Firms share is divided among them. But firms
Firms are trying to produce their best consoles to satisfy consumers andattract even more. But large brands such as Sony has been recognized bygamers and are loyal to them so by this few large brands has dominatedmarket.Larger brands they collude in the market. They corporate in the market as aone firm. So it allows large gaming brand to be as oligopoly. As they producesimilar goods, so they have control over price to be in fix range. As hugemarket share is divided among them. But firms can’t act independently of eachother. They need to take account what rival firm will do when they take action.Proper strategy for these large brands are important for price or nonpriceactivity. These large brands can make artificial barriers to avoid new firms toenter in the market.However, they all are efficient in terms of innovation and consolesdevelopment. This generate more profits for them and gain larger profit sharesfrom market.4Question 2Sony Corp PS, Microsoft Xbox and Nintendo have dominated consolesmarket. Same games now you can play on phones, Pcs and in consoles.Video gaming industry has been increasing as earned in 2015 $99.6Bn(figure2).Ps4 was released in 2013, whose sales increased year by year, (figure1) itsunit were sold from 4,49million to 17,37millions. Which proves how its demandincreased in market and sony has been making huge profits from it. But due toincrease market share of PS4, Sony PS3 sales has decreased too much from14,42millions (2011) to 1,94millions (2015). However there has been onesignificant change in market, as in 2008 Sony sold 43,25million unit but in2015 they sold 19,31million unit. Even Though sales in market is decreasingbut in 2015 they had highest market share compare to other counselors.Sony had influence in console market with PS2 but stumbled with PS3, asNintendo and Microsoft foothold in the market. But later it seems Sony tookmore market share back with PS4 (Srikant, 2015).Figure2 shows that smartphone has been becoming part of gaming marketand affecting consoles sales. Sony and Nintendo have blamed poor sales oftheir most current portable consoles on the rise of the smartphone gamingindustry (Keating, 2015) .It is expected their market to grow ($188.6Bn revenue in 2019) howeverfigure1 shows that their unit sales has decreased. Maybe with the help ofnew products such as 3D glasses/games which can increase in unitsales and boost their revenue.5Question 3Smartphone has been advanced much faster than any other technology. Aftermany updates now consumers can play high quality games in mobilephoneswhich has affected consoles demand.Demand and supply of smartphones (Dia1)With the help of advance technology, smart phone firms have experienceeconomies of scale which has lead to reduction in per unit cost. So supplycurve shifts towards right, decrease in price with more quantity. Smartphonesare more flexible than consoles, their demand has increased and they are alsoprice elastic, so if incomes increase that will make shift in demand curvetowards right. Both curves shift (S to S1/ D to D1) which leads to quantity atQe and price at Pe. So it will lead to higher profits.6Demand and supply of game console (Dia2)Figure 2 shows that smartphones sales are increasing so that mean demandfor consoles has decreased but there is still chance for its growth in marketwhich can have effect in different segments. Smartphone is substitute good forcounselors games so once demand for smartphones rise (shown in Dia1) thatwill have change in shift in demand curve of consoles (shown Dia2 from D toD1), which will decrease in price(P to P1) and quantity(Q to Q1). That meansless revenue for counselors. Figure 2 shows, revenue share for counselorsdecreases from 30% to 26% but their revenue for sales will increase from$27,54Bn(2015) to $30,839Bn(2018). So even though their demand mightdecrease but due to increase of market share (inflations or different exchangerates affecting price), their revenue will still increase.