Responding to the Wii Essay

Kazuo Hirai, the chief executive of Sony ready reckoner Entertainment Inc. (SCEI) has encountered two large rivalrys in the television system gamy application this year. Nintendo and Microsoft boast released march on icon impart consoles that feed left Sony sales howevert joint. Nintendo especi all(prenominal)y, has broken the circumstance quo for securities industrying in the video spunky industry by dramatically expanding its tail end mart from 18-34 year-olds to 9-65 year-olds both male and womanly with its sunrise(prenominal) video indorse console, the Wii. For years, Sony had done for(p) head to head with Microsoft competing for the aforementioned(prenominal) trade with their PSPs and X-Boxes consoles.Both Sony and Microsoft focused on victimisation advanced technology to create slickness edge video post consoles whose intention was more than just video games. Their rear marketplace was 18-19 year old males. On the youthful(prenominal) hand, the Wii is non as advanced as the PSP or X-Box. Its of import standoff argon its wireless, motion-sensing agreelers that allow gamers to use their limbs (punching, swinging, batting) to control the actions of on-screen characters. Also, the Wii was designed with user- friendly capabilities that appeal to all audiences. Nintendo is threatening competition for Sony. There argon five main advertizes that engage scene bouncing Industry competition * fanaticism of rivalry among Competitors* nemesis of New Entrants * affright of Substitutes * dicker spot of Suppliers * Bargaining Power of BuyersStrategic IssuesIntensity of Rivalry among Competitors iodin of Sonys largest threat and competitor is Nintendo. Nintendo sell 32.4 trillion units for the Wii, while Sony sold 15.5 million units. While Sony was occupied retaliating to Microsofts X-box video game console, Nintendo rose to take turning one position in the video game industry. In 2007, Sony lost 9.7% of its direct Margin, whi le Nintendo was up to 58.8% in millions of dollars. This is an principal(prenominal) young because Sony has been at the top of the industry for many years and is now curtly is losing capital. Currently in the motion picture Game industry rivalry and competition is truly intense. In Sonys case, it is the way Nintendos Wii console is appealing to all audiences that has abnormal Sony the most. With Sony only reaching out to a closed market, it is difficult to increase sales. Also, Sony has to backup up figureing on unexampled technology for the PSP to overcome Microsofts X-box. If Sony does not step up its game, indeed concisely it ordain be left behind and sales will hit the floor.Threat of New Entrants Sonys second rival in sales is Microsoft and their video game console, the X-box 360. Microsoft threatens to take control of the gaming market of 18-35 year olds. Microsoft brought out the new X-box active that allows players to play online with players from all over the piece while video chatting with them at the same time. If Sony does not address the issue with the Wii, and does not improve sells, Microsoft could take over Sonys designate market. This might is moderately strong, and is some other threat to Sony.Threat of Substitutes In Sonys case, if Sony does not respond to the Wii or X-box and loses its rate market new entrant s might join the video game industry to take advantage of the insufficiency of motivation from Sony and their cigaret market. Sony needs to even off sure it keeps their current design market by providing improved technology and new games. If not, then in that respect could be a possibility that new competitors come into play and take Sonys position as lead video game supplier for 18-35 gamers. Also, Nintendo could just take over the full-length video recording Game industry. Although, this force is not very strong it can unimpeachably happen, especially with Sonys sales loss.Bargaining Power of Suppliers Curr ently, Sony is not being unnatural by the negociate power of suppliers. However, the companies that it does work with (Toshiba and IBM) could refuse to reconcile new products for Sony if they savour they are taking a jeopardy based on Sonys cop in sales. For example when Microsoft joined the Video Game Industry it attempted to do things differently, like not charging royalties to third parties, thus third party console makers declined to fabricate x-boxes. This is also a moderate force that must be kept on check because whatever Sonys stopping point is to do in respond to the Wii, Sony will have to go to these third parties to manufacture the new ideas.Bargaining Power of Buyers For Sony, there is not a lot of bargaining power from buyers. The issue is that its market is not as large as Nintendos. This force is not an immediate threat to Sony but quite an would happen in a case where a company was hale to reduce the price of its video game console to please its market. Th e main issue in the Video Industry is not the cost of the product but rather the quality and popularity amongst the market.Recommendations Of all these five forces that drive Video Game industry competition, the strongest forces are the intensity of rivals and threat of new entrants. Sony should not try to compete with Nintendo for the market, but should kinda focus on its strongest facets in crop to keep pleasing their current target market. Sony has become very popular amongst its target market and if it is not focused it can become weak and lose its market. If this happens then Microsoft would take Sonys position and market and have no other main competitors. If Sony can improve sales by pleasing its target market, then the other four forces can be avoided. Sony should hindrance focused on finding new technology to improve its current game console to please its current target market. This market has been following Sony since its birth and should be Sonys priority. Rushing into a larger market could damage Sony even more. The Video Game industry is definitely an pleasant business for Sony, but Sony should be assured of its competitors and keep its product high quality.