The driving forces in the video game console industry include innovation, novel devices, the introduction of Internet, and social media trends. Innovation entails developing games with such features as superior graphics and motion sensors. The introduction of new devices, such as iPods and mobile phones, has influenced the video game console industry as well. The capability to connect to the Internet has allowed multiplayer games with opponents from anywhere in the world. What is more, social trends determine how users want to play games and the nature of those games.
The above mentioned forces are making the industry more competitive. Video game developers need to provide games for the devices used by players. For instance, the use of smartphones has increased dramatically. Thus, it is important for the video game companies to consider this fact as they release new games. Many users now prefer multiplayer games that can be played via the Internet. The players can now compete with their friends and keep track of their progress on social media. This trend has been made possible by the introduction of Internet-based games. Games with features, such as superior graphics and augmented reality, are likely to have higher sales in the market.
The critical aspects that determine the success of video game console developers include technology and change. Advanced technology makes it possible to develop games with augmented reality. This aspect is a primary success factor as it produces games that have high demand in the market. The change also determines the luck of companies like Nintendo since it allows the firms to venture into innovative platforms that cover a new target market. For example, the company decided to introduce Pokemon GO, a game that operates in the Android and iOS environments. This move resulted in the company obtaining increased revenues, which were not anticipated. This success can be attributed to the growth in the use of smartphones.
Nintendos strategy focuses on obtaining a new target market that is comprised of non-gamers. This goal will be achieved by simplifying the design of new games and shifting focus from hyper graphics to artistic elements. The new target market has provided a chance for the company to increase sales and revenue. This strategy also involves shifting from being a pure game developer to becoming an intellectual property-focused firm. Even though the company has been primarily focused on the development of games for game consoles, it has now ventured into the games that can be played on the Android and iOS gadgets.
Nintendo uses the broad differentiation strategy in the five generic strategies available for businesses. This is because they have focused on the development of exclusive products with superior features that are currently not produced by any other rival. As a result, they have been the pioneer in several products that have compelled business rivals to make counter moves. This strategy has permitted the firm to increase sales and attain customer loyalty.
The addition of new features has been the primary defensive strategy employed by Nintendo. This approach has been achieved by the incorporation of new capabilities in Pokemon go where clients can go around their neighborhoods in real life to capture Pokemons. This new feature is a development in augmented reality, an area that has not been exhausted. This move has been successful as the game overtook candy crush sales and was downloaded over one hundred million times. Nevertheless, several security concerns have been raised regarding the Pokemon Go. Searching for the products could lead clients to unsafe locations such as alleys and rivers.
The release of the WII by Nintendo is a blue ocean strategy because the device has created a new market that was uncontested. It shifted focus from hyper graphics to artistic elements. Thus, the product attained a new target market of non-gamers, which was not targeted by any other firm at that time. The blue ocean strategy involves dealing with competition by establishing a new target market that makes competition irrelevant. A company employing a blue ocean strategy can obtain considerable revenues in the new target market before the competitors venture into it. Particularly, if the new features are enabled by intellectual property that cannot be easily copied by competitors, the firm will enjoy making profits for a long time. Therefore, Nintendos release of WII is aligned with the principles of blue ocean strategy.
The impact of Pokemon GO on Nintendos financials has been tremendous. The app has been at one point generating over $10 million daily. The revenue obtained from the game in its first week was approximately $250 million, which was higher than the income collected by Candy Crush or the Clash of Titans in their first weeks. The stock of the company doubled in several weeks after the release of the game. Moreover, the marketing of Pokmon GO did not entail numerous ad campaigns, which allowed the company to save significant amounts of money.
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Microsoft and Sony should place more focus on the augmented reality in the development of new games. Moreover, these firms should get out of their comfort genres in order to venture into the augmented reality. Currently, the innovation of these two companies involves releasing newer versions of existing games that have better features. However, this move does not help obtain new clients, but instead, only retains existing customers. Therefore, Microsoft and Sony cannot achieve higher revenues from these sales. A venture into the augmented reality will allow the two firms to gain new target markets, which will ensure the companies obtain higher incomes while simultaneously countering the Pok?mon GO app effectively.
The two organizations should also focus on the defensive strategy of advertising. This decision will allow them to demonstrate the innovation of their products and their commitment to outperforming the competitors. Moreover, Microsoft and Sony should place emphasis on the security of their products. Even advertising would be appropriate since there are numerous security concerns regarding the use of Pok?mon GO. As a result, many clients will become cognizant of the better security features provided by these companies as compared to Nintendo.
The two above mentioned firms should also employ the defensive approach of pricing. It can be achieved by reducing the prices of both new and existing products. The reduced prices of new products can be strategic since clients already know the current prices of those products. Thus, many more customers will be purchasing them since they will know they are receiving a good deal. The reduction of new products prices can be attained by launching innovative products and setting their predetermined prices for a specified period. During this time, the company will conduct an intensive ad campaign to inform clients of these new captivating features. Once customers become familiar with the products, the companies should slash their prices. This move will result in high revenues obtained from the sale of the new products.