Electronic Arts and the Global Video Game Industry
Gaming has become an important part of growing up for people who were born in the last 25 years. Approximately 3.9 - 4.7% of total world population (250 to 300 million people) is ¡§very active¡¨ or a ¡§frequent¡¨ player of video games or at least owns the necessary equipment. This target group spends five or more hours a week playing video games. The United States is the largest video game market in the world with about 50% of the US population (145 Million people) spending 6.5 hours a week on computers and video games.
The majority of video game players are preteens, teenagers, and young adults ...view middle of the document...
The video game business is an interdependent industry. Companies have to pay a customary royalty to the console makers. The console manufacturer have the power to authorize all games, limited the number of games, marketing plan and even the quantity of production. The guidelines and restrictions put forth by the Software Rating Board (ESRB) effects the content, storylines and features of video games.
Cell phones, high-speed internet access, interactive TV, and satellite TV services have become commonplace features in recent years. Video games will move from stand-alone game systems such as consoles or PCs to become online games accessible via many devices. Continuous participation of other gamers around the world will make the games more challenging. Moreover, the high performance of next generation of chips and 3-D graphic animations will attract even more gamers to the market.
The importance of the non-US market is growing every year. However, regulations, cultures, language and other attitudes of each country can differ from the US. For example, people play ¡§soccer¡¨, instead of American football and baseball and different rules exist for the game of chess in Asia and the US. Therefore, the company and industry may need to customize some products and introduce multi-language online games to appeal to the diverse global tastes.
Chairman Probst¡¦s vision for Electronic Arts is to overcome traditional entertainment companies like Disney, Viacom, and Time Warner as the biggest and best entertainment company in the world.
Electronic Art¡¦s had two stated goals. The first near term goal is to be the market leader of games played on the current generation of 128 bit consoles. The second near term goal is to generate hundreds of thousands if not millions of users to their online EA Sports product.
EA is focusing on video game entertainment at this point. The CEO has plans to turn the company into an entertainment giant by aggressively chasing high growth markets that draw off of the core competencies of the firm.
EA¡¦s current strategy is to focus on franchise and sports related games that develop loyal followings and repeat sales. They use a unique multi-lingual/multi-platform approach to producing and distributing games around the world. The company¡¦s three main differentiators are their internal sports culture, ability to localize games, and international distribution.
Product strategy: EA¡¦s product strategy is based on the franchise model. 70% of their sales consist of new releases of previous hits. They also seek to be toward the cutting edge of technological innovation.
Sales strategy: The company¡¦s current sales strategy is to use their field sales representatives and call centers to sell their games to over 80,000...