The "General Games Chat" forum, which includes Retro Game Reviews, has been archived and is now read-only. You cannot post here or create a new thread or review on this forum.
Its a fact that most people are better off nowadays than they were say 10 to 15 years ago. The richer we get the more the games market, and game and console producers, benifit. Recently, in the last six years or so, there have been many new consoles brought out onto the world market. There was the saturn, playstation, N64, Dreamcast, Gamecube and the X-Box. When consoles were first about there were not nearly as many of them and they were produced, mainly, by two producers. Ther was Service Games, which was shortend to SEGA in 1965, and Nintendo. There were other smaller companies who produced other consoles but none really took off. Lately the games industry has four main producers of consoles; SEGA (which recently announced its retirement from producing consoles), Nintendo and the relative newcomers SONY and Microsoft.
Why have we all of a sudden got two more producers of consoles on the market? The answer is simple. The market for games has massively increased over the last eight years and has become a multi-billion dollar industry. More companies want a piece of this money and we can see this with the introduction of the latest producer Microsoft. They wouldnt bother entering the console producing market if there wasnt any money in it because they are already in a multi-billion dollar computer software industry. Is this a thing we are going to see more in the years to come? Will more and more electrical companies enter the gaming market as it grows and grows?
There are many reasons for the growth in the market for games and in particular games consoles. One reason may be that other entertainment pastimes have fallen in popularity; for example, less people play board games nowadays and its a fact that kids stay indoors a lot more than they used to (maybe because of worried parents!?). All these things may contribute to the growth but i believe the main benifactor is MONEY. I know there is lots of equality in the world and there is a massive difference in annual incomes from person to person but it is clear that more economically developed countries are getting richer.
If more people are getting richer then more people can afford games consoles (ding - a light turns on in Billy Gates's head). People nowadays are buying two or three consoles. Where as before they may only have had one or none. It doesnt sound a lot to have one more console but if you think about it, you take your annual outgoings on games and times it by three. Thats quite a lot more money your lining the pockets of those fat-cats! This brings me back to my point i made earlier. I believe that it is possible for more and more companies to start making game consoles in the future. If people are buying two or three consoles now, in another ten years time who knows how many people will be able to afford! There is a downside to all of this though. If the companies producing the consoles and software really think people can afford more what are they going to do? Raise prices! The richer we get the more the prices may rise, and it probably not on a proportionate scale.
So my point is basically this question: Will the gaming world be better with more money and more comanies producing in it?
Thanks for reading
g
Why have we all of a sudden got two more producers of consoles on the market? The answer is simple. The market for games has massively increased over the last eight years and has become a multi-billion dollar industry. More companies want a piece of this money and we can see this with the introduction of the latest producer Microsoft. They wouldnt bother entering the console producing market if there wasnt any money in it because they are already in a multi-billion dollar computer software industry. Is this a thing we are going to see more in the years to come? Will more and more electrical companies enter the gaming market as it grows and grows?
There are many reasons for the growth in the market for games and in particular games consoles. One reason may be that other entertainment pastimes have fallen in popularity; for example, less people play board games nowadays and its a fact that kids stay indoors a lot more than they used to (maybe because of worried parents!?). All these things may contribute to the growth but i believe the main benifactor is MONEY. I know there is lots of equality in the world and there is a massive difference in annual incomes from person to person but it is clear that more economically developed countries are getting richer.
If more people are getting richer then more people can afford games consoles (ding - a light turns on in Billy Gates's head). People nowadays are buying two or three consoles. Where as before they may only have had one or none. It doesnt sound a lot to have one more console but if you think about it, you take your annual outgoings on games and times it by three. Thats quite a lot more money your lining the pockets of those fat-cats! This brings me back to my point i made earlier. I believe that it is possible for more and more companies to start making game consoles in the future. If people are buying two or three consoles now, in another ten years time who knows how many people will be able to afford! There is a downside to all of this though. If the companies producing the consoles and software really think people can afford more what are they going to do? Raise prices! The richer we get the more the prices may rise, and it probably not on a proportionate scale.
So my point is basically this question: Will the gaming world be better with more money and more comanies producing in it?
Thanks for reading
g
Page:
I agree.
And the trade discount on monopolised products is poo too.
And the trade discount on monopolised products is poo too.
Good point - i actually know what an oligopoly is! The console market is different from the computer market (operating systems) as that market is totally monopolistic because Microsoft has total control. Could you imagine if the console market changed from an oligopolistic market to a monopolistic. Then we would see prices rise out of proportion! but thankfully that will never happen as this market is a very competative one and one where people have strong values on different companies.
g
g
Ah but you can predct the future to an extent.
The console market is oligopolistic. That means there's room for a few firms in there who are either intensely competitive (think Coca-cola family vs. Pepsi family of soft drinks) or collude to raise prices (think oil producing countries that make up cartels).
The market for consoles is competitive in the extreme. You may not have been able to predict specifics, such as Microsoft entering and Sega leaving, but you can predict vaguely; ie if a firm were to enter, another one would leave.
Competition means that prices will fall and the only rises we see will reflect the cost of newer technology and inflation. Overall costs will fall. Especially if you look at things relatively, I payed £100+ for a NES when it came out, that £100 would now buy me an N64. In terms of processing power prices have evidently fallen. In "NES prices" an N64 would probably have cost £1000.
Your predicitions aren't too far off, I agree that demand for consoles will increase. However, prices will fall in relative terms and there will never be more than three key competitors in the market.
The console market is oligopolistic. That means there's room for a few firms in there who are either intensely competitive (think Coca-cola family vs. Pepsi family of soft drinks) or collude to raise prices (think oil producing countries that make up cartels).
The market for consoles is competitive in the extreme. You may not have been able to predict specifics, such as Microsoft entering and Sega leaving, but you can predict vaguely; ie if a firm were to enter, another one would leave.
Competition means that prices will fall and the only rises we see will reflect the cost of newer technology and inflation. Overall costs will fall. Especially if you look at things relatively, I payed £100+ for a NES when it came out, that £100 would now buy me an N64. In terms of processing power prices have evidently fallen. In "NES prices" an N64 would probably have cost £1000.
Your predicitions aren't too far off, I agree that demand for consoles will increase. However, prices will fall in relative terms and there will never be more than three key competitors in the market.
yes i agree with what you have said Mr. Happy but you cannot predict the future for a market - i have made a few points on how the market may go. Its nearly immpossible to see where the market will lead next. I mean did anyone really think that Microsoft would enter the games market? or SEGA would cease the production of consoles?
G
G
The situation with the prices is very fragile at the moment. Especially in America. Sony are Rumoured to cut the price of the PS2 very soon to the same price as the Gamecube (or similar) very soon. But Nintendo have warned that they are prepaired to undercut Sony even then.
What you are talking about is markets, and market forces.
The general principle goes, that the more firms there are in a market, the better it is for the consumer. If you don't believe me then lets look at two examples:
Example One: The internet
There are, as you'll agree, hundreds of options open to anyone wanting to get on-line. You have everything from BT through to AOL, all providing a service. Now, all of these companies want you to use their service, so they cut prices, provide special deals, and overall the cost of surfing the internet has fallen over time. I used to pay loads because I was on metred access, I now pay £15/month for unmetred access. That's an improvement due to increased competition.
Example Two: PC operating systems
Chances are that if you own a PC then you have Windows. Microsoft has a monopoly on the provision of operating systems. It's only competitors are Linux, which is only used by highly proficient computer users, and the I-mac operating software, which is only used by mac users. Microsoft's position allows it to set any price it sees fit, because if you have a computer then there's not much else you can do but buy windows. Due to the lack of competition AND the lack of potential competition (no-one has the financial backing or incentive to bring out a viable alternative to Windows) Microsoft can do what it likes and frequently does.
------
So the more console producers there are the better?
Well, maybe. Up to a certain point. I think that your predicition is a little off the mark. As Sega's plight shows the console market is not as big as you might think. There is, in my opinion, only room for three companies, and even then it's a squeeze. The market is more suited to having just a few competitors.
First of all you have to consider the enormous cost of making a console. Firstly you have to experience in that area or be able to buy it. Secondly you have to research and develop a console. Thirdly you have to advertise enough to make people want to buy it. The only companies with the finances needed to do this and so enter the market, already have, and that's Sony and Microsoft. Sony entered after being helped on the technical by Nintendo, in designing Nintendo's next console. However, Nintendo pulled out, and Sony was left with the Playstation. Microsoft have enough money to buy Sony and Nintendo, so the huge overheads in making a console really didn't bother them.
Of course that's not all. the console market is special because it's closely linked to another market; namely the games market. This secondary market is populated with othe companies that are not necessarily linked to the big three in the console market. The relationship between the two is symbiotic. The games producers need the console makers to make consoles, and the console makers need the producers to make games. Now, if you're making games, you hardly want to be working on games for ten different consoles do you? Resources needed to be allocated efficiently, and for that to be done I'd say that no more than three consoles will ever be backed by a games manufacturer.
Games are a key factor in this. Choice is one thing, but too much of it can be damaging to the market as a whole. Games can cheaper if the game producers can churn out more copies in one go, and for this to be done you need a few formats rather than loads. Consoles can be cheaper if you can produce loads, for this you want just a few competitors. Finally the consumer doesn't want to back a loser. If there's too many firms in a market then some of them are going to go bust as the market finds an equilbrium. It happened with video recorders when they first came out. there were two formats: VHS and Betamax, betamax went belly up and all those people who owned them were forced to go out and buy VHS machines. Imagine if Microsoft decided that the X-box had been a waste of money and abandoned it. All the people who owned one would be left with an obsolete console and no new games would come out for it. The more people make consoles, the more that type of thing would happen.
However, having a few firms isn't a bad thing. There are currently three firms and the competition between them is going to be ferocious. Microsoft is already feeling the heat and both Sony and Microsoft are considering price cuts. Look at Nintendo, they've broken the trend of releasing a console at a high price and then cutting the price. The Gamecube's low release price is a reflection of how competitive the market has become. In this climate it wouldn't really be possible for another company to enter the market.
You are right to say that we, in the West, are getting richer and as incomes rise, so does demand for consoles (that's a high income elasticity of demand kiddos). However, that doesn't mean that prices will rise. Price is often an important factor when you're thinking about buying something, not always (think about petrol, people'll buy it no matter how much it costs). When you buy a console and are choosing between Sony, Nintendo and Microsoft, you are likely to place a fair emphasis on price; lots of people aren't buying X-boxes because they cost £300. There are other factors, for instance exclusive titles, brand loyalty, etc. But at the end of the day price is still important. As long as price is important to consumers then prices will stay low as competition hots up in that area.
The rise in incomes should benefit the game producers more than the console producers. Sure we'll buy more consoles, but the growth in demand for consoles will be multiplied in the games market. And also if profits rise at Sony, Nintendo and Microsoft then they'll be able to plough money back into research and development, which means better, faster, feature-packed consoles of the future (if there were more console producers then R&D would suffer as profits would be reduced overall).
So, to summarise:
- more firms does not equal higher prices
- the market is too competitive for more firms
- prices should fall in the long-run
The general principle goes, that the more firms there are in a market, the better it is for the consumer. If you don't believe me then lets look at two examples:
Example One: The internet
There are, as you'll agree, hundreds of options open to anyone wanting to get on-line. You have everything from BT through to AOL, all providing a service. Now, all of these companies want you to use their service, so they cut prices, provide special deals, and overall the cost of surfing the internet has fallen over time. I used to pay loads because I was on metred access, I now pay £15/month for unmetred access. That's an improvement due to increased competition.
Example Two: PC operating systems
Chances are that if you own a PC then you have Windows. Microsoft has a monopoly on the provision of operating systems. It's only competitors are Linux, which is only used by highly proficient computer users, and the I-mac operating software, which is only used by mac users. Microsoft's position allows it to set any price it sees fit, because if you have a computer then there's not much else you can do but buy windows. Due to the lack of competition AND the lack of potential competition (no-one has the financial backing or incentive to bring out a viable alternative to Windows) Microsoft can do what it likes and frequently does.
------
So the more console producers there are the better?
Well, maybe. Up to a certain point. I think that your predicition is a little off the mark. As Sega's plight shows the console market is not as big as you might think. There is, in my opinion, only room for three companies, and even then it's a squeeze. The market is more suited to having just a few competitors.
First of all you have to consider the enormous cost of making a console. Firstly you have to experience in that area or be able to buy it. Secondly you have to research and develop a console. Thirdly you have to advertise enough to make people want to buy it. The only companies with the finances needed to do this and so enter the market, already have, and that's Sony and Microsoft. Sony entered after being helped on the technical by Nintendo, in designing Nintendo's next console. However, Nintendo pulled out, and Sony was left with the Playstation. Microsoft have enough money to buy Sony and Nintendo, so the huge overheads in making a console really didn't bother them.
Of course that's not all. the console market is special because it's closely linked to another market; namely the games market. This secondary market is populated with othe companies that are not necessarily linked to the big three in the console market. The relationship between the two is symbiotic. The games producers need the console makers to make consoles, and the console makers need the producers to make games. Now, if you're making games, you hardly want to be working on games for ten different consoles do you? Resources needed to be allocated efficiently, and for that to be done I'd say that no more than three consoles will ever be backed by a games manufacturer.
Games are a key factor in this. Choice is one thing, but too much of it can be damaging to the market as a whole. Games can cheaper if the game producers can churn out more copies in one go, and for this to be done you need a few formats rather than loads. Consoles can be cheaper if you can produce loads, for this you want just a few competitors. Finally the consumer doesn't want to back a loser. If there's too many firms in a market then some of them are going to go bust as the market finds an equilbrium. It happened with video recorders when they first came out. there were two formats: VHS and Betamax, betamax went belly up and all those people who owned them were forced to go out and buy VHS machines. Imagine if Microsoft decided that the X-box had been a waste of money and abandoned it. All the people who owned one would be left with an obsolete console and no new games would come out for it. The more people make consoles, the more that type of thing would happen.
However, having a few firms isn't a bad thing. There are currently three firms and the competition between them is going to be ferocious. Microsoft is already feeling the heat and both Sony and Microsoft are considering price cuts. Look at Nintendo, they've broken the trend of releasing a console at a high price and then cutting the price. The Gamecube's low release price is a reflection of how competitive the market has become. In this climate it wouldn't really be possible for another company to enter the market.
You are right to say that we, in the West, are getting richer and as incomes rise, so does demand for consoles (that's a high income elasticity of demand kiddos). However, that doesn't mean that prices will rise. Price is often an important factor when you're thinking about buying something, not always (think about petrol, people'll buy it no matter how much it costs). When you buy a console and are choosing between Sony, Nintendo and Microsoft, you are likely to place a fair emphasis on price; lots of people aren't buying X-boxes because they cost £300. There are other factors, for instance exclusive titles, brand loyalty, etc. But at the end of the day price is still important. As long as price is important to consumers then prices will stay low as competition hots up in that area.
The rise in incomes should benefit the game producers more than the console producers. Sure we'll buy more consoles, but the growth in demand for consoles will be multiplied in the games market. And also if profits rise at Sony, Nintendo and Microsoft then they'll be able to plough money back into research and development, which means better, faster, feature-packed consoles of the future (if there were more console producers then R&D would suffer as profits would be reduced overall).
So, to summarise:
- more firms does not equal higher prices
- the market is too competitive for more firms
- prices should fall in the long-run
Great post. You got across your point well.
I think that the only reason they are raising their prices is because everyone is becoming richer. Even though we may not think so, is because as we get richer the prices are raised so it just seems like we are paying around-a-bout the same amount but it is gradually getting larger.
I think that the only reason they are raising their prices is because everyone is becoming richer. Even though we may not think so, is because as we get richer the prices are raised so it just seems like we are paying around-a-bout the same amount but it is gradually getting larger.
Its a fact that most people are better off nowadays than they were say 10 to 15 years ago. The richer we get the more the games market, and game and console producers, benifit. Recently, in the last six years or so, there have been many new consoles brought out onto the world market. There was the saturn, playstation, N64, Dreamcast, Gamecube and the X-Box. When consoles were first about there were not nearly as many of them and they were produced, mainly, by two producers. Ther was Service Games, which was shortend to SEGA in 1965, and Nintendo. There were other smaller companies who produced other consoles but none really took off. Lately the games industry has four main producers of consoles; SEGA (which recently announced its retirement from producing consoles), Nintendo and the relative newcomers SONY and Microsoft.
Why have we all of a sudden got two more producers of consoles on the market? The answer is simple. The market for games has massively increased over the last eight years and has become a multi-billion dollar industry. More companies want a piece of this money and we can see this with the introduction of the latest producer Microsoft. They wouldnt bother entering the console producing market if there wasnt any money in it because they are already in a multi-billion dollar computer software industry. Is this a thing we are going to see more in the years to come? Will more and more electrical companies enter the gaming market as it grows and grows?
There are many reasons for the growth in the market for games and in particular games consoles. One reason may be that other entertainment pastimes have fallen in popularity; for example, less people play board games nowadays and its a fact that kids stay indoors a lot more than they used to (maybe because of worried parents!?). All these things may contribute to the growth but i believe the main benifactor is MONEY. I know there is lots of equality in the world and there is a massive difference in annual incomes from person to person but it is clear that more economically developed countries are getting richer.
If more people are getting richer then more people can afford games consoles (ding - a light turns on in Billy Gates's head). People nowadays are buying two or three consoles. Where as before they may only have had one or none. It doesnt sound a lot to have one more console but if you think about it, you take your annual outgoings on games and times it by three. Thats quite a lot more money your lining the pockets of those fat-cats! This brings me back to my point i made earlier. I believe that it is possible for more and more companies to start making game consoles in the future. If people are buying two or three consoles now, in another ten years time who knows how many people will be able to afford! There is a downside to all of this though. If the companies producing the consoles and software really think people can afford more what are they going to do? Raise prices! The richer we get the more the prices may rise, and it probably not on a proportionate scale.
So my point is basically this question: Will the gaming world be better with more money and more comanies producing in it?
Thanks for reading
g
Why have we all of a sudden got two more producers of consoles on the market? The answer is simple. The market for games has massively increased over the last eight years and has become a multi-billion dollar industry. More companies want a piece of this money and we can see this with the introduction of the latest producer Microsoft. They wouldnt bother entering the console producing market if there wasnt any money in it because they are already in a multi-billion dollar computer software industry. Is this a thing we are going to see more in the years to come? Will more and more electrical companies enter the gaming market as it grows and grows?
There are many reasons for the growth in the market for games and in particular games consoles. One reason may be that other entertainment pastimes have fallen in popularity; for example, less people play board games nowadays and its a fact that kids stay indoors a lot more than they used to (maybe because of worried parents!?). All these things may contribute to the growth but i believe the main benifactor is MONEY. I know there is lots of equality in the world and there is a massive difference in annual incomes from person to person but it is clear that more economically developed countries are getting richer.
If more people are getting richer then more people can afford games consoles (ding - a light turns on in Billy Gates's head). People nowadays are buying two or three consoles. Where as before they may only have had one or none. It doesnt sound a lot to have one more console but if you think about it, you take your annual outgoings on games and times it by three. Thats quite a lot more money your lining the pockets of those fat-cats! This brings me back to my point i made earlier. I believe that it is possible for more and more companies to start making game consoles in the future. If people are buying two or three consoles now, in another ten years time who knows how many people will be able to afford! There is a downside to all of this though. If the companies producing the consoles and software really think people can afford more what are they going to do? Raise prices! The richer we get the more the prices may rise, and it probably not on a proportionate scale.
So my point is basically this question: Will the gaming world be better with more money and more comanies producing in it?
Thanks for reading
g
Page: