3DO

Power Play: 3DO in 32-bit Video Games

By: Christina Connolly

competitive analysis

1994 Nintendo Sega 3DOMarket Share 45% 45% 7%Retail Price $250 $400 $700 Net Sales $4.7B $4B $21M

Special Offerings Super FX ChipVirtual Reality Theme Parks

First CD-ROM system

0.03000.0700

0.4500

0.4500NintendoSega3DOOthers

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Nintendo Sega 3DO

Net Sales

0

100

200

300

400

500

600

700

800

Nintendo Sega 3DO

Retail Price

competitive layout

• 1994 video game industry

product lifecycle

• CD Rom systems

impact of profitability

Competitive Intensity

Bargaining power of Suppliers

Bargaining power of Customers

Threat of New Entrants

Threat from Substitutes

Gaming Industry

High Low

Profit

Threat/Power

perceptual mapPopularity

(market share)

Retail Price

High

Low

HighLow

value chain

3DO

Console Manufacturers

Game Developers

Distribution

Retail

Gamer

the situation

3DO is a laggard entrant into the video game industry. While they are attempting to be first to market with premiere technology, their competitors are using the same technology as an upgrade, undercutting 3DO in cost and capitalizing on their popularity

product and dilemmas

Launching an expensive product in a capitalized market while larger players are offering comparable upgrades at a fraction of the cost

Disjointed production system Single port console

5 button controller

consumer and dilemmas

Young demographic with minimal disposable income

Loyalty to larger market players

Demand Side Increasing Returns Popularity of a console hold great value within each

social network

technology and dilemmas

Introducer of CD-ROM consoles First time video consoles can be used for more than just games

Pictures Videos

Licensing of manufacturing and game development Required no accountability of quality

Laggard to market, leading to decreased efficiency and high retail cost

Lack of accountability led to sub-par game publishing

Inferior graphics Generic Soundtracks

partnering and dilemmas

Retail

Panasonic

Manufacturing

Matsushita AT&T Sanyo Toshiba GoldStar Samsung

300 Software Developers

Widespread licensing led to a competition among the partners and a lack of accountability for quality of the product

business model “that is missing one part”

Trip Hawkins’ initial goal: Console Concept

Required Technology (Dave Needle)

Game Development (independent developers)

Hawkins: “my goal is to be out to market first”

Gamer

business model issues

Console Concept

Required Technology (Dave Needle)

Game Development (independent developers)

Hawkins: “my goal is to be out to market first”

Gamer

• no contract of mutual expectations• no quality requirements• no time pressure

• The gamer is paying premium costs for minimal consideration

• entering an already competitive market• requires the consumer to be the test market• limits market research• increases likelihood of error• may decrease quality of product

• missing a piece, and no formal agreements to fill it

suggestions

Adapt to market trends Multi-player console 6 button controller

Maintain control over product Licensing standards

Focus on efficiency (as opposed to speed) A product is only useful if consumers will use it Decreased retail price

Marketing Capitalize on consumer identity to produce brand loyalty

Sources

"Essays.cc - Nintendo." Free Essays, Cliff Notes & Term Paper Database. 21 Mar. 2009 <http://www.essays.cc/free_essays/b2/iev101.shtml>.

"Game Genre Lifecycle: Part I." Lost Garden. 21 Mar. 2009 <http://lostgarden.com/2005/05/game-genre-lifecycle-part-i.html>.

"Power Play (C): 3DO in 32-bit Video Games." Harvard Business School (1995): 1-9.

"The Video Game Critic's 3DO Console Review Page." Video Game Reviews by the Video Game Critic. 21 Mar. 2009 <http://www.videogamecritic.net/3doinfo.htm>.