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Javier Nasser
MGMT 4020
03/30/2011

Responding to the Wii?

Market Analysis
Complementors

In the videogame industry, sales are high because of complementors. Consumers depend oncomplementors to enhance their videogame experience. The market seeks the newest videogame titles that will entertain them while the next new title comes out. Videogames are not the only complementors. Othercomplementors include controllers. The demand for controllers is highest when the household has more than one gamer obviously, but even if there is only one gamer he or she will have a slightly weakerdemand for controllers so that he can enjoy his videogames when he invites his friends over. Batteries and charging cables are necessary to operate the controllers. Another complementor would be thehard drive which offers data storage. Not only videogame data can be stored on these hard drives, but technology has made it possible for the hard drives to be able to store photos, music, and evenvideos. The most expensive complementor which you will need even if you buy a so called “bundle” (which includes everything like games, controllers, necessary cables, etc) is a television. Sony has theedge in the industry because demand for TV’s rise during high sales season of videogame consoles. Sony should take advantage of this factor for the next upcoming generation of consoles by offeringbundles that include a TV for example.
Supplier Power

There are a few suppliers of videogame consoles. The 3 are Sony, Microsoft, and Nintendo. A high switching cost is involved if the customer decidesto start buying different videogame titles because they will have to purchase another console as well. Switching costs are around $300.
Buyer Power

Buyers cannot purchase a large portion of totaloutput of consoles but they can purchase a large portion of total output of videogame titles. Customers cannot easily switch consoles because it involves high costs. The sellers are dependent on the...