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The video game industry has become a huge influence on society and the economy today. It is an industry that is so huge that it is estimated that 70% of U.S homes will own a Video game system by the year 2005, (Cassandra, 2002) Just one year away. ... Since it is still an industry it has to follow the natural laws of economics. In this paper we will dive into the industry that now has gone beyond movies and recordings in profit.
The first is that the video game consol industry is an oligopoly and has to deal with the game theory. It is an oligopoly because it has high barriers to entry such as hardware subsidies and very fierce competition amongst already established firms (Scevek, 2001) Also there are only three major producers of video game consoles: Sony, Nintendo, and the recently Microsoft. Because these three all have personal interests the game theory applies quickly. ... This unwise release is catching up with Microsoft as the profits for the X-box had halved to 190 million in 2003 compared to the loss of 60 million the year before (Yabedo, 2003), and it may soon be forced to leave the gaming industry. ... While the figures may be small Nintendo is building up slow but steady steam with its big name titles, and domination of the hand-held industry. ... However , as we know from example when a industry is earning economic profit others soon enter and drive it down. Sony announced that at the end of 2004 it would release a portable, hand-held gaming system known as the Playstation player (Yabedo,2003) While the effects of this are unkown, one thing is for certain the the two arms of the console industry are going to have fiercer and fiercer compition as time goes on.
Another aspect we will look at is the demand of video games. Demand for video games is generated by many factors.
Approximate Word count = 1582
Approximate Pages = 6.3
(250 words per page double spaced)
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