Industry background
The video game industry (formally referred to as interactive entertainment) is the economic sector involved with the development, marketing and sale of video and computer games. It includes video game consoles, game software, handheld devices, mobile games and online games. The video gaming industry has been growing exponentially in recent years. The growth is expected to leap-frog in the future.

Following chart shows the projected market share by 2010 of different segment in the industry-

Following chart shows growth of different segments in the industry- From the above charts, it is clear that the console is the largest segment in the industry, but online, mobile, pc software and broadband are some of …show more content…

Weighted Competitive Strength Analysis Microsoft Sony Nintendo
Competitive factors Weight Rating Weighted Score Rating Weighted Score Rating Weighted Score
Console Graphics 0.9 8 7.2 9 8.1 5 4.5
Controller 0.8 4 3.2 5 4 9 7.2
Game titles 0.9 7 6.3 8 7.2 6 5.4
Price 0.5 7 3.5 6 3 9 4.5
Console features 0.8 8 6.4 8 6.4 7 5.6
Technology Innovation 0.7 8 5.6 7 4.9 6 4.2
Innovative Ideas 0.7 6 4.2 5 3.5 8 5.6 36.4 37.1 37

Conclusion: The above chart shows there is no clear winner. Each contender has its strength and weaknesses but overall they are very close. Market is expected to see fierce battle between these competitors.

SWOT analysis for Microsoft, Sony and Nintendo
Strengths

Microsoft:
• Internal resource strength in developing software
• First mover in High definition (HD) gaming products (Xbox 360).
• Production cost is falling.
• Successful marketing strategy.

Sony:
• Experience in entertainment industry
• Blue Ray HD technology which is considered video disk platform of the future
• Competitive advantage incorporating multiple technologies in PS3.

Nintendo:
• Low development cost for Wii video games.
• Wireless wand controller technology.
• Strong internal resource strength of being innovative. Weakness

Microsoft:
• Uses HD technology, which is not supported by the industry.
• High development cost of video games.

Sony:
• Pricing Strategy had flaws for PS3 launch, High price.
• Unable to