Strategy forecast: Next generation gatekeeping in the video games industry

Rasmus S√łegaard Kaas

Student thesis: Master thesis


The objective of this thesis was to provide a strategic forecast of the video games industry hardware market, through the actions of the three gatekeepers, ultimately aiding 3rd party game developers and other stakeholders, in planning their strategies for the next hardware generation. Through a study of major historical industry events and consumer culture, the frame was set from where to research the current industry design. Thus a value chain study of relevant activities was conducted, ultimately exposing the strong linkage between gatekeepers and the developers of 3rd party complementary software. To get a picture of the perceived strengths and weaknesses of gatekeepers in the eyes of these 3rd party developers, an interview with umbrella company NOGAP was conducted, identifying Microsoft as the overall favorite. While Microsoft and Sony had historically followed the performance play strategy, Nintendo had during the last paradigm shift recaptured market leadership through a controlled migration. An analysis of industry profit potential saw a historical downward tendency, where especially the threat of disrupting technologies had a potential of changing the core industry. In leading a direct war on standards, Nintendo was advantageous. Highlighting some of the similarities to the feature film industry and relating them to the proposed decline of Hollywood, provided two major lessons: Never force hardware standards too aggressively and never let risk aversion destroy software creativity. This lead to a historical analysis of video game innovation, ultimately seeing it decline over the years. Drawing on the key lessons of this thesis, the presumed next generation first-mover, Nintendo, were likely to continue their trend of hardware innovation, this time through convergence of their two core markets: handheld- and home systems. Nintendo would become more innovative, through new IP game productions that were harder to imitate than seen with the average Wii casual games. Microsoft and Sony would go for a controlled migration and a performance play respectively.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2011
Number of pages100