The Microeconomics of the Video Game Industry Essay

Tommy Deen November 28, 2006 ECO 201 The Microeconomics of the Video Game Industry Video games have been around for years with many different types of consoles and games. The video game industry has grown into a $20 billion dollar industry over the past ten years, and it only shows signs of growing larger in the years to come. In the United States alone, the market has grown considerably where 60% of all Americans play video games, 40% are women, and 60% of all gamers are between the ages of 25 through 44 years old (games-advertising.com). According to an article on Gamespot.com, analysts estimate that the video game category will have about 50 to 55 more square feet of shelve space in Best Buy by the year 2007. The video game†¦show more content†¦Stores immediately sold out the day the Xbox 360 came out. According to Wikipedia.org, Microsoft was not able to supply enough systems to meet initial consumer demand in Europe or North America. Many potential customers were not able to purchase a console at launc h and the lack of availability led to Xbox 360 bundles selling on eBay at grossly inflated prices, with some auctions exceeding $6,000. It was reported that 40,000 units appeared on eBay during the initial month of release, which would mean that 10% of the total supply was resold. By years end, Microsoft had sold 1.5 million units; including 900,000 in North America, 500,000 in Europe, and 100,000 in Japan. Another example of this tactic being used is with the release of Nintendos Wii. A total of four million Wii consoles were to be released worldwide with the majority of that number going to North America alone. On November 19 of this year, the consoles sold out immediately. Some stores passed out cards for the console to people who were in line the night before. Circuit City had people camping out early in the day, but gave out tickets to people later in the evening. They even had a sign that stated they only had thirty Nintendo Wiis, yet people were still hopeful and stubbor nly stood in line. Sonys Playstation 3 was released on November 17, 2006 with an even shorter supply than the Nintendo Wii; some consumers camped outside of theShow MoreRelatedUop Eco 365 Week 2 Individual Assignment1003 Words   |  5 Pagesthe simulation shows the effects of things like new employers moving into the area, rent control laws being put into effect and the change in trend from apartments to homeownership and back again. Microeconomics Versus Macroeconomics In this simulation, concepts from the study of both microeconomics and macroeconomics are observed. Macroeconomics covers factors that affect the whole economy of an area, not just one company. Events such as scenario four’s introduction of Lintech into the areaRead MoreShould College Athletes Be Paid?1402 Words   |  6 Pagescollege sports. One of the most pressing issues in Today’s sport world is if College athletes should be paid. Sports such as baseball, football and basketball generate giant amounts of revenue every year and has become the NCAA in a multi-billion industry that cannot ignore the payment for college athlete’s issue. According to the article â€Å"Why College Athletes Should Be Paid† on Elite Daily the NCAA generated over $845 million last year and following the NCAA agreement the athletes are not allowedRead MoreThe Sustainability Of The Activision Blizzard Corporation1857 Words   |  8 Pageswill show through the principles of mi croeconomics the sustainability of the Activision-Blizzard Corporation. Individual behavior in the gaming industry today is what helps predict the market supply and demand for Activision-Blizzard’s goods and services. Activision-Blizzard’s future production and market position in the gaming industry can replicate past successes by analyzing the market data. This report will be using business and market data and core microeconomic principles to show how to keep theRead MoreThe Pitfalls Of Creative Destruction1398 Words   |  6 Pagestechnologies. On a microeconomic basis, innovation is significant to survive in the marketplace. Creative destruction exists in the movie, music, and mailing industry. Fewer people watch movies in theaters because of Hulu and Netflix, where consumers can watch movies at the comfort of their homes. Because of online video rentals like Netflix, video stores like Blockbuster have been forced to shut down. Blockbuster generated income by allowing consumers to rent movies and games for few weeks, butRead MoreSimulation Reflection Paper1766 Words   |  8 Pagescompleted three simulations based on real life marketing situations. The first simulation was titled, Forecasting Market Demand. This simulation discussed the importance of determining the future demand for your product in the voice commanded software industry. The marketing team for the new Listensoft software needed to accurately forecast the production capacity of the new product and the pricing strategy. This task is especially difficult because human behavior is difficult to predict. Forecasting behaviorRead MoreOutline Game Theory2132 Words   |  9 PagesB6838 Game Theory Instructor Name: Title: Tel: Email : Adjunct Faculty David Cheung Game Theory (Semester 1, Full course, No final in-class exam) (65) 9022 4161 david.cheung@ntu.edu.sg COURSE DESCRIPTION Game theory provides managers a structured and coherent approach to making better strategic decisions in an environment where conduct of competitors is often uncertain. This course uses cases to provide both the conceptual foundations of game theory and applications to business. This course appliesRead MoreIn Order To Understand How The Media Economy Has Changed1801 Words   |  8 Pagesdigital media, I believe we should first define what the media economy is. We can use Albarran’s definition which explains it as the study of how media firms and industries function across different levels of activity in tandem with other forces through the use of theories, concepts, and principles drawn from macroeconomic and microeconomic perspectives. There are two main factors that have force the media economy to evolve: the definition of a household and the incredibly quick evolution of technologyRead MoreAdvanced Placement Microeconomics23462 Words   |  94 PagesAdvanced Placement Microeconomics Instructor, Mrs. Peggy Pride Study Notes to accompany Economics Principles, Problems and Policies, 15th Ed. Campbell McConnell Stanley Brue AP MICROECONOMICS SEMESTER PLAN Instructor, Mrs. Peggy Pride TEXT: Economics, Principles, Problems and Policies, 15th Edition, McConnell and Brue Video: Econ U$A series with discussion Class Activities: APIP workbook activities, reinforcement and writing activities and other teacher-developed materials This semester-longRead MoreLego And Its Unique History And Brand Concept5206 Words   |  21 PagesLego and a new competitor. As have discussed above, for Lego to produce quantity x its costs will be Costs-Lego. However, for the incoming competitor to produce quantity x its cost will be significantly higher than Lego. Thus in the context of microeconomics, firms may not decided to compete with the current monopoly powerhouse due to the negativity in the cost benefit analysis of the higher starting costs. For a competitor to reach the current level of output of Lego: it would prove to be unbeneficialRead MoreEssay on Chipotle and its Economics - Complete with graphs, statistics.. etc.2239 Words   |  9 PagesAnalysis of Chipotle The purpose of this project is to tie together the various topics in microeconomics that are discussed during the semester. The project involves an analysis of a particular product or service, a company that produces the product, the industry that produces the product, and an industry that produces a raw material or input used in the production of the product you choose to analyze. Choose any final good or service (no basic commodities, although this could come in the analysis