The video game console war has raged on for decades now. The players have changed and the amount of options has differed over the years, but the competition has always been spirited. Ranging from the original Atari and Intellivision consoles to the Sega Genesis and Dreamcast as well as the different generations of the Sony PlayStation and the Nintendo consoles, there is a continuous and protracted evolution with each new release of the consoles. While there are three somewhat confusing options, at least to some, on the market right now, each console of the “Big 3” has its own advantages and disadvantages and all three companies have an older console that is still supported or even sold to this very day.
The person interviewed for this report and the words that were offered very much aligned with the model given by SDSU in one of its online lectures. In that model, there are five stages, those being problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior. Problem recognition is actually the perception of a “need”. While a video game console purchase is not fulfilling a “need” in the true sense of the word, the model described in this section would otherwise still hold. It is just that the “problem” is choosing the right console (SDSU, 2013).
Information search would include looking at reviews and specifications of each console as compared to the monetary investment that would have to be made for each console. When speaking of video game consoles, items or services that are related directly or indirectly are internet access, controllers, games, headsets, home video and audio equipment, furniture, mounting accessories and so forth.
There are a number of factors that would influence the purchase of any item, including that of a video game console. The first factor that can be mentioned is the price point. Customers will obviously expect (or even demand) a good value on what they spend, sort of a “return on investment” if you will, or they will later view the purchase as ill-advised. When speaking of video game consoles in particular, there are some definite trade-offs that have to be considered. For example, the new Microsoft Xbox One has a feature whereby Skype calls can be requested or received by a user of the Xbox. However, the Nintendo Wii U and Sony PlayStation 4 do not offer this because Skype is owned and operated wholly by Microsoft. Similarly, some lucrative video game franchises are specific to a console. The Gran Turismo racing series is only available on PlayStation. The first-person-shooter (FPS) series Halo is only offered on Microsoft consoles. In its hey-day, only Sega Genesis offered the Sonic the Hedgehog games, although the rights were sold off to Sony after Sega exited the American video game market.
However, the aforementioned price and feature tiers are influenced by one other factor, that being that there is a “second-tier” of consoles below the current and most updated ones. For example, while the current dominant consoles are the Xbox One, the Sony PlayStation 4 and the Nintendo Wii U, there are more price-sensitive options behind each of them, those being the Xbox 360, the PlayStation 3 and the original Nintendo Wii. Beyond that, each console has different options and characteristics that endear them to certain segments of the marketplace. For example, the Nintendo Wii and Wii U are obviously targeted to a wider swath of demographics as many to most of the Nintendo games are for children and even elderly Americans will be found playing Wii games in nursing homes. On the other hand, the PlayStation 4 and the Xbox One (and their predecessors) are targeted more towards the core video game demographics, that being males 18 to 34 years old. However, something that has been part of all three company’s consoles for a while, and is a huge thing that drives their sales and use, is the ability to stream Netflix, Amazon Instant Video, Pandora and another programming/music. This is often an option with certain Blu-Ray players and “SMART” television, but survey after survey has shown that devices like PlayStation 3’s and Xbox 360s, and now the newer devices, are used quite heavily for this purpose (Stenovec, 2013).
However, no matter how good a device is technological, there are a few intangibles that are specific to each console and company that have to be considered as well. Things like corporate perceptions of the parent companies as well as the attitudes, consumer experience and attitudes of the buyers also have to be looked at. For example, Microsoft “stepped in it” when they announced not long before the release of the Xbox One that purchased games could not be resold without the game’s sale being noted with Microsoft and Microsoft thus being able to take a cut of the game’s resale price as a cost of transferring ownership of the game. Much the same thing happened when Microsoft tried to assert that the Xbox One would not be functional unless it was always online. In other words, the console would be basically useless if it was not continually connected to the internet. In both cases, current Xbox 360 and prospective Xbox One customers revolted and Microsoft was forced to retract both plans on the grounds of what would happen if they were kept in place (Hruska, 2013).
The cultural traits, the shopping process and such all hearken to interesting questions and concerns about things such as class, gender, race, and ethnicity. As an example, the Xbox One and PlayStation 4 are extremely hard to acquire right now. People often have to pay 50 to 100 (or more) beyond the regular retail price to even acquire the unit. This can price many people out of the market, at least for now, but the exact same thing happened with the Nintendo Wii and PlayStation 3 came out years ago. The newer units will eventually return to their normal release prices and beyond that will fall in price as market saturation goes up and demand goes down.
While many would expect that video games would not be purchased by people that are poor and low-income, that is actually not the case. Video game consoles are one of those things, along with certain brands of cars, that people will invest a huge amount of their time and/or income into acquiring. Only in America do people in poverty from a statistical standpoint have Apple iPhones, an Xbox and/or a Cadillac. With consoles that are several hundred dollars apiece and games that are often north of $50, it is a cultural phenomenon to watch. However, the used/refurbish market has greatly eased the cost and effort that people must issue to get these devices or vehicles. Some decry this as poor decisions on the part of the people engaging in these practices and many businesses such as pawnshops and used car lots actively exploit these tendencies. However, many point to a chicken and egg scenario when discussing this and they assert that removing the supply would not change the demand and a “black market” would just fill any void created by cultural, societal and political efforts engaged in to counteract what the populace wants. It is not unlike the people that condemn Wal-Mart for buying China’s goods en masse and paying their workers to lower wages and benefits whilst the shoppers take advantage of the ensuing low prices in droves. Again, changing the supply would not change the demand.
As indirectly noted earlier in this report, the uses for the three primary consoles in the video game market vary quite a bit. Some owners use the consoles in part, mostly or even exclusively for movie and/or music streaming. Some owners follow the same pattern for games. Some users do a blend and indeed there are many family units that all use the console for their own purposes. Many households own consoles from more than one (if not all three) companies. Indeed, the person interviewed for this report has a PlayStation 3, a Nintendo Wii and an Xbox 360. However, the interviewee has no immediate plans to buy any of the newer consoles as he is happy with the console options he has right now.
In general, what causes a person to buy a console can vary based on prior experience, the choices made by family, the choices made by friends and the wider cultural trends and so forth. As noted before, what is better technologically may or may not mesh with what the consumers demand. For example, Betamax video technology was widely held to be superior in quality to that of VHS but the latter won out eventually. Some of the same chatter occurred when Blu-Ray and HD-DVD were going back and forth. Fortunately for Sony, Microsoft, and Nintendo, there is enough room in the market for all three of the company’s consoles. Indeed, many of the newest gaming trends are offered on two if not all three consoles. For example, the Madden football game franchise is offered on all three. A lot of games on the video game consoles, even those that are brand-specific, are often offered for use on personal computers. For example, the very popular Diablo III game has marked a shift from its predecessors in that Diablo I and II were only offered on PC’s but Diablo III is available on PC and PlayStation 4.
Other than selection, factors that can influence the ownership experience and the perceived quality thereof is how many friends (online or “real life”) that the person engages with while using the console, the quality of the internet connection used to play online games or content, the availability of new and/or use games in the market in question, the experiences encountered when playing certain games, consultation of reviews and information about the games on review sites as well as purchase sites like Amazon and Wal-Mart and so on.
Indeed, some people only play video games or use video games in passing while others use them extensively, perhaps to excess. Indeed, many people assail the violent imagery and addictive nature that video games are perceived to have. Many personal computer games such as World of Warcraft and Everquest II are doused with the same accusations. Marketing is also a huge factor in what console(s) people purchase and why. For example, fans of the National Football League (NFL) have no doubt seen the recent Xbox One commercials that showcase retired NFL stars, Brian Urlacher and Ray Lewis. The marketing in this commercial is not overt as the features and options of the console are shown indirectly as Urlacher and Lewis use the console and interact with each other. In this way, the marketing is very obvious but is done in a passive fashion rather than the stars explicitly mentioning what the features are and why they think people should use the console as they do. PlayStation is taking a very different tack as of late. They are showing “regular people” living in a fantasy world that uses their favorite game as a backdrop. Whether it be racing a car in Gran Turismo, wielding a sword in a medieval-themed game, or toting a gun in a first-person-shooter, the obvious point of these commercials is to emphasize the escapism that some video game users engage in. The company that is the most “honest” and direct in what they are doing is Nintendo, which much more heavily focuses on how the device works and shows how it used. They are much more often mentioning the features and options that exist in explicitly terms rather than showing real-life situations or otherwise indirectly showing the options and features of the console. There are exceptions with each console, however, as they do diverge in certain instances from the general trend. For example, the Xbox version of “Just Dance 2014” is marketed by showing people actually playing the game while also showing the screenshots of what the user sees as they play the game. However, a party atmosphere surrounds this depiction, so it’s not a complete departure from the general trends engaged in.
However, while many people form relationships of sorts with one or more video game console, it is entirely possible for those relationships to be compromised or even broken. For example, the aforementioned plans of Microsoft to have “always-on” requirements and restrictions on game resale would almost certainly have hurt the number of people that came to the Microsoft console world and increased the number of people that left it as no similar plans were every publicly stated by Nintendo or Sony. Price is also a threat but consoles are always falling price over time and the time horizon of how long a console lasts in the market has helped this as well. This manifests in two ways. First, the Xbox 360 has been replaced by the Xbox One but the former is not going anywhere anytime soon. Even if Microsoft stops selling it, which they likely will not do for at least a few years, the resale market of games and consoles is going to keep the console alive for years to come. Microsoft would be insane to stop sales of the Xbox 360 right now given that this older console, by itself, outsold the PlayStation 4 on “Black Friday”. However, it should be noted that the Xbox 360 was a lot cheaper than the PlayStation 4 at that time. In much the same fashion, the Xbox One outsold the PlayStation 4 as well but the latter was on the market for a week or two before that, so the Black Friday figures should be taken with a huge grain of salt. The fact that PlayStation 4 is in two markets right now while the Xbox One is in thirteen is also a factor (Peckham, 2013)
It is obvious that any device or product that leads to people waiting in Black Friday lines days (if not weeks) in advance is a market and cultural force. Indeed, many groups of friends bond and enjoy each other’s company while playing video games. It engenders things like competition, camaraderie, and enjoyment of playing a game well.
As noted before, the marketing for all three consoles is widely different but this makes sense given that each console has a different demographic niche and place in society. For example, Nintendo has a focus on its wide demographics so they focus on full family participation with a usual focus on children as many of the games on the Nintendo consoles are catered in whole or in part to kids. The Microsoft ads focus on the games and features that are specific to the Xbox including Skype, the Xbox Live Universe, Sony’s version of the same, the hands-free nature of the Kinect Motion controller and so forth. The PlayStation demographics are similar but the form and function of the marketing are obviously different in that they focus on the fantasy aspect.
The writer of this report has noticed that Xbox marketing has been especially aggressive as they are actually fully integrating into the programs and advertising of actual television networks like Comedy Central. A recent example of this was Key and Peele in their hocking of the Xbox One both during the show and during ads, all within the Key and Peele time slot. This stands in contrast to the PlayStation and Wii products that are commonly only advertised in commercials and on websites. In short, PlayStation and Nintendo are taking the traditional avenues of advertising while Microsoft is being much more aggressive but they are not doing so in a way that is clearly over-the-top. However, it still may come off that way to some. Marketing is not often done to parents and the older sets of the population. This is probably wise in that the core demographics give the best “bang for the buck” but this may very well change over the years. However, it is true that family-oriented marketing is in large part covered by the games and features (like Netflix, etc.) that lend themselves to family participation as a group.
As far as recommendations, the four P’s come into play. Those “P’s” are the product, placement, price, and promotion. When it comes to the newer video games consoles, the latter of those four is not really necessary as the demand is clearly there. Doing sales and promotions will likely be required later, including discounts and rebates, just as has been done with prior consoles. For example, the initial PlayStation 3’s included only the console and the basic parts to use the game system. However, there have since been sales of consoles that include one or more games such as Gran Turismo, Gears of War and so forth. Nintendo Wii did the same thing with some of their Mario games and Xbox did it with the Kinect console piece which was initially an additional cost. This pattern should continue as it is very effective and proper in reaction to the shift in demand as more time passes from the date of sale to the present day.
As far as price, the same general patterns that already occur are proper. While the consoles are expensive at first, the price will fall over time and the initial demand for the consoles will justify the price being high for now. After all, the companies don’t make their money from the consoles. Instead, they lower the price over time as demand continues to make the console cheaper to market and sell as more games become available and so on. What is huge, however, among the four P’s are the other two P’s, which are product and placement. Even the product itself evolves over the years as the consoles tend to get smaller and more advanced as the console continues to be built.
Placement is necessary to keep the product on the radar of the American and international buying public. The plus for the video game console makers is that the game makers do a lot of the legwork because that is what keeps the game consoles selling. However, one recommendation that the author of this report would have as far as placement and product is to implement strong quality control and make sure the games being developed for the consoles are high-quality and that they fit with the target demographics of the market. For example, a “blood and guts” game would not be impossible to sell on the Nintendo Wii or U console, but it would be a tough road to hoe because many buyers of the console chose the Wii or Wii U because of its family-friendly games.
Another recommendation is to expand the time horizon of how often consoles are released. Forcing consumers to buy a new console too often is less than wise because it causes pushback from the buying public. Indeed, Sony might seem to know that the message as the PlayStation 4 as the writer of this report has heard that the console could easily last at least 10 years. It is not easy to make such a prediction this far out and the words of Sony might just be bluster to get people to buy the console now rather than stick with an older console like the PlayStation 3. A related, but different, the recommendation is not to abandon the prior consoles too soon. If the newer technology is done well and proper, the people will eventually move to it.
Microsoft is particularly guilty of doing this but they mostly engage in this sin when it relates to their Windows operating system. The Windows XP operating system was released more than a decade ago but many people refused to upgrade to Vista and even resisted the much more popular Windows 7. Much the same cycle is starting now with the recent revelation that the retail version (but not the OEM version) will not be sold in stores anymore thus nudging people not-so-subtly to Windows 8 even though Windows 7 is much more like and embraced than Windows 8. Microsoft should avoid doing too quick an upgrade and too quick a shuttering of the Xbox 360 in the coming years as consumers will not take kindly to it. Even if they try to do so, the pawnshops and eBay’s of the world are going to allow for a market to exist even if Microsoft refuses to participate. Sony, Microsoft and Nintendo should embrace this…not reject it.
Finally, the companies should also recognize that while it is possible they can reveal options and products that the consumers will embrace and demand, they should be careful not to try and tell the consumers what they should buy and why. For the most part, consumers should be sold what they truly want rather than what the companies think they want. For example, Microsoft can market the ability to use Skype on the Xbox but if users mostly ignore it, they might want to dial down the level to which they market the option and how much it is used. In a similar fashion, if Microsoft ever creates a video streaming site like Netflix (or they buy one), they should not force out the other players in the market as a result because users would not tolerate that. If a market alternative to Skype comes about, Microsoft should at least consider allowing its use on the Xbox consoles as an option, even if they have to hold their nose as they do it.
One thing that the video game console and game makers should be careful of is making clear that there is a healthy amount of video game playing and diving into the world of the game and either of those being unhealthy and excessive in nature. While video games and the associated frameworks and networks harness much of the same social and networking capability as social media sites nowadays, there is a big difference between the video game world and the “real” world. While video game console and game makers should not be held responsible for the excesses of their users and inactions of parents, they should all be working on the same team in terms of children not being allowed to play games to excess. Parents should be made aware of tools and tricks that can be used to limit gaming time and thus contribute to a more balanced amount of socialization and life experiences.
Anything used to too much extent can be damaging. Even simple things in life like sodium, fat or even water can be beneficial in small doses but harmful in excessive doses. The services and options that video games offer are no different. Games can be educational and informative but they can also be life-consuming, time-consuming and can help ostracize people from the world. While much of what leads to this is voluntary, just leaving people to their own devices and not at least offering a subtle warning in the documentation and marketing is also not ethical or proper. A proper balance should be struck so that most to all of the good can be realized by users while most to all of the bad can be avoided. Regardless, there will always be parents that buy mature-rated games for their children without a second thought and that lets them play until 2 am in the morning.
In the end, the video game console makers are doing things the right way. They bring the latest and greatest to the people that want it. At the same time, they are usually (but not always) not eschewing and abandoning the more budget-minded options that more casual and lower-class users like to buy. Companies need to listen to their consumers while at the same market new features and options, at least in passing, to perhaps find the new great trend in entertainment consoles. The evolution of gaming consoles over the years has been notable and noticeable as consoles are shifting from the bastion of nerdy teenagers and young adults to full-fledged entertainment and communication consoles that the whole family can use and enjoy. The days of video game players being “losers” and “wasting their lives” are not gone yet but they are certainly starting to face as many people of all ages and genders are using the PlayStation, Xbox or Wii in one way or another, if not more than one way. As has already been the case, the manifestation of these devices and how/when they are used will continue to evolve.
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