1. 3 DO Analysis Composite of the Best Slides from class submissions

2. new product/service new process new business model K. Thakur Industry Analysis PEST Analysis Value Chain Porter’s 5 Forces Incumbency Competitive analysis Opportunity Value Proposition Target Customers Revenue Model Unique Capabilities Distinctive Activities Value Creating Activities

3. Market Structure, 1991 World-Wide Home Video Game $3 Billion North America Entertainment Arcade games, Movie theater, Video Rental Japan Europe Asia Home Video Game Companies belong to: All other amusement and recreation industry (713990)‏ $29 Billion Overall HC Jun

4. Social Trends

5. Social Trends

6. Industry Analysis

7. Industry Analysis

8. Multiple Layers Industry Value Added * $50 Retailers $27.5 Developers Software Hardware $5 License Fee $450 – Retailers Manufacturer ** (Closed Architecture)‏ 1~5% Margin * In case of Sega’s case. ** Only estimation is available, but some says that retail price could be lower than manufacturing cost. (http://www.alexassoc.com/white/sony.shtml)‏ $19.5 Revenue

9. How Industry Worked HCJun

10. Pricing Strategy of Industry HCJun

14. INDUSTRY ANALYSIS Natalie Rebot

20. 3DO Ownership Roles & Responsibilities: Matsushita: Manufactured double speed CD-ROM AT&T: Proprietary graphics processor chips Electronic Arts: Video game software Time Warner: Largest entertainment company Kleiner Perkins: Funding from Silicon Valley venture capital firm 3DO: Put it all together

21. VALUE CHAIN Customer Retailer Physical hardware Components are Gathered by the Manufacturer and Prepared for assembly. Manufactures assemble The video game console Using the different Hardware components. Video game consoles Packaged and ready to Be shipped to retail Stores worldwide. Video game consoles Are sold in retail stores Along with the video Games to be played on Them. Customers first Purchase the video Game console and Then purchase the Games to be played On them. This is Usually first done at The same retail Location at least for The first video Games purchased. Blank CDs or cartridges are a form of raw materials for video game software. Computer software Engineers write codes To add sound, graphics, And function to create An enjoyable video game. The final video game Whether in CD or Cartridge format are Then prepared for Distribution to retail Stores. Raw Materials Manufacturer Distributor Raw Materials Manufacturer Distributor Video Game Console (Hardware)‏ Video Game Disc (Software)‏

22. VALUE CREATION PROCESS Raw Material  Software  Distributor  Retailer  Customer Price paid by customer $40 $37 $5 $31 Blank CD Buy games in bulk Reduce risk Economies of scale $3 per disc royalty to Hardware manufacturer Additional profits Markup $3 $3 Profit Value Added $20 $3 $6 $6 $7 Shelf space Own sales force Store experience Key: $2-$4 manufacturing cost Video game created Graphics, Audio, Interactive Code writing Most value added if enjoyable game $2 CD ROM Video Game

29. As time goes by…

31. Despite all the product innovation at 3DO, the company failed to envision harnessing network economies. Unlike its competitors, it did not capitalize on the biggest invention of the decade; the internet. Another way of looking at the role of network effects is that although 3DO was getting its liquidity injections, the company’s solvency was not healthy enough for it wait for the internet to play a major part in its growth; the way it did for 3DO’s competitors. Essentially, 3DO’s competitors have leveraged off the social networking aspect and grown their brands stronger through the online/multiplayer aspects of gaming which bring a whole new dimension to the human interaction – emotions. 3DO however, could not use this to its advantage the way it should/would have wanted to. At the time 3DO sought bankruptcy protection, its top competitors besides Sega and Nintendo were EA and Activision Blizzard, both companies with evolving revenue models like online gaming which were essentially changing the rules of engagement in an old industry and therefore redefining the future. my takeaway – Innovation in and of itself is not the key to success. The ability to allocate resources and create unique/uncompromising value for the consumer should be a company’s goal.

33. new product/service new process new business model K. Thakur Industry Analysis PEST Analysis Value Chain Porter’s 5 Forces Incumbency Competitive analysis Opportunity Value Proposition Target Customers Revenue Model Unique Capabilities Distinctive Activities Value Creating Activities

34. Super Mario Bros. (40.23 million)[39] Super Mario Bros. 3 (18 million)[40] Super Mario Bros. 2 (10 million)[40] The Legend of Zelda (6.51 million)[41] Zelda II: The Adventure of Link (4.38 million)[41] Teenage Mutant Ninja Turtles (4 million)[42] The top 10 selling Xbox 360 games. Halo 3 (8.1 million)[24] Gears of War (5 million,[25] may include PC version)‏ Grand Theft Auto IV (4.074 million approximately: 3.29 million in US,[26] 750,000 in UK,[27] 34,000 in Japan)[28] Gears of War 2 (4 million)[25] Call of Duty 4: Modern Warfare (3.772 million approximately: 3.04 million in US,[29] 78,000 in Canada,[30] 53,501 in Japan,[31] 600,000 in UK)[32] Call of Duty: World at War (3.35 million approximately: 2.75 million in US,[26] 600,000 in UK)[32] Forza Motorsport 2 (2.674 million approximately: 2.23 million in US,[19] 31,255 and 100,500 Platinum Collection,[31] 12,600 in Canada,[33] 300,000 in UK)[34] Fable 2 (2.6 million)[35] Assassin's Creed (2.285 million approximately: 1.87 million in US,[29] 60,000 in Canada,[30] 55,041 in Japan,[31] 300,000 in UK)[34] Marvel: Ultimate Alliance (2.08 million in US)[19] Guitar Hero II (2 million in North America and Western Europe)[36]

35. Double network effect