Week 2 EOC: Boston Consulting Group - Video Games

In 2009, there was a decrease in sales for the video game industry. “The video game industry tends to have its own cycles, which are somewhat separate from macroeconomic patterns. That is because the industry’s ebbs and flows track closely with the introduction, adoption and obsolescence of new hardware platforms…But the growth slowdown in such a critical month as November may well indicate that the rapid downturn in the economy is taking its toll on the industry.”(nytimes.com)Everyone was feeling the hurt of the failing economy. People were not buying video games or consoles because they could not afford them. They would wait until the prices dropped. During these times companies are forced to lower their prices in order to make some sort of profit. “Console manufacturers slash hardware prices to boost volume sales especially during lean off-peak season. This is likely to affect console hardware sales in terms of value. However, manufacturers expect to recover losses on hardware from greater console software sales.” (prweb.com)Some people still enjoy video games, but there are many that don’t want to sit around for hours at a time anymore playing them. This is all because of games you can now get on your phones. They are cheaper, you can play them anywhere you are, and they are all at the click of your fingertip. At first people didn’t think that this would become popular, but they obviously were wrong. “In 2011, the world video game market (equipment + software) will total EUR 52.1 billion, up from EUR 51.9 billion in 2010. The slight improvement (+0.4%) between 2010 and 2011 is explained by the dynamic performance of the market segments for online games and games for mobile phones, which is compensating for the decline in revenues from the home console games segment.” (www.prnewswire.com)With a rise in people owning smart phones, there should be an increase in sales next year also. Below I've added a BCG analysis of the video game market in my own views.

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