Case 14
Video Game Console
Industry in 2015
The latest round of competition in the market for video game consoles kicked off
in November 2012 when Nintendo launched its Wii U. A year later, Sony launched
its PlayStation 4 and Microsoft its Xbox One. The new generation of video game
consoles—the eighth since the beginnings of the industry in 1972—presented considerable uncertainty for all three companies.
The first six generations of consoles had established a clear consensus as to key
success factors in this industry. The strategies of all the leading players were focused
upon establishing market leadership that would then generate network effects in
gaining support both from users and game developers. To establish early market
leadership the key was to target early adopters—the “hardcore gamers,” who were
primarily males aged between 13 and 30.
However, the conventional wisdom had been upset by the outcome of the last
round of competition. Among seventh-generation consoles the winner had been
Nintendo. Its Wii was a technologically unsophisticated, easy-to-use console targeted at the casual user. It had outsold the more technologically advanced machines
from Sony and Microsoft. Moreover, while Sony and Microsoft had focused upon
turning their consoles into multifunctional home entertainment devices, the Wii was
a dedicated games console.
At the same time the home video game console was under threat. Increasingly
game playing was shifting to mobile, multifunctional devices, such as smartphones
and tablet computers.
Increasing competition between different types of hardware—home video game
consoles, PCs, portable game consoles (such as the Nintendo 3DS and the PlayStation
Vita), mobile phones, and tablet computers—had implications for the console makers’ market positioning. The success of the Wii was built upon its appeal to causal
game players. However, these casual players were migrating to playing games on
mobile devices such as smartphones, and tablet computers.1 If consoles were to
lose casual game players to other hardware devices, the console makers might be
inclined to return to their traditional focus: the hard core gamer for whom the video
game console offered unparalleled speed and graphical realism.
History of the Video Game Industry, 1972–2015
The history of the video game console comprised a series of product generations,
each lasting about five years and each defined primarily by the power of the microprocessors used by the consoles (Figure 1).
This case was prepared by Robert M. Grant. ©2015 Robert M. Grant.
588 CASES TO ACCOMPANY CONTEMPORARY STRATEGY ANALYSIS
FIGURE 1 Global sales of video game consoles by product generation (millions
of units)
300
Nintendo
Sony
Microsoft
Atari
Sega
Other
250
Xbox 360
Dreamcast
200
Xbox
150
PS3
Saturn
100
Master Sys.
Genesis
Play
Station
PS2
Wii
50
NES
Atari 2600
Super NES
2G (1978–85)
3G (1985–90)
4G (1991–95)
PS4
N64
GameCube
5G (1995–98)
6G (1999–05)
0
Xbox One
Wii U
7G (2006–13)
8G (2013–)
The First and Second Generations, 1972–1985: The Atari Era
The home video game market emerged during the 1970s as an extension of arcade
video games. The first generation of home video consoles were dedicated machines
that embodied a single game. The second generation of players featured interchangeable cartridges. Industry pioneer Atari with its Atari 2600 unleashed a craze
for video games driven by Space Invaders (released in 1979) and Pac-Man (1981).
Atari failed to protect its proprietary technology and was overwhelmed by competition from suppliers of Atari-compatible consoles and a flood of unauthorized games
from independent software developers.
The Third Generation, 1985–1990: The Nintendo Era
Nintendo, the leading Japanese supplier of arcade video games, released its Nintendo
Entertainment System (NES) home video console system in Japan in 1983 and two
years later in the US. By 1988, Nintendo held 80% the US market, due to hugely
popular games such as Donkey Kong, Legend of Zelda, and Super Mario Brothers
created by its legendary games developer, Shigeru Miyamota.
Nintendo’s market dominance and huge profits rested upon its careful management of the relationship between hardware and software. Nintendo kept a tight
control of the supply of games, managing their quality and releases. Developers
were required to follow strict rules for the creation and release of games for the NES
console. Cartridges incorporated a security chip that ensured that only cartridges
manufactured by Nintendo could run on the NES. Nintendo charged game publishers a 20% royalty and a manufacturing fee of $14 per cartridge. The minimum
order—10,000 cartridges for the Japanese market and 50,000 for the US market—had
to be paid in advance. Any game developed for the NES could not be released on a
competing system for two years.
By 1991, Nintendo’s sales exceeded $4.4 billion, its stock market value exceeded
that of Sony, and about one-third of US and Japanese households owned an NES.
CASE 14 VIDEO GAME CONSOLE INDUSTRY IN 2015
The Fourth Generation, 1991–1995: Sega vs. Nintendo
Sega, like Atari and Nintendo, began in arcade games. In October 1988, it launched
its 16-bit Genesis home video system in Japan, and next year in the US. With the
introduction of Sonic the Hedgehog in 1991 and, with strong support from independent games developers, sales of Genesis took off.
Nintendo countered with its 16-bit Super-NES, in September 1991. But despite
maintaining market leadership in Japan, Sega’s bigger library of 16-bit titles (by
January 1993 it offered 320 games, compared to 130 for Nintendo) allowed it to take
a small lead in Europe and the US.
The Fifth Generation, 1995–1998: Sony PlayStation
With the launch of its 32-bit Saturn console in November 1994, Sega sought to
extend the success of its Genesis console. However, a month later, Sony introduced its PlayStation console, the result of a six-year development effort led by Ken
Kutaragi, Sony’s video game guru. Like Saturn, PlayStation used CD-ROMs rather
than cartridges. However, PlayStation possessed some key advantages: by courting top games developers, providing them with comprehensive software development tools and financing game development, PlayStation entered with a range of
high-quality games. Moreover, Sony possessed a strong brand, global distribution
capability, and content from its movie division. Sega’s ill-coordinated Saturn introduction paled beside PlayStation’s well-orchestrated, big budget launch, which was
preceded by cryptic prelaunch advertisements that fueled a buzz of anticipation
within the gamer community. Meanwhile, Nintendo attempted to recapture market leadership by leapfrogging Sony in technology. Its 64-bit N-64 console was
released in June 1996 at a low price ($199 compared to $299 for a PlayStation), but
it retained its cartridge system, which involved higher manufacturing costs and less
flexibility in meeting unexpected demand for hit games. The lower costs of producing and distributing CDs allowed Sony to offer a much bigger library of games than
Nintendo could, many of which targeted niche markets and minority interests.2 By
1998, PlayStation was the leader in most of the world’s major markets.
The Sixth Generation, 1999–2005: Sony vs. Microsoft
With the sixth generation of consoles, the global market was transformed. Although
Sega led with its Dreamcast console in November 1998, the company was unable
to establish market leadership and in 2001 exited hardware to focus on games
development. Its nemesis was Sony, which launched its PlayStation 2 (PS2) early in
2000. Kutaragi’s brief had been to design a games machine with performance that
exceeded any PC and with graphics processing power ten times that of the original PlayStation. With cinematic-style graphics, a DVD player, and the potential for
internet connectivity, the PS2 aspired to be a multifunctional entertainment device.
However, the technical complexity of the PS2 created problems both for the supply
of key components and the development of new games. As a result, the launch of
the PS2 was marred by a shortage of consoles and a lack of new games.
In 2001, Microsoft joined the fray. Despite having just 19 games and a poor
reception in Japan, Xbox combined three key strengths: its technological advances
589
590 CASES TO ACCOMPANY CONTEMPORARY STRATEGY ANALYSIS
(an internal hard disk, a 733 MHz processor, 64 MB of memory, a DVD player, and
an ethernet port), the hit game Halo, and Microsoft’s online capabilities. In 2002,
Microsoft launched Xbox Live, which allowed online interactive gaming and the
direct downloading of games.
Nintendo, with its GameCube console, was the last to join the new generation
of consoles.
By 2004, Sony was the clear market leader, with Microsoft a strong second in the
US and Europe, and Nintendo a strong second in Japan.
The Seventh Generation, 2006–2012: Nintendo’s Renaissance
Microsoft led the new generation of consoles with its Xbox 360 released on November
25, 2005: the first ever console with a simultaneous global launch as opposed to a
phased rollout. Xbox 360 involved a shift in market positioning by Microsoft: while
the original Xbox emphasized processing power and focused on hardcore gamers,
Xbox 360 emphasized versatility, design, and its multiplicity of entertainment and
online capabilities.
Sony’s PS3 was launched on November 11, 2006 after a long delay, caused by
Sony’s technological ambitiousness—notably its decision to make the PS3 the flagship for the Blu-ray DVD drive and its adoption of an advanced multicore-cell
microprocessor developed jointly with IBM and Toshiba. The losses incurred by the
PS3 were the result not only of huge development and launch costs but also of the
component cost of each unit sold (estimated at over $800) exceeding the retail price
($499).3 In addition, the complexity and high cost of developing games for the PS3
meant that there were few games that fully exploited its technical capabilities.
Nintendo’s launch of its Wii console coincided with that of the PS3. Despite its
technological modesty—it lacked the speed and graphical capabilities of the PS3
and Xbox 360 as well as a hard drive, DVD player, and ethernet port—it was a
sensation. Its innovative feature was its remote wand-like controller that was sensitive to a range of hand movements. This allowed Wii to be used for a variety of
new sport and exercise applications—Wii Fit was one of the biggest-selling titles of
2008–2010. The accessibility and ease of use of the Wii allowed it to target a very
broad demographic, including older people. But although Wii established a clear
market lead over the PS3 and Xbox 360 in terms of unit sales, in terms of revenue it
was overtaken by both Sony and Microsoft.
The Video Game Industry in 2015
The Market for Video Games
At the beginning of 2015, video games continued to be a growth industry (Figure 2).
Worldwide sales of video game software and dedicated hardware (both consoles
and handheld game players) were about $70 billion in 2014 and PwC expected them
to grow to $93 billion by 2019.4 Most of this growth would be in emerging markets.
China offered particularly interesting prospects. The prohibition of video game consoles was lifted in 2014 and Microsoft’s Xbox One and Sony’s PS4 were being distributed by the state-controlled Shanghai Media Group whose primary interest was
in encouraging home-developed games for these platforms.5
CASE 14 VIDEO GAME CONSOLE INDUSTRY IN 2015
FIGURE 2 Projected worldwide sales of video game hardware and software to 2017
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2013
2014
2015
2016
2017
Home Console Hardware Market
Offline Computer Software Market
Handheld Software Market
Handheld Hardware Market
Mobile Software Market
Online Computer Software Market
Home Console Software Market
However, video games were played on an increasingly wide variety of hardware:
home video consoles, personal computers, and various mobile devices—smartphones in particular. All the recent growth had been in gaming on mobile devices.
In mature markets, notably in the US, sales of video game consoles had been in
decline for several years (Figure 3). Nevertheless, video game consoles faced little
prospect of total displacement. User experience had been continually enhanced by
graphical realism, multiplayer online gaming, and the personalization of games, 3-D
visual displays, and virtual reality.
The shift in the distribution of games from boxed DVDs to downloads, subscriptions, and cloud access fostered the emergence of new business models. The online
distribution of video games through console makers’ websites had facilitated the sale
of add-ons and accessories. In-game advertising also offered additional sources of
revenue. Most video games for mobile devices were offered free and supported by
advertising. Increasingly, the developers of mobile games adopted “freemium” models: the games could be downloaded for free, but additional features and enhancements had to be purchased.
In terms of demographics, a major development of the past decade had been the
broadening user base of video game players. Once the preserve of teenage boys
and young adult men, by 2014 the majority of the US population aged 18–49 played
video games, and even among 55- to 65-year-olds 30% played video games. Female
participation had also increased strongly—especially in mobile gaming. However,
gaming on dedicated consoles remained primarily the pursuit of teenage boys and
young men aged between 20 and 35. The broadening of the market had also led to
its segmentation—both demographically and in terms of game genres.6
Software
Each video game console supplier (“platform provider”) licensed third-party software companies to develop and distribute games for its system. Two types of
591
592 CASES TO ACCOMPANY CONTEMPORARY STRATEGY ANALYSIS
FIGURE 3 US sales of home video game consoles and associated software
($billion)
20
18
16
14
12
10
8
6
4
2
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
0
Hardware and software
Hardware
Source: Author’s estimates based upon multiple sources.
company were involved in video game software: video game publishers, which
were responsible for financing, manufacturing, marketing, and distributing video
games; and video game developers, which developed the software. Publishing was
increasingly dominated by a few large companies (Table 1). Typically, the software
publisher submitted a proposal or a prototype to the console maker for evaluation
and approval. The licensing agreement between the software company and the
hardware provider gave the console maker the right to approve game content and
control of the release date, and provided for a royalty payment from the software
company. Game developers were paid a royalty, typically between 5 and 15%,
based on the publisher’s revenues from the game. The console makers were also
the major developers and publishers responsible for some of the most popular
video games (Table 2).
Escalating game development costs were a result of the demand for multi-featured,
3-D, cinematic-quality games that could utilize the potential of increasingly powerful consoles. Atari’s Pac-Man released in 1982 was created by a single developer
and cost about $100,000. Activision’s Destiny released in September 2014 involved
a budget of over $500 million—though this included marketing costs as well as
development costs. Grand Theft Auto V cost an estimated $265 million. In terms
of cost and revenue patterns, video games increasingly resembled movies: they
incurred substantial upfront costs and a mere few became money-spinning blockbusters. Their production processes were increasingly similar—even to the point of
using Hollywood actors not just to voice characters but also to make appearances:
Kevin Spacey played a character in Call of Duty: Advanced Warfare. Like movies,
too, many of the most successful new releases were sequels to earlier games—this
CASE 14 VIDEO GAME CONSOLE INDUSTRY IN 2015
TABLE 1 Top-20 suppliers of video games ranked by sales of game software
Rank
Company
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Tencent
Sony*
Microsoft*
Electronic Arts
Activision Blizzard
Apple*
Google*
King.com
Nintendo
Ubisoft
NetEase
GungHo Entertainment
Nexon
Disney
DeNA
TakeTwo Interactive
Facebook*
Square Enix
GREE
Konami
2014 ($million)
Change over 2013
7,211
6,040
5,023
4,453
4,409
3,199
2,623
2,260
2,092
1,806
1,586
1,447
1,446
1,280
998
978
974
949
883
841
+37%
+27%
+3%
+22%
–4%
+35%
+89%
+20%
–13%
+33%
+11%
–7%
–2%
+9%
–38%
–60%
+10%
+13%
–34%
–18%
Note:
*Estimated. Estimates include all non-hardware, game-related revenues.
Source: Newzoo.
created valuable brand franchises such as Super Mario Brothers, Grand Theft Auto,
Call of Duty, and Halo).
Recent generations of consoles had seen a major shift in the balance of power
between console makers and game publishers. In earlier generations, the console
TABLE 2 Top-ten console games in the US, 2014 (units sold)
Rank
Title/platform
Publisher
1
2
3
4
5
6
7
8
9
10
Call of Duty: Advanced Warfare (PS3, PS4, X360, Xbox1)
Madden NFL 15 (PS3, PS4, X360, Xbox1)
Destiny (PS3, PS4, X360, Xbox1)
Grand Theft Auto V (PS3, PS4, X360, Xbox1)
Minecraft (PS3, PS4, X360, Xbox1)
Super Smash Bros. (WiiU)
NBA 2K15 (PS3, PS4, X360, Xbox1)
Watch Dogs (PS3, PS4, X360, Xbox1)
FIFA 15 (PS3, PS4, X360, Xbox1, Wii)
Call of Duty: Ghosts (PS3, PS4, X360, Xbox1, WiiU)
Activision Blizzard
Electronic Arts
Activision Blizzard
Take 2 Interactive
Mojang
Nintendo
Take 2 Interactive
Ubisoft
Electronic Arts
Activision Blizzard
Source: NPD.
593
594 CASES TO ACCOMPANY CONTEMPORARY STRATEGY ANALYSIS
makers were dominant, enforcing exclusivity and imposing heavy royalty payments
on the publishers. Consolidation among publishers (caused by rising development
costs) and more intense competition among the different hardware platforms had
changed all that. Exclusivity ties had disappeared from most licensing contracts—
most leading games titles were cross-platform—and were often launched simultaneously on both PlayStation and Xbox. The only popular games exclusive to a
single platform were typically those developed in-house by the console makers
(e.g., Microsoft’s Halo).
At the same time, game publishers were also facing new pressures. The licensing fees paid by software publishers for exclusive rights to the intellectual property
of media companies and sports organizations grew substantially between 1998 and
2002. The rights to a game based on a hit movie (e.g., Harry Potter) could cost
several million dollars. For sports games, the major leagues (NFL, NHL, MLB, NBA,
and FIFA) required an upfront payment, plus a royalty of 5–15% of the publisher’s
revenue from the game.
Not only did software sales exceed hardware sales; software was responsible
for virtually all of the industry’s profit. The console makers followed a “razors and
blades” business model: the consoles were sold at a loss; profits were recouped on
software sales (both games developed internally and royalties received from thirdparty game publishers). The result was strongly cyclical earnings for the platform
providers: the launch of a new console would result in massive cash outflows; only
with a substantial installed base would the platform provider begin to recoup the
investment made.
The Console Makers
For the console suppliers, the period 2006–2014 had been a difficult one. The razorsand-blades model worked less well when the games were no longer exclusive to
specific platforms. The loss of software exclusivity also undermined network effects:
the tendency for consumers and software developers to gravitate toward the marketleading platform.
The new dynamics of the market were evident from the financial performance
of the companies (see the Appendix). Despite Nintendo’s success with its Wii, only
during 2007–2010 did the company earn high profits; by 2012, it had fallen back into
losses. For Sony, its technological ambition for its PS3 bestowed high costs which
ate up potential margins. Sony’s games division incurred substantial losses during
2007–2015. While Microsoft had the satisfaction of achieving its goal of establishing
itself as a major force within the video game business, the costs were high: although
the financial results for the Xbox were buried in the aggregated financial data it
published, it believed that Microsoft’s video game business had accumulated billions
of dollars of losses between 2001 and 2015.
One consequence of deteriorating profitability was the desire to extend product
cycles. Reluctance to incur the costs of developing new models was the major motivation behind Sony and Microsoft’s desire to extend the lives of their current models.
Eight years had elapsed between the launch of Microsoft’s Xbox 360 and its replacement by Xbox One—previous cycles tended to have a duration of five or six years.
When the companies did launch their eighth-generation models, they each pursued a differentiated strategy.
CASE 14 VIDEO GAME CONSOLE INDUSTRY IN 2015
Nintendo’s Wii U was essentially an upgraded Wii. It had limited computing
power and its innovatory features were focused upon its controllers—notably
an embedded touchscreen.
● With the PS4, Sony returned to the industry’s traditional focus on hardcore
gamers—its tagline “4 the players” was designed to emphasize this focus.
However, Sony also envisaged a ten-year life cycle for the PS4 and over that
lifetime it would broaden its market appeal and expand its functionality. The
appeal to core gamers was primarily through technical capabilities—notably
in graphics, its second screen and remote playing capability, and upgraded
online services through the PlayStation network. Sony also committed to a
continuous upgrading of the game playing experience—notably through its
Morpheus project to deliver virtual reality.
● Microsoft’s Xbox One shared many of the same technical features of the
PS4—many of the core components including the AMD CPU were identical.
However, its initial market position was different from that of Sony. Xbox
One’s design and launch were influenced by Microsoft’s “One Microsoft”
strategy, which sought greater integration across the company’s products and
divisions. According to Microsoft’s VP for hardware: “It’s more than a gaming
platform. We’re thinking about our devices as a stage for all of Microsoft.”7
In particular, the Xbox One was seen as a platform for a broad array of
Microsoft’s streaming and cloud services.
●
During 2014, it was apparent that Sony’s PS4 had established a clear market lead.
The Xbox One had been launched at $499 in the US, compared to $399 for the PS4,
which put Microsoft at an immediate disadvantage. It was also clear that Microsoft’s
emphasis on home entertainment and online capabilities had alienated many
gamers—especially in relation to always-on internet connectivity and restrictive digital rights on boxed games. During 2015, Microsoft was busily back-pedaling and
reformulating its Xbox One strategy. By the end of June 2015, lifetime sales of the
PS4 were 25.3 million, Xbox One 14.3 million, and Wii U 10 million.
Looking to the Future
The evolution of the video game industry had greatly impacted both the profit
potential of the industry and the sources of competitive advantage within it.
The rise of mobile platforms and the shift in power from the suppliers of hardware to the suppliers of software had greatly undermined the industry’s capacity
to generate profits for the console makers. The weakening of network effects had
meant that video games were no longer a winner-takes-all industry with a dominant
strategy for the competitors within the industry.
Moreover, the expanding number and variety of video game players suggested
that the market was segmenting, for example the Wii appealed to different users
than the Xbox and PlayStation.
For Sony and Microsoft, their game consoles were part of their broader corporate
strategies. Both companies envisaged their video game consoles as multifunctional
home entertainment devices, but where Sony was primarily a consumer electronics company with a strong emphasis on hardware and entertainment—and movies
595
596 CASES TO ACCOMPANY CONTEMPORARY STRATEGY ANALYSIS
in particular—Microsoft’s Xbox was an integral part of a home-based digital strategy based upon the online provision of software and services. The willingness of
Sony and Microsoft to devote so many resources to a business that yielded them
such low returns on their investments could only be justified by broader strategic
considerations.
Nintendo was the closest to a “pure play” in video games—its business comprised
hardware and software both for home and mobile game playing. Its portable game
players (the Nintendo 3DS) comprised a much larger proportion of its revenues and
profit than its home consoles (Wii). However, as a specialist, it lacked the financial
and technological resources of Sony and Microsoft and was most threatened by the
trend to multifunctional hardware—especially in mobile devices.
Appendix: Financial Data for the Leading Console Makers
TABLE A1 Nintendo (year ending March 31; ¥billion)
Sales
Operating income
Net income
Operating income/
Average total
assets (%)
Return on equity (%)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
514
110
33
10.5
515
113
87
9.7
509
91
98
7.9
966
226
174
19.5
1,672
487
257
27.0
1,838
555
279
31.7
1,434
357
229
21.0
1,014
171
78
10.1
648
(37)
(43)
(2.4)
635
(36)
7
(2.2)
572
(46)
(23)
(3.1)
550
25
42
1.8
3.7
9.6
10.4
16.8
11.0
19.9
16.8
5.7
(4.2)
0.6
(2.0)
3.7
Source: The financial data in Tables A1, A2, and A3 is derived from the companies’ annual reports.
TABLE A2 Sony Corporation (year ended March 31; ¥billion)
Sales
of which
–Games
Operating
income
of which
–Games
Net income
Operating
income/
Average
total assets
(%)
Return on
equity (%)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
7,496
7,160
7,475
8,296
8,871
7,729
7,214
7,181
6,403
5,691
6,682
7,036
754
99
703
114
918
191
974
150
1,219
475
1,685a
(227)
1,512a
32
1,493a
200
3,137b
(67)
750c
227
1,044c
26
1,388c
40
68
89
1.1
43
164
1.2
9
124
1.9
(232)
126
0.6
(124)
369
2.9
(87)a
(98)
(1.8)
(83)a
(41)
0.3
36a
(259)
1.6
(230)b
(457)
(0.5)
(4)
42
1.6
(19)
(128)
0.0
48
(126)
0.3
3.6
6.3
4.1
3.9
10.8
(3.1)
(1.4)
(9.4)
(15.6)
0.3
(4.6)
(4.1)
Notes:
a
For 2009–2011, the segment data for Sony are for “Networked Products and Services.” This includes both game consoles and PCs.
b
For 2012, the segment data are for “Consumer Products and Services.”
c
For 2013–2015, the segment data are for “Game and Network Services.”
CASE 14 VIDEO GAME CONSOLE INDUSTRY IN 2015
TABLE A3 Microsoft (year ending June 30; $billion)
Sales
of which
—Entertainment
and devices
Operating
income
of which
—Entertainment
and devices
Net income
Operating
income/
Average total
assets (%)
Return on equity
(%)
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
32.2
36.8
39.8
44.3
51.1
60.4
58.4
62.5
69.9
73.7
77.8
86.8
2.75
2.73
3.11
4.29
6.07
8.14
6.42
6.22
8.16
32.44a
32.10a
37.67a
13.2
9.0
14.6
16.5
18.5
22.5
20.4
24.1
27.2
21.8
21.9
22.1
(0.92)
(1.01)
(0.45)
(1.28)
0.43
(1.97)
0.29
0.57
1.14
6.05a
9.42a
8.71a
10.0
17.9
8.2
10.3
12.3
17.6
12.6
23.6
14.1
29.3
17.7
30.9
14.6
27.2
18.8
27.8
23.2
27.9
17.0
18.0
21.9
18.8
22.1
16.0
17.6
11.7
19.9
28.6
16.45
42.47
38.5
43.7
44.8
25.6
27.8
24.7
Note:
a
The segment data for 2012–2014 relate to “Devices and Consumer,” of which “Computing and Gaming Hardware” comprises less
than 25%.
Notes
1. The rise of smartphones for playing video games was
revealed by the success of Angry Birds. Launched in
2009 for the Apple iPhone, 300 million copies of Angry
Birds had been downloaded by the end of 2011.
2. In 1997, the average PlayStation game sold 69,000 copies; the average N-64 title sold over 400,000 copies.
3. “Delays Likely for Sony’s PlayStation 3,” Financial Times
(February 20, 2006).
4. PwC, Global Entertainment and Media Outlook,
2015–2019, http://www.pwc.com/gx/en/global-
entertainment-media-outlook/global-data-insights.jhtml,
accessed July 20, 2015.
5. “The End of Console Competition and the New Game
Development Era in China,” Forbes Asia (January 30,
2015).
6. Genres included: action games, shooter games, adventure games, role-playing games, simulation games, strategy games, and sports games.
7. “Xbox is a Test for the One Microsoft Strategy,”
Bloomberg Business Week (November 21, 2013).
597