement about the strategy implemented by Microsoft in order to reinforce its market power across the networked users of Windows Operative System, and Xbox Games Console. It is presented an economic view that supports the anticipating (not predatory) position assumed by Microsoft against its direct competitors.Externalities, Microsoft, Software Industry, Regulation Policies

Externalities of the Microsoft^Rs Network Goods

This paper aims to make a public statement about the strategy implemented by Microsoft in order to reinforce its market power across the networked users of Windows Operative System, and Xbox Games Console. It is presented an economic view that supports the anticipating (not predatory) position assumed by Microsoft against its direct competitors.Externalities, Microsoft, Software Industry, Regulation Policies.

The Effect of Superstar Software on Hardware Sales in System Markets

Systems are composed of complementary products (e.g., video game systems are composed of the video game console and video games). Prior literature on indirect network effects argues that, in system markets, sales of the primary product (often referred to as "hardware") largely depend on the availability of complementary products (often referred to as "software"). Mathematical and empirical analyses have almost exclusively operationalized software availability as software quantity. However, while not substantiated with empirical evidence, case illustrations show that certain “superstar†software titles of very high quality (e.g., Super Mario 64) may have had disproportionately large effects on hardware unit sales (e.g., Nintendo N64 console sales). In the context of the U.S. home video game console market, we show that the introduction of a superstar increases video game console sales on average by 14%, over a period of 5 months. Software type does not consistently alter this effect. Our findings imply that scholars who study the relationship between software availability and hardware sales, need to account for superstar returns, and their decaying effect over time, over and above a mere software quantity effect. Hardware firms should maintain a steady flow of superstar introductions, as the positive effect of a superstar only lasts for 5 months, and make, if need be, side-payments to software firms, as superstars dramatically increase hardware sales. Obtaining exclusivity over superstars, by hardware firms, does not provide an extra boost to their own sales, but it does take away an opportunity for competing systems to increase their sales.indirect network effects;new product introductions;superstars;system markets;video game industry;software;hardware

International gaming: comparative survey research on digital gaming

Computer and console gaming has become a major entertainment sector around the globe. Still, the diffusion rates and the general acceptance of gaming vary between countries. There is some anecdotal evidence that there are countries and regions which are more open to technological advancement and gaming in particular. However, until now, researchers had to rely mostly on market research and industry information when trying to identify the state of gaming in their respective countries. In a unique effort to solve the problem of missing cross-national research, this panel brings together several international teams of researchers, presenting several large-scale surveys in a comparative manner