Week 2 EOC: Boston Consulting Group - Video Games

There is a lot to say about the Video Game Market. I feel it’s a buyer's market, no doubt. As a consumer we can choose from the Xbox, PlayStation, and we can play video games on our phones. It is a very competitive market and everyone is trying to come up with new ways to attract new buyers and to keep the ones the already have. My opinion of the market can be compared through a BCG analysis of the video game market.  I would say the AE Sports, Electronic Arts, is a cash cow. Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of cash that the company uses to pay its bills and to support other SBUs that need investment. "While physical sales of games continue to decline, EA’s digital sales — games and add-on content delivered over the Internet — are soaring. The company’s shares are at their highest point in almost six years.  For us, whether you’re spending $50 or $60 on a console game or you’re investing nothing but time in a mobile game, it’s important you feel value for that. We’re as focused on investment of time as investment in money. Engagement is the world’s new profit metric."

http://bits.blogs.nytimes.com/2014/06/12/a-conversation-with-andrew-wilson-chief-executive-of-electronic-arts/?_php=true&_type=blogs&_r=0

I would the classify Nintendo and their new Wii Fit into the Star. Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows. I think that they will do very well with this new addition, but I think they will eventually fall back to a cash cow. They are always looking for new ways to grab that piece of the market. "The videogames business, after hitting a new sales high last year, this week plans to showcase new technologies to help spur further growth -- including a new product from Nintendo Co. to get users to exercise using their Wii game consoles. {Wii Fit}. Overall, computer and videogames have become a big business, generating $17.94 billion in hardware and software sales last year, up 43% from the prior year. Beyond Nintendo, technology companies are touting innovations, such as voice communications among gamers and even a headset that lets users control actions using their thoughts." http://online.wsj.com/articles/SB120347378492578983

Finally I would list Microsoft a question mark, their video game console Xbox. Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out. "In addition to selling at least 2 million fewer players than Sony, Microsoft has lost $1 billion in future sales, based on how much gamers spend over the life of a console, according to Michael Pachter, a Wedbush Securities analyst who predicts the company will bounce back. Further market-share losses would give Sony greater influence with the companies that create the most-popular games and applications."  http://www.businessweek.com/news/2014-06-06/xbox-looks-for-do-over-with-gamers-as-sales-trail-sony-s