The video game industry competition Analysis

Table of Content


The video game industry has revolutionized the field of entertainment in an undeniably fast pace over the last few decades. With the advent of computerization and the evolution in home PC market video games have grown from a small time segment to a large multi-billion dollar industry. With gamers growing by the day the gaming industry gains a steady momentum and companies are competing to provide new and innovative gaming experiences to gamers across the globe. Microsoft, Sony and Nintendo are some large players in the market.

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In 1958 William Higginbotham created the video game ‘Tennis for two’ which is dubbed as the first ever video game to be created. Steve Russell’s ‘space war!’ invented in 1962 was a computer based game. In 1966 Ralph Baer an Electronics engineer designed a model that made gaming possible from home television. 1970’s marked a substantial advancement in the industry and today the video game industry encompasses a major market share of the entertainment industry providing employment opportunities for many and is a major sector by itself.

Industry Overview

Video game industry is a fast growing industry globally. In the U.S the gaming industry or the entertainment software industry has surpassed the growth of software industry. According to ESA (Entertainment Software Association) report “U.S computer and video game software sales grew 22.9 percent in 2008 to $ 11.7 billion – more than quadrupling industry software sales since 1996”. The industry provides huge employment opportunities and is a successful economic segment since its inception.

Key success factors

Some of the key success factors that attribute to the phenomenal growth of the industry are:

Innovations in Technology and design of creative  gaming experience
Continuous up gradation
Market research
Strategic marketing and communication
Parallel growth and developments in the computer hardware and electronic industry like sound cards, video high end systems, play station consoles, key board, mouse and other hardware and Growth in the software segment and new software platforms and programs like UNIX and Graphic user interface modules.
Large players in the market; Sony, Nintendo, Microsoft
Growing number of gamers and the popularity of the games.
The online article on Bruce on games, a gaming market strategy website, lists major success factors in video game marketing as the genre of the game, the content, time of the year, the price point, the competition and the USP of the game. The article observes that “You should never market two games in the same way, to do so is to totally misunderstand what you are doing. Each game is an individual that needs loving care. And so should be nurtured in it’s own special way. Only by doing this will you realize the full potential of that game in the market. This is what the people who have developed the game and those who have invested in it deserve” (Bruce Everiss, “ Success factors in game marketing”  par. 1)


Microsoft entered the gaming industry with its X-box in 2000. “Microsoft’s entrance into the gaming industry simply means leveraging its market-leading DirectX technology, which already drives the majority of top-rated PC games, with a new device similar enough to a PC to let developers easily move their titles to the system” ( Paul Thurrott, “Microsoft to Enter Gaming Industry with X-Box” Par. 1) . Microsoft’s business strategy focuses on the masses and with the gaming industry on an upswing with an industry sale of $7 billion in 1999 it was a strategic focus for Microsoft to enter the gaming industry.  X-box was conceived to compete with Sony’s play station 2. With Sony and Nintendo gaining an early entrant advantage over Microsoft there is a continuous pressure on Microsoft to build its base of game loyalists. The present market for Microsoft is limited to the U.S majorly and Microsoft lacks regional attraction in its game theme development. Due to this, Microsoft misses on the Japanese gaming market which is a substantial market worldwide. The new and upcoming gaming product by Microsoft ‘project natal’ is “a full-body motion-sensitive technology that should allow gamers to do what they want without holding on to any hardware” (Daniel Terdiman “Microsoft’s Project Natal: What does it mean for game industry?” par. 1). The strategic focus of Microsoft is to identify the key market for its new development, make the pricing affordable and market the products to its current loyalists, competitor’s loyalist and to new and ever growing gaming population.


Nintendo is an early entrant in the gaming industry and enjoys a large base of loyalists. Game boy was an early game invented by Nintendo. Game cube and Wii are other popular products from them. In 2006, Nintendo introduced Wii with revolutionary features and a highly competitive pricing. As observed by an online article “Wireless motion-sensitive remote controllers, built-in Wi-Fi capability, and a host of other features have made the Wii the best-selling latest generation console system in the world”

The Nintendo entertainment system (NES) was introduced in 1985 and was an instant success for the company. Nintendo has since enjoyed a market leader in the segment or many years and even today they are amongst the top three in the industry.

Competitive pricing, innovative technology and a wide market base are some of the factors attributing to the success of Nintendo. In 2007, “The Nintendo Wii has pulled into first place ahead of the Xbox 360, with the Sony PlayStation in third” (Daniel Eran Dilger, “PlayStation 3 vs. Xbox 360 vs. Nintendo Wii”, par. 11)


Sony enjoys a leadership position in the Gaming industry with its play station line up of games and a host of other innovative games developed using the latest technology. Sony’s PS 3 or play station 3 is a innovative high-tech play station with a standard hard drive, hi definition blue-ray optic drive , HD video output, Bluetooth connectivity and the latest version of wireless networking.

With its PS2 version of the play station Sony “was able to maintain a clear lead, having sold 115 million units between 2000 and 2006 (blue in the pie chart below), compared to only 24 million for the Xbox (green), and 21 million for the failed GameCube (purple)” (Daniel Eran Dilger, “PlayStation 3 vs. Xbox 360 vs. Nintendo Wii”, par. 21)

In spite of the higher pricing in comparison to Microsoft’s X-box and Ninetendo’s Game cube and Wii, Sony proves to be a tough competition and a lead with its technological innovations. Sony has strategically set up its play station 3 as a close PC alternative. “The premium model has a memory card reader for not only Sony’s own Memory Stick but also–in what must be an incredible first for the company–Compact Flash and SD memory cards, making the PS3 a digital hub for photos; with a USB keyboard and mouse and the included web browser, it can serve as a basic PC” (Daniel Eran Dilger, “PlayStation 3 vs. Xbox 360 vs. Nintendo Wii”, par. 4)


Sony, Microsoft and Nintendo with their products PlayStation 3 vs. Xbox 360 vs. Nintendo Wii respectively are constantly improvising and targeting supremacy in a closely fought market leadership position.  The business strategies, unveiling of new and improved technologies, an understanding of the gamers psyche and appropriate product positioning gives them an edge in different business area making their battle for supremacy a tightly fought one. The gamers benefit largely from the competition gaming their way to glory.

Works Cited

Bellis, Mary, n. d. Computer and Video Game history: Early arcade machines, the history of   home consoles and the history o the video game. 28 July 09

ESA. The Entertainment Association. n .d.  Industry Facts. 28 July 09

Eran D, Daniel (2006) PlayStation 3 vs. Xbox 360 vs. Nintendo Wii  F6EBCA0E3B23.html 28 July 09

Everiss, Bruce, (2008) Success factors in game marketing 28 July 09

Terdiman, Daniel (2009) Microsoft’s Project Natal: What does it mean for game industry?. 28 July 09

Thurrott, Paul (2000) Microsoft to Enter Gaming Industry with X-Box  box.html. 28 July 09


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