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Surviving the Next Generation Console Transition

During the next three years the video game industry will be challenged by the transition to a new generation of game consoles. The increased development costs associated with an order of magnitude leap in console performance is the game developer's main concern. As retail prices of console games will not increase, the implication is a shakeout of smaller game companies. However, during the transition period other gaming platforms will gain market share from the consoles, offering new opportunities for companies positioned to exploit them. The changing landscape will require game developers such as Radical Games to revise their strategies, as Radical's traditional competitive advantages will be eroded by the transition. Radical should diversify from its primary focus on consoles and explore the emerging niche opportunities, using the transition as an opportunity to develop its own Intellectual Property in a low-cost, low-risk manner.