Video game industry

Sony Computer Entertainment Ltd. Versus Nintendo Ltd.

For many years, video game industry has played a key role in the growth of economics of some counties. Both Sony Computer Entertainment (SCE) and Nintendo are two representatives of this industry and they also are the main competitors in this fierce market. Previous research has shown that SCE had dominated the video game console market since Playstation2 launched with 138 million unit sales (Plunkett, 2009). Nintendo however occupy much marketing share after their new generation game console Wii and Nintendo Dual Screen (NDS) succeeded in this industry. This essay will compare and contrast SCE and Nintendo in several aspects and this paper which based on secondary resources without exclusive information. Therefore, it will begin via discussing the characteristics of product produced by these two companies, subsequently a discussion concerning price factors between the products of two corporations, for examples the development cost and price of software. Finally, this essay will focus on the marketing share and sales.

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Nintendo is a multinational corporation founded on 23 September, 1889 by Fusajiro Yamauchi which producing handmade hanafuda cards. Then the company had tried several small businesses before they developed into a video game company, for example as a cab company and love hotel (Nintendo, 2009a). Consequently, Takenaka (2007) points out Nintendo became Japan’s third most valuable listed company by developing game console and software, with a market value of over 85 billion USD. Nintendo on the other hand is the majority owner of the Seattle Mariners, a Major League Baseball team. Unlike Nintendo, SCE is a wholly-owned subsidiary of Sony which was established on 16 November, 1993 for handling the Research and Development, production and sales of both hardware and software for Playstation (SCE, 2009). SCE currently has three main headquarters around the world: Japan which controls operations in Asia; USA and UK response to control operation in North America and Europe respectively.

SCE and Nintendo have their own way to innovating for making their product attractive in order to surviving in the competitive market. Therefore, according to the announcements about new consoles of SCE in 2004 and 2006, Playstation Portable (PSP) and Playstation3 has launched in 12 December 2004 and 11 November 2006 respectively. People were amazed about the high technology in the hardware of the two consoles, for instance, PS3 has built-in Blu-Ray Disc (BD) player and cell processor, and PSP has UMD disc player and 3D image processor. BD is the new standard of disc which has enough space to save the high definition media files. As a result, the software launched for PS3 and PSP, particularly video games evolved by fantastic screen. Unlike SCE, Nintendo did not invest much to develop disruptive technology in order to improving the hardware but creating new game style. The product features of Wii are the motion sensitive remote and NDS with touch screen and internal microphone. Therefore, most of software launched on Nintendo console has bring the features in full play. For instance, the Wii Fit is the education program about Yoga and it is suitable for people who want learn yoga at home, especially ladies. Furthermore, My Word Coach DS and SekainoGohan Shaberu DS are the software for teaching user language and cooking respectively.

While, Nintendo’s product no matter consoles and software are considerably cheaper than SCE’s. The significant brand image of SONY and the costly latest technology for consoles determine SCE’s product is expensive. There were two hardware configurations announced for PS3 in E3 2006: a 20GB model and a 60GB model, initially priced at 499 USD and 599 USD respectively (IGN, 2006). Furthermore, PSP is the first venture of SCE in the pocket game console market with price skimming strategy too. The price of the base model in first announcement of it was 19800 yen about 181 USD in 2004 (IGN, 2004). Then, in accordance with appendix 1(Curmudgeon Gamer, 2007), the table reveals the comparison of the average game price between DS and PSP in Mid-Nov 2006 and Mid-Apr 2007 respectively. The trends of average game price for PSP and DS both were experienced a decreased during that period of time. Besides, the average game price of PSP is more expensive than DS by 2-3 USD per game. However the price of Nintendo’s consoles wii and NDS are much lower than PS3 and PSP. Compared with PS3, the Wii launched in United States in November 2006 at 249.99 USD nearly half of PS3 (Sanders and Casamassina, 2006). Moreover, according to Harris (2004) Nintendo announced the NDS would be released in North America in November, 2004 for 149.99 USD.

Nintendo already had occupied much more marketing share than SCE with the successful strategy and the attractive features of consoles. Although SCE had invested significant mount of money for developing their new generation game console.

Sony released its life-to-date sales for the PS3 and PSP. As of June 30, 2009, the high-powered and relatively high-priced console had sold 23.8 million units worldwide since its November 2006 launce.

(Thorsen, 2009: no page)

Thorsen (2009), also cited in the Game Spot, “The PSP, which launched in 2004 (Japan) and 2005 (all other territories), had sold 55.9 million units as of the end of Sony’s last fiscal quarter.” On the contrary, Nintendo (2009b, pp9) reported NDS and Wii had sold 107.75 million units and 52.62.million units since it launched to the June, 09 respectively. Moreover, appendix 2 illustrates the sales of the four game consoles in the three main markets (Japan, United Kingdom and United States).

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To sum up, the purpose of this essay is to highlight some main differences and similarities between SCE and Nintendo, it has been seen that even though SCE and Nintendo produce the same types of products, they have the different way on designing their products and expanding their business. In terms of evaluating the circumstance of the two corporations it has emerged from the discussion above that Nintendo occupied much more market share and it is in a stronger financial position than SCE. Given the current economic climate, Nintendo therefore is the video game development company which would suffer the least economic loss.

References

• Brightman.J (2008) Wii U.S. installed base now leads Xbox 360 by almost 2 million (Online) Retrieved from http://www.gamedaily.com/articles/news/wii-us-installed-base-now-leads-xbox-360-by-almost-2-million [Assessed 24 October 2009]
• Curmudgeon Gamer (2007) Nintendo DS vs. Sony PSP: game pricing update (Online) Retrieved from http://curmudgeongamer.com/2007/04/nintendo-ds-vs-sony-psp-game-pricing.html [Assessed 22 October 2009]
• Famistu (2009) Revenue of Japan video game industry was almost 582.61 billion yens (In Japanese) (Online) Retrieved from http://www.famitsu.com/game/news/1221045_1124.html [Assessed 24 October 2009]
• Harris.C (2004) Official Nintendo DS launch details (Online) Retrieved from http://uk.ds.ign.com/articles/549/549919p1.html [Assessed 23 October 2009]
• IGN (2004) Japanese price and date set (Online) Retrieved from http://uk.psp.ign.com/articles/560/560947p1.html [Assessed 22 October 2009]
• IGN (2006) E3 2006: The final word on playstation (Online) Retrieved from http://uk.ps3.ign.com/articles/709/709973p1.html [Assessed 22 October 2009]
• Kiyoshi Takenaka (2007) UPDATE 2-Nintendo sets $85 bln high score, thanks to Wii, DS (Online) Retrieved from http://www.reuters.com/article/companyNewsAndPR/idUST30751820071015 [Assessed 10 November 2009]
• Martin, M (2009) Console installed base reaches 22m in UK (Online) Retrieved from http://www.gamesindustry.biz/articles/console-installed-base-reaches-22m-in-uk [Assessed 24 October 2009]
• Nintendo (2009a) Company History (In Japanese) (Online) Retrieved from: http://www.nintendo.co.jp/corporate/outline/index.html [Assessed 21 October 2009]
• Nintendo (2009b) Consolidated Financial Highlights pp9 (Online) Retrieved from http://www.nintendo.co.jp/ir/pdf/2009/090730e.pdf#page=23 [Assessed 24 October 2009]
• Plunkett, L (2009) Sony talks Playstation lifetime sales, PSN revenue (Online) Retrieved from: http://kotaku.com/5340392/sony-talk-playstation-lifetime-sales-psn-revenue [Assessed 21 October 2009]
• Sanders, K and Casamassina, M (2006) US Wii price, launch date revealed (Online) Retrieved from http://uk.wii.ign.com/articles/732/732669p1.html [Assessed 23 October 2009]
• SCE (2009) Company Profile (Online) Retrieve from: http://www.scei.co.jp/corporate/index_e.html [Assessed 21 October 2009]
• SCE (2004) PSP enters the market on December 12, 2004 at 19,800 Yen in Japan (Online) Retrieved from http://www.scei.co.jp/corporate/release/pdf/041027ae.pdf [Assessed 22 October 2009]
• SCE (2006) Playstation3 Launches on November 11, 2006 in Japan (Online) Retrieved from http://www.scei.co.jp/corporate/release/pdf/060509ae.pdf [Assessed 22 October 2009]
• Thorsen.T (2009) PS3 sales almost 24 million, PSP near 56 million (Online) Retrieved from: http://uk.gamespot.com/news/6214693.html?om_act=convert&om_clk=newstop&tag=newstop;title;5 [Assessed 24 October 2009]