Markets come and go. As technology advances and people adapt to utilize better alternatives that are available, the parts of the market that cannot adapt to the changes will be left out. There are few examples of parts of markets dying due to changes in technology: the emergence of plastic and low cost bedroom furniture, versus traditional wooden furniture, VHS tapes and cassettes to CDs and DVDs, and CDs losing to MP3 players, to name a couple of examples.
Adapting, however, means that the company is going to abandon the things they used to do, and this is a problem for some companies. For example, if a company spends millions on R&D for a specific type of technology only for that technology to be deemed obsolete after a few years when they haven’t made a profit from it yet, they’d most likely continue until they stop making any profit.
Let us take a recent example of possible reactions to such a situation: the console gaming market versus the emerging mobile gaming market and the three most prominent companies in console gaming: Nintendo, Sony, and Microsoft.
Mobile gaming is everywhere, and everyone thinks that it will be the future of gaming. Console gaming is becoming niche again because consoles tend to be bulky, not portable, and is usually one generation late in technology compared to PC and mobile. And with the current statistics given, it seems that console gaming is destined to end soon. So as a big console gaming company, what would you do?
Nintendo’s approach
Nintendo’s answer to mobile gaming is to incorporate emerging technologies into their products. Nintendo started their own mobile gaming department making games for mobile phones. Their current console for this generation has the same advantages as a mobile phone. If the console market truly dies, they can completely abandon that market by turning their console into a hybrid gaming console and mobile device. They can continue making mobile games for their device or allow other mobile games on their platform.
Sony’s approach
Sony’s approach seems to stay with their console department by moving it to a place where it can still profit with it. By transferring their PlayStation company to the USA from Japan, they secured a market that still appreciates their product. However, this is just a delaying tactic, as more and more people in the West start taking notice of mobile games. Pretty soon, the console gaming market in the US will also be in danger.
Microsoft’s approach
Microsoft continues to not react to the dying console market because their console already doubles as a Windows PC machine. And PC gaming is still significant, just as big as mobile gaming these days. They can afford to abandon console gaming already and focus on selling PCs and software made to play video games.
At the end of the day Sony seems to be the one with the most to lose, should they refuse to adapt to the changes. By giving their products multiple functions or incorporating new technologies, both Microsoft and Nintendo have secured a way to minimize their losses should the console market die.
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