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MULTI-SIDED PLATFORMS Wii versus PSP/Xbox

Same Pattern, DiΩerent Focus

82

PATTERNS KP KA VP CR CS

high per-
high per-
hardcore
formance ormance hardcore
f
gamers
gamers
consoleconsoleconsole gamers
KR CH
game
console game
developers
devel
devel
audienceaudience developersopersopers
Sony and Microsoft dominated the game console market until Nin-
tendo’s Wii swept the sector with a fresh approach to technology and
C$ R$ hardwarewareware an astonishingly diΩerent business model. Before launching the Wii,
hardware
hard
hard
sale
sale
sales at a losss at a losss at a losss at a losss at a loss
sale
sales at a loss
sale
royalties Nintendo was spiraling downward, rapidly losing market share, and tee-
royalties
tering on the edge of bankruptcy. The Wii console changed all that and
catapulted the company to the market leader position.
PSP/Xbox Focus Traditionally, video console manufacturers targeted avid gamers
Video game consoles, today a multi-billion dollar business, provide good and competed on console price and performance. For this audience of
examples of double-sided platforms. On one hand, a console manufacturer “hardcore gamers” graphics and game quality and processor speed were
has to draw as many players as possible to attract game developers. On the the main selection criteria. As a consequence, manufacturers developed
other hand, players only buy the hardware if there is a suΩicient number extremely sophisticated and expensive consoles and sold them at a loss
of interesting games available for that console. In the game industry, this for years, subsidizing the hardware with two other revenue sources.
has led to a fi erce battle between three main competitors and their respec- First, they developed and sold their own games for their own consoles.
tive devices: the Sony Playstation series, the Microsoft Xbox series, and Second, they earned royalties from third party developers who paid for
the Nintendo Wii. All three are based on double-sided platforms, but there the right to create games for specifi c consoles. This is the typical pattern
are substantial diΩerences between the Sony/Microsoft business model of a double-sided platform business model: one side, the consumer, is
and Nintendo’s approach, demonstrating that there is no “proven” solution heavily subsidized to deliver as many consoles as possible to the market.
for a given market. Money is then earned from the other side of the platform: game developers.

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