Running Header MMJ Games - Strategic Analysis

MMJ Games - Strategic Analysis

MMJ Games - Strategic Analysis

Analysis of the Video Gaming Industry

The video games industry in essence has brought arcade video games to the home of the user. Firms involved in the games console industry design, manufacture and bring to the market a host of video games consoles and games software.

The introduction of the video game console in the early eighties allowed users to play video games at home by connecting the console to the users TV as opposed to traditional coin operated video games machines found in arcade centers. This innovation allowed the video game console industry to grow as the size of the potential market increased. The industry has seen periods of growth and decline over these past few decades with record sales of $23.1 billion in 2008.

External factors are those factors relating to and impacting on business growth over which a firm has no direct influence or control. Such factors affecting growth within the video games console industry include advances in technological factors. These relate to not only how the games console looks and performs (graphics and speed) but also in the processes and operations involved in bringing the console to market (R&D and value chain). Increasing internet availability and trends towards online gaming will also impact heavily on the console market.

Societal factors have also had a huge impact on industry growth. In recent decades society has become more health conscious and parents are more aware of the negative impacts that hours of gaming can have on their children's physical and mental health. The types of video games played and levels of violence enacted in these games have also raised concerns. These concerns have led the games industry to incorporate more movement into the gaming experience to imitate actions i.e. sports and dance, similar to that of exercise and to design games that are more family orientated.

General economic conditions are also a strong external factor impacting on growth. The video games console could be viewed as a luxury or non-essential item and during times of recession/economic downturn demand usually weakens for such items as consumers opt for substitute products and cheaper alternative means of entertainment. This is illustrated in the case study as figures have shown a sharp decline in unit sales since 2008.

In summary the video games console business is a highly competitive global industry with huge potential revenue for successful companies. It is driven by factors such as advances in technology, societal and general economic factors. New features in games consoles have allowed users to play and chat to a network of online gamers, access and stream media content. These innovations have made this an attractive industry to be in as industry commentators have indicated moves to incorporate gaming, internet and TV to form the complete home entertainment systems,

Issues arising from the 5 forces model below allow an analysis of the overall nature of competitive forces affecting growth and future profitability in the video games ...