{"id":5533,"date":"2013-03-05T14:34:03","date_gmt":"2013-03-05T22:34:03","guid":{"rendered":"http:\/\/www.dfcint.com\/dossier\/?post_type=features&p=5533"},"modified":"2018-06-29T18:00:36","modified_gmt":"2018-06-29T18:00:36","slug":"battling-for-the-entertainment-dollar","status":"publish","type":"post","link":"https:\/\/www.dfcint.com\/dossier\/battling-for-the-entertainment-dollar\/","title":{"rendered":"Battling for Entertainment Dollars: 7 Major Companies in the Video Game Market"},"content":{"rendered":"
\"We

We are seeing a new level of competition in consumer electronics for entertainment dollars.<\/p><\/div>\n

MARCH 5, 2013 \u2022 As we discussed recently in Can Sony & Nintendo Recover?<\/a> one of the great ironies of 2012 was that Sony and Nintendo were not able to take advantage of strong consumer excitement over digital devices.\u00a0 Hardware is clearly not a commodity and this should be good news for game hardware manufacturers that specialize in providing unique, proprietary systems.\u00a0 Unfortunately, we are seeing a new level of competition in consumer electronics and many established players are struggling to compete in this so called new order.\u00a0 DFC Intelligence has identified seven potential major players in this new order: Amazon, Apple, Google, Microsoft, Nintendo, Samsung and Sony as the companies with the most at stake.\u00a0 We thought it would be interesting to take a look at how they each stack up.<\/p>\n

Of course, we expect many people will take issue with the idea that hardware is not a commodity.\u00a0 Companies like Royal Philips Electronics, Nokia and Dell were once giants that have struggled as consumers flock to lower cost \u201ccommodity\u201d products in their respective categories. In January 2013, Philips, a major innovator of consumer electronics technology, announced it was completely leaving the consumer electronics business<\/a> to focus on lighting and healthcare products.\u00a0 Last month Dell took the extraordinary step of looking to go private in an effort to better prepare against declines in the core consumer PC business.\u00a0 Nevertheless, we would argue that the problem that these companies faced is that they were caught in the middle between low-cost producers on one end and high-end hardware on the other end.\u00a0 In other words, they were the master of none.<\/p>\n

\"NO-S2\"Both Apple and Nintendo have had a long line of success creating proprietary mobile products that consumers crave.\u00a0 They both understood that, even in a digital age, consumers need to interface with hardware and thus they want something physical that is sleek and exciting.\u00a0 Meanwhile, video game systems have, of course, always been proprietary and sold based on their features with consumers tending to pick their favorite company.\u00a0 Furthermore, many of the biggest products in the recent years of the video game industry have incorporated a very physical element: think not just the Wiimote, Xbox Kinect or PlayStation Move, but also Guitar Hero, Skylanders, Wii Fit, and many others.\u00a0 Disney Interactive had wanted to get out of the high risk console video game business but is now rethinking its plans with Disney Infinity.\u00a0 Disney is finding the attraction of combining physical with digital is just too hard to resist.<\/p>\n

Video game consoles and Apple products are great examples of hardware that attracts a huge consumer following because they are not a commodity.\u00a0 Samsung and Amazon have recently had success with sexy hardware such as the Samsung Galaxy S III and the Amazon Kindle Fire.\u00a0 Mobile products are clearly no longer a commodity but that is just a start.\u00a0 The next big battleground is likely to be for the living room and control of entertainment services to the household.\u00a0 The battle for the video game and mobile dollar is just a precursor to what is a larger war to control consumer discretionary spending.<\/p>\n

\"MThe companies that gain control of consumers in the living room will tap into a major growth market.\u00a0 This is a global business but unlike in mobile, the fight for control of the living room will take place in the leading console video game markets, of course lead by the U.S.\u00a0 Of DFC\u2019s seven big players four are U.S. companies while the others (Sony and Nintendo from Japan and Samsung from Korea) have a strong presence in the U.S. and Europe.\u00a0 The battle for the living room is likely to be a mess and it isn\u2019t winner take all.\u00a0 Market share is likely to be fragmented.<\/p>\n

Of course, Apple established the tablet category and made huge improvements in smartphones as consumer entertainment devices.\u00a0 AppleTV will likely be Apple\u2019s major attempt to replicate iTunes for the living room and Apple does have the advantage of a large consumer base locked into iTunes.\u00a0 Nevertheless, in the battle for the living room, Apple is behind and the competition is on the lookout.\u00a0 Overall, Apple is the most powerful player, but they definitely are a company that can be challenged.\u00a0 Recent declines in Apple stock price show how much pressure Apple is under to do everything perfectly.<\/p>\n

\"MThe accompanying charts look at the competitive landscape of the seven major players.\u00a0 It should be noted that there are many other potential players for the living room battle.\u00a0 Valve is looking to connect its Steam Box to the television set for its 50+ million users.\u00a0 Startup Ouya made waves when they raised $8 million for their set-top video game console.\u00a0\u00a0 Other companies like Razer and NVIDIA have their own potential market entries.\u00a0 Nevertheless, we picked our seven companies because they have both a proven track record in hardware and the ability to deliver a complete entertainment ecosystem to consumers.<\/p>\n

The idea of an ecosystem is key to the battle for the living room.\u00a0 The success of Apple and the video game hardware manufacturers has been largely due to their ability to deliver proprietary hardware that will only play software and services that they, the system\u00a0 manufacturer, controls.\u00a0 There is a great deal of talk about open versus proprietary, or closed, systems.\u00a0At the end of the day it seems that as much as consumers demand open systems for general business and productivity they tend to like closed systems for entertainment.\u00a0 You want to be able to email or call people across any device or system, but when it comes to playing a game or watching a movie consumers mainly want it to work on their hardware.\u00a0 That is what a successful proprietary ecosystem does very well, help ensure services actually work.\u00a0 Of course, closed systems also provide a great business model for hardware manufacturers that control the system.<\/p>\n

\"MOur analysis looks at where each of the major companies stand on our major criteria used to evaluate the potential to compete for delivering entertainment services to the living room.\u00a0 We would note that all these companies are both in bed and competing with each other.<\/p>\n

Amazon, for example, markets its own tablet along with those of its competitors.\u00a0 Samsung not only markets its Windows tablet to compete with Microsoft\u2019s Surface tablets, but also its Android tablets in competition with Google\u2019s Android tablets.\u00a0\u00a0 In other words, this is complicated market and it could be several companies working together that creates the most successful formula.\u00a0 Right now things are just getting started.<\/p>\n

Our next article looks at the strengths and weaknesses of the major players<\/a>.<\/p>\n

 <\/p>\n

\"Stock<\/p>\n

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MARCH 5, 2013 \u2022 As we discussed recently in Can Sony & Nintendo Recover? one of the great ironies of 2012 was that Sony and Nintendo were not able to take advantage of strong consumer excitement over digital devices.\u00a0 Hardware is clearly not a commodity and this should be good news for game hardware manufacturers […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[49,147,148,66],"tags":[135,265,52,389,31,115,12],"_links":{"self":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts\/5533"}],"collection":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/comments?post=5533"}],"version-history":[{"count":20,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts\/5533\/revisions"}],"predecessor-version":[{"id":16332,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts\/5533\/revisions\/16332"}],"wp:attachment":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/media?parent=5533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/categories?post=5533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/tags?post=5533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}