Deployment in the Video Game industry

The different generations of competition can be summarized in certain important strategies, which focus around

Timing Licensing and compatibility Pricing Marketing Distribution

Timing

being willing to cannibalize existing generations before competitors do, and

timing introduction to coincide with the Christmas selling season.

Licensing and compatibility making new generations of video game

consoles backward compatible with previous generations;

licensing third-party developers to produce games (though still producing games in house).

Profits are made off of game royalties so it is not effective to license console production to others because they will not be able to subsidize console price with game royalties.

Pricing

consoles must be priced at or below cost, somewhere under $300 in order to facilitate Christmas sales.

Marketing

aggressive advertising and promotion, with preannouncements about upcoming product introductions.

Distribution leveraging distributor relationships (as

Sony did), providing guarantees if necessary (as

Nintendo did with its early consignment policies),

making sure that a wide range of distributors receive sufficient shipments (to avoid Sega’s mistake with the Saturn).