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As we continue to integrate 21st century technology into our daily lives, video games are becoming a more prominent aspect of American pastime and recreation. According to a 2009 NPD study, “nearly two out of three Americans (63 percent) have played a video game” within the previous six months prior to the study (NPD). Nowadays “more Americans play video games than go out to the movies” (NPD). Yet, according to the recent revenue reports of January 2012, game console purchases are “rapidly declining” (Mazel). These paradigmatic trends have a lot to do with key success factors and current changes within the video game industry, as well as the strategies that the “Big 3” companies in the US market are, successfully and unsuccessfully, are employing in order to advance hardware, market software and boost revenue.

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As noted in chapter three of our text, there are three key success factors driving the video game industry. To be more precise, these factors are the ability to adopt new technology rapidly, the ability to aggressively market and franchise the goods, and the ability to continually develop new products and services.

Anyone who plays video games knows how quickly hardware and software advances. The “Big 3” game console manufacturers -- Sony, Microsoft, and Nintendo -- are leaders in computer technology in general. They also manufacture the leading Playstation 3, Xbox360, and Wii consoles respectively. One reason for these consoles’ dominance in the industry is the computer technology that is constantly being developed, tested, and integrated into each corporation’s latest video game console model. By quickly adopting the latest technology and swiftly integrating it into console units, these companies have not only secured their place at the top of the industry but have also introduced significant changes to the 21st century world’s gaming. Service-oriented gameplay and enhanced interactivity are two significant changes that are altering the landscape of the video game industry. A decade ago, advancements in portability saw the rise of advanced handheld consoles from each of the top console manufacturers. In this instance, manufacturers successfully adopted and integrated the latest advancements in portable/wireless technology that was being developed in conjunction with wireless communications (namely, cell phones), and now, ten years later, it is rather difficult to find a person in America who has never heard of a PSP or DS. Interestingly, Microsoft -- a leader in computer technology -- failed to develop a handheld gaming device, which is perhaps one reason why Microsoft struggled to compete with Sony and Nintendo in the early days of its Xbox gaming console. Today, each of the latest seventh-generation consoles (PS3, XBOX360 and Wii) has adopted internet-based services and social networking. For example, one can purchase downloadable content (DLC) directly from each console as well as access a variety of other services and network-oriented interfaces such as Facebook, Twitter, Zune movies and music, etc. Not only has the adoption of these technological developments kept the Big 3 companies at the top of the industry, but it has also changed the nature of how people comfortably play at home.

Interactivity is another example of the current technology being quickly and successfully adopted by the leading game console manufacturers. All three of the seventh-generation consoles allow gamers to play and communicate virtually with other players from around the world.  Not only online functionality is an example of how current technology has changed the way Americans play video games, but it has also informed marketing strategies by all 3 companies. Each of the companies can (and does) now market and sells software and digital downloads directly from console interfaces. As seen in some recent television commercials, online functionality also informs each of the company’s advertising campaigns. This ability to aggressively market gaming add-ons directly to players is not only a successful marketing strategy but also, as mentioned previously, a key factor for success in the industry.

These recent advancements are responsible for the increase in Americans who play video games. But how can one explain the recent declines in revenue? None of the three leading companies has released a new console within the last five years. To combat this, manufacturers have focused on increased product development, which has also changed the landscape of how people play video games today. Each of the three leading console manufacturers began to focus on increased interactivity, namely through the advent of motion gaming technology. Nintendo was the first to incorporate motion gaming with the Wii’s “Nunchuk” controller, enabling gamers to actively control on-screen actions through movement sensors. Sony was quick to implement motion technology in its Playstation Move controller for the PS3. Microsoft was the last to implement the technology, but first to eliminate the need for a handheld controller altogether with its “Kinnect” sensor unit. This latest advancement enables gamers to use body movements to control what happens on-screen, from fighting pirates and kickboxing with a friend to selecting a movie from the Netflix instant streaming menu.

In conclusion, the video game industry is currently witnessing increases in the number of customers due to the three key success factors incorporated by the three leading console manufacturers and the resulting changes to the world of video games. At the same time, a lapse in product development has dwindled sales. As a result, Sony, Microsoft and Nintendo have all increased product development, resulting in the latest technological advancement and gaming trend in the industry, namely motion gaming. From here, strategies in product development, marketing and technology integration will determine both competition and leaders in the industry within the coming decade.

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