The Video Game Market

Executive Summary

The video game market is a portion of the entertainment industry that has quickly and quietly grown to proportions as big as the movie industry. Both the United States and Japan provide the greatest economic markets for this flowering product. Not only does the video game industry produce just games, they also provide home gaming systems, portable gaming systems and all of the necessary gadgets to play the games. 

Despite the sustained growth in the industry there is still significant space for upward movement. The DRF Intelligence website, which follows market movement and news within the video game industry, explains that, “the number of U.S. household with a video game system has gone from 34 million in 1994 to 45 million today. On top of that, over 25% of video game households only own an older system. Therefore it seems clear that much of industry growth has come from increased usage with existing customers. There are still plenty of new customers waiting in the wings.”

Individual Product Pricing Component

Ever increasing technology is the most important factor in the success of video games and home gaming systems. Video games are not a necessary product but they are very successful in countries that value entertainment products highly.
There are several substitute products and many complementary products. The major home system competitors include Nintendo, Sony and Microsoft. All three of these companies produce gaming systems, video games (along with other companies focused solely on games), periphery items such as controllers and other gadgets. These companies set their prices in relation to how the competition has set theirs.