Xbox - Xbox Case Background The Xbox was launched in...

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Xbox Case Background: The Xbox was launched in November 2001 and was considered the most technically advanced console system in the market Its' features included: DVD player, built in hard drive and modem and integrated internet access Competed with Sony's PlayStation2 and Nintendo's GameCube Launch price was $299, similar to the price of the PS2 Industry Overview: The success of the consoles depended on the quality of the games designed for them. If games were not interesting, then no use for the console. People were playing games for a longer period of time – average 11 hrs per week in 2001 It was viewed as “fun entertainment” by 35% of the population interviewed: relieved stress and was challenging 32% of players in the US in 2000 were 35 or older (insert the graph from page 14 with the age breakdown) NOT KIDS STUFF ANYMORE here I would include that 43% of gamers were women, first cause most people would think that only men are playing and 2nd in case you are presenting it would be a nice thing to mention (just an idea) and to show that it becomes a trend in all demographic segments 1. Is the video game console industry such an attractive industry at all? Pros: Rapidly evolving industry dominated by only 2 major players: Nintendo and Sony Total console market in 2000 amounted to close to USD 20 billion, Non US sales accounting for 52% of total revenues in 2000 and expected to increase slightly faster than the US market to 54% of total revenues in 2005 Research has shown that consoles were occupying a central role in the home, 60% located in either family rooms or living rooms – it was now being considered part of the home entertainment complex. The estimate was that by 2005 video game consoles would be in 70MM homes in America Place of growth is (it is still, now :-)) was on the internet. 40 million Americans playing online games in 2000, estimated 72 million were going to be playing by 2004 From 2000-2005 the gaming market was expected to grow to more than 5.3 million Cons: The items below are ‘features or charcteristics’ of the industry but not necessarily cons. Companies that can adapt to the below, can thrive. Agreed with other guys – analyse the features of the industry using the 5 forces (diagrammatically). And for those items that might make it unattractive, we should mention (i) the significant development costs for a new console ($2 bn – Xbox) and the games (ii) significant marketing costs (100s millions) for hardware, and the games (iii) the risks and outcomes of software piracy/IP theft (p3) and (iv) the need to build an innovative organisation and network to continuously develop games and hardware innovations Industry is highly cyclical - bottom to peak roughly 5 years
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Is it really a cons ? Using the right timing, it is an opportunity to enter and to change the rules ! (agree with Guillaume her, example would be launch of PS2)
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