Electronic Art in 2007. POWERPOINT

Electronic Art in 2007: Can It Retain Its Global Lead in Video Game software? : 

Electronic Art in 2007: Can It Retain Its Global Lead in Video Game software? Mike Resciniti, Jack Duffy, Leo Lee, Leslie Booth and Joe D’Alfonso

Electronic Art : 

Nowadays, there are many people that play video games, pc games, massive multiplayer online games and mobile games. Given the increase in online games and mobile games, it is safe to say that EA and all of the gaming industry is increasing. Because of technology, the gaming industry can develop more games which have high quality, and develop more generation’s of console. This presantation will briefly to talk about element of Electronic of Arts, discuss about the global video game industry by five-force analysis, talk about SWOT analysis reveal about Electronic Arts’ situation, and explain what is Electronic Arts’ generic competitive strategies. Moreover, some appropriate analytical tools techniques will be used in this case. Electronic Art

Identifying Key Problems : 

Any given industry change very fast, this includes the video game industry, so EA will need to keep up with research and development and continue to create games that are in demand EA must keep a tab on what competitors are coming out with to give them some sort of idea for what to come up with next. Not enough money spent on research and development, giving competitors a chance to take over the market Identifying Key Problems

The Five Forces Model : 

1. Competitive pressures associated with the jockeying among rival sellers For global game industry, every company competes violently. From 2000 to 2005, the video game industry represented from $24 billion to 35 billion global market Every company produces video games for different consoles. Consoles are developed in new generations fast, game developer should compete to gain license for new generation console.(stronger) Every video game developer have good capability in faster processing speeds, digital and high-definition graphics capability and on line connectivity to develop new game or new game-playing device, by those ways, they can easily to attract extended consumer The Five Forces Model

: 

2. Competitive pressures associated with the threat of new entrants To enter the game industry is difficult because new entry should possess high technology skill, high capital and well distribution, it’s not easy to new entry Entry barriers of global video game industry are high because every global game industry companies cooperates and competes with each other, they have force to influence this market, and new potential entrants are not easy to enter this market According to case, game develop cycle for PS2, Xbox were typically12 to 24 month, but developing game for PS3 Xbox 360, and Wii could take from 12 to 36 month, it would take a lot of money to support development. If a company who do not have a lot of asset and experience, it’s difficult to enter global video market.

3. Competitive pressures from the sellers of substitute products : 

Substitutes are attractively price: Consumer can choose entertainment which cost them lower price than play video game when they have free time, such as movies, DVDs, or music Because many people spent a lot of time playing video game, their parent, spouse, or relative will be unhappy. It will cause game players to choose other substitutes active which are more healthy to do, like travel, and shopping with their relatives 3. Competitive pressures from the sellers of substitute products

4. Competitive pressures stemming from supplier bargaining power and supplier-seller collaboration : 

Because of economic scale, game developers can easily negotiate volume discount, game developer’s suppliers are not easy to refuse their request There are many third-party vendors that can produce game titles, pressing of CDs or DVDs and printing of user manuals for game developer companies, game developer companies can easily to choose one of them Game device companies sell their own games’ license for game developer to produce, and game device companies charge royalties from game developers. Because most of those games have high demands, game developer should agree to royalties; otherwise, game device companies can give license to other game developers 4. Competitive pressures stemming from supplier bargaining power and supplier-seller collaboration

5. Competitive pressures stemming from buyer bargaining power and seller-buyer collaboration : 

Because game recycle is 50-90 days, there are many games released in a period. Consumers would like to play a new game or new series game; consumer would not care about price For retailers, because new releases game is very popular, retailer is net easy to deal price with game developer, they should get more inventory for their consumer purchasing For a game device company, they might have power to deal price with game developer. Some games which are designed by a game device company are very popular. If game developers do not decrease price, game device companies might give license to other game developer 5. Competitive pressures stemming from buyer bargaining power and seller-buyer collaboration

Driving force for video game industry : 

Emerging new internet capabilities and application Increasing globalization Product innovation Technological change and manufacturing process innovation These are the main reasons in which the game industry will be and has been increasing dramatically Driving force for video game industry

SWOT ANALYSIS : 

1. Strengths: Electronic Arts have several strategies to gain more market share, such as digital download, using dynamic advertising technology, developing online game and cellular handsets and so on. Electronic Art use those strategies to extend its product line in many segments- video game, online game and cellular handsets game. Electronic Arts is the world’s leading independent developer Electronic Arts have five principal design studios in the world Electronic Art have 7200 employee, and its design staff of 4100 people consisted of digital animators, programmers, music industry, and movie industry Electronic have good e-commerce capability to sell their product, it can provide their product for online retailer or provide their game in its website for consumer download. SWOT ANALYSIS

2. Weakness: : 

Electronic Ares’ product is extensive, it produces video game, online game, portable device game. Electronic Arts might not focus in most important segment, also, if demand of one of those segment decreases, Electronic Arts might get lost. To develop a game might spent several months or years, also to develop a game should cost a lot of money. If Electronic Arts can not create games on time, it might lose money The cost of developing new game is too high, it would reduce its profit. 2. Weakness:

Slide 12: 

3. Opportunity: The demands of the video game market is increasing, Electronic Arts do not worry their market share. Because new technologies are created, Electronic Are can use those new technologies to produce their game in different segment, such as video game, on line game, pc game and so on. Because of high speed internet and internet is extended to every household, the demand of massive multiplayer online game are increasing, it provide Electronic Arts an opportunity to develop multiplayer online game. Movies industry produces many popular movies, such as Spider-Man, Harry Potter, Lord of the Ring, and so on, Electronic Arts also produce those game. Consumers are willing to purchase those games and play them.

Slide 13: 

4. Threat In video game industry, there are many games for consumer to choose and consumers can choose different generation of game-playing consoles, consumers do not need to wait and buy Electronic Arts’ product, and they can choose what they want easily Developing a new game might cost Electronic Arts a lot of money and the cost is increasing, but the price of game almost the same price, Electronic Arts might not cover it expense.

Conclusion : 

The video game industry in increasing day by day. The numbers of consumers also increase. Although EA is a leader in video game industry, there are some many challenges that EA should face. There are some recommendations from my personal opinions for EA to improve performance. • To use new technology in their product. • To reduce game develop cost • To reduce process of developing game • To focus in how internet impact industry. • To look for potential consumers • To set up design studio in China and India • To sign up famous people for it advertisement • To support some famous even such as Beijing Olympic Games Conclusion