PlayStation 3 vs. XBox 360: Video Game Consoles in the US in 2006

Published 30 Nov 2008
Reference 5130
Topic Strategy
Region North America
Summary

In the ongoing battle among video game consoles, the case describes how the industry evolved from the early era of Atari domination up to the latter-day rivalry between Sony (PS3), Microsoft (XBox360) and Nintendo (Wii). It discusses how Sony succeeded with the PS1, despite being a late entrant, how Microsoft lost with XBox, despite imitating Sony, and how the battle changed again with Microsoft’s early launch of the XBox360. The case also gives information on the video game supply chain

Teaching objectives

The case allows an analysis of the strategies for entering markets with dominant incumbents benefiting from high economies of scale, scope and network externalities. Specifically, the setting shows how under certain conditions latecomers do not face an overwhelming disadvantage and how they can develop a winning strategy.

Keywords
  • winner-take-all competition
  • network externalities
  • entering high barrier industries
  • backward compatibility
  • dominant incumbents
  • first mover advantages
  • RD1108
  • AR2008
  • AR0708