Industry Network & Industry Manufacturers

The video games industry develops, publishes, manufactures, distributes, and sells
electronic gaming devices, software, and accessories. The global marketplace, which is
mainly composed by video game console hardware and software, online, mobile and PC
games, has recently reached $93 billion in 2013, a 14 billion increase from 2012. (Blau
2013) Strongly driven by strong sales in the constantly evolving video game consoles and
mobile gaming softwares, the market is forecast to reach $111 billion by 2015.
The industry can be segmented into two main sectors. Firstly the software sector,
which constitutes the games themselves; and secondly the infrastructure and technology
sector, which consists of the research and development necessary to manufacture the
hardware with the latest techonolical enhancements available to play the games. Typically,
new hardware sales drive demand for new software sales. The different consoles target
different market segments. Microsoft and Sony's flagship gaming consoles have strongly
held the top two spots in the market for the last decade. By implementing the newest
processing and graphical technologies that appeal to the true gamers, both the Xbox One
and the Playstation 4 are the competitors to beat. On the other hand, Nintendo's Wii U,
which from a technolological standpoint is less advanced, has appealed to an entirely new
customer segment, the younger and casual gamers.
Some of the most significant growths in the video game industry also derive from
revenue obtained in the most recently emerging markets. Nowadays, revenues from the
mobile app gaming market comes majorily from the U.S. and Europe, where smartphone
and tablet gaming development is predominant. Online and PC games remain extremely
popular, however, this segment is highly limited in overall size. According to market
analysts the traditional PCs will not be replaced by newer PCs in households, but by tablets.

As video games, their platforms and gameplay ideas continue to expand, so this will in turn
drive demand for play. (Blau)
The video games industry is segmented into 5 vertical stages: development,
publishing, manufacturing, distributing, and retail; and secondly as previously stated, into
two distinct arenas: software and hardware. In several similar aspects it can be seen as
comparable to the book publishing industry. (Blau).

As shown in the diagram below, the industrys main distribution channel consists of
retail chains such as malls and department stores, specialty gaming stores, mail orders,
discount stores and the E-Commerce Outlets. None of the consoles hardware marketed and
sold in the United States is actually produced domestically. Neither Sony, Microsoft, nor
Nintendo produce any of their gaming consoles. Foxconn, the major electronics
manufacturer in the world, used to be the sole maker of the Xbox One, both the Playstation
3 & 4 and Nintendo Wii. Now some other manufactures such as ASUSTeK and Flextronics
realized the industrys business opportunity and are now slowly beginning to take some
from Foxconn. In this industry the suppliers handle all manufacturing of the gaming

consoles and some of the big ones are Foxconn, Flextronics, ASUStek. Sony, Microsoft,
and Nintendo rely heavily on their manufacturers in order to meet the intense demand of
customers. The suppliers in this industry are relatively larger than others various industry
suppliers. Foxconn for example has been associated with manufacturing for Sony,
Microsoft, and Nintendo as well as other big electronic companies such as Apple. The
suppliers in this industry are very concentrated to ensure consistency with the
manufacturing of the gaming console. This will allow a better relationship between the
suppliers and the companies in our industry.

In occasions, companies we consider to be big players really aren't as big as we

thought. And those rising stars (or companies with flagging fortunes) may not be quite as
small in stature as they first appeared. In the table below we have ranked the most
influential players in the video game industry arranging them by the metric that can mainly
quantify a companys size, its revenue. Similar to the several companies on this list, Sony's
business goes far beyond the gaming industry. As a reason, not all of these companies
report the revenues of their gaming business apart from all other technological industry
branches they manufacture for, as a result the revenue data could not be completely
attributed to just game sales. Consequently this means the industrys giants such as Sony,
Microsoft, and Time-Warner will receive the top ranks with a drastic revenue difference to
that of its video game industry competitors. As another good example, Japanese game
publishing and development giant, Konami operates a series of fitness centers in Japan,

while Sega Sammy manufactures video games and arcade machines, and Namco Bandai
holds a strong portfolio of toy brands like Gundam, Power Rangers, and Tamagotchi.
Video game retailer GameStop came up bigger than the creator of Mario,
Nintendo. The company had a exceptionally rough year in terms of revenue, on the other
hand, the specialized game retailer GameStop brought in more than $1 billion in revenues
compared to Wii Us creator.(Sinclair 2012) By bringing in a combination of the top video
game consoles, together with their respective compatible gaming software, plus its re-used
game business, GameStop pushed Nintendo to the 11th spot of the chart.

These are clearly extremely impressive sales figures for Sony, but how do the
next generation video gaming consoles directly compare to the previous launches of the
predecesor consoles? It is evident the Sony PS4 is off to an incredibly strong start since its
recent launch in November 2013, the Xbox One also had a solid launch, while the Wii U is
struggling even today. The Xbox 360 sold 1.5 million in its first six weeks. Taking in
consideration that the Xbox One sold 3 million units in a similar time frame. Sony sold 1.7
million PS3s in its first eight weeks, compared to 4.2 million PS4s in a comparable time
frame as well. Ultimately, the Wii U may have struggled in 2013, but it actually launched
very strong. 1.53 million consoles were sold in the US and Japan in around the first six
weeks of its launch.

We also need to take into great consideration the most recently created industry, the
industry of mobile gaming app platforms. In terms of minutes per day, the mobile app
consumption in the U.S. reaches 127 minutes, compared to 168 minutes for television and
70 minutes for web browsing. App revenues have grown at a 129 percent compound annual
growth rate since 2008, starting first with ad revenue and then virtual goods purchases in
free-to-play games. This fast-growing industry did not exist in 2008, but just in 2012, $18
billion in revenue was generated from mobile apps. (Khalaf, 2013)
Mobile App Development Stages

Blau, Brian. "Newsroom." Gartner Says Worldwide Video Game

Market to Total $93 Billion in 2013. 11 Apr. 2014
http://www.gartner.com/newsroom/id/2614915
Orchard, Pauline. "Video Games: Global Entertainment & Media Outlook." PwC.
12 Apr. 2014 http://www.pwc.com/gx/en/global-entertainment-mediaoutlook/segment-insights/video-games.jhtml
Sinclair, Brenan. "Who are the biggest players in the industry?" GameSpot. 17 July 2012.
21 Apr. 2014 http://www.gamespot.com/articles/who-are-the-biggest-players-inthe-industry/1100-6387414/
Gilbert, Ernice. "The Top 24 Gaming Companies In Japan." Games Thirst Amazing Life.
13 Apr. 2014 http://www.gamesthirst.com/2010/11/09/the-top-24-gamingcompanies-in-japan-are
Takahashi, Dean. "The mobile app economy is exploding (so, what else is
new?)." VentureBeat. 18 Jan. 2013. GamesBeat. 21 Apr. 2014
http://venturebeat.com/2013/01/18/the-mobile-app-economy-is-exploding-so-whatelse-is-new/
Davis, Justin. "What Sony's '4.2 Million PS4s Sold' Figure Actually Means - IGN." IGN. 7
Jan. 2014. 25 Apr. 2014 http://www.ign.com/articles/2014/01/07/what-sonys-42million-ps4s-sold-figure-actually-means
Asustek's earnings per share down in 2013." Www.ChinaPost.com.tw. 15 Feb. 2014. The
China Post. 25 Apr. 2014
http://www.chinapost.com.tw/taiwan/business/2014/02/15/400653/Asusteksearnings.htm