Question

"‘Pokémon Go’ shows Nintendo the promise of mobile Leo Lewis in Tokyo"

Describe any barriers to entry that these companies, including Nintendo, are likely to encounter in this market. Are they structural and/or strategic barriers? Explain.

Answer 1

I think the barriers to entry for companies like Nintendo to get into the online/device games are structural and some strategic. They companies that already in this market have been here for a while and they have several things that will make it hard for Nintendo to gain entrance to this mark:

Structural barrier:

Control resources: Their resources are the engineers, programmers, systems architects, game codes, etc. They already have the best and they continue to recruit for the best, and even though Nintendo is well known, I think the companies that are already in this market have the advantage and have the best resources.

Marketing Advantage: The existing companies know how to market their games in other apps and online content. They are well known and gamers know who they are and they know where to find their games and the quality of these games. Newer companies will have a learning curve when it comes to marketing and advertising their products.

Strategic barriers:

Predatory pricing: the companies already in this market will set the price of their products low so that the new companies cannot compete. Even if the set price is to low for them, they can offset their loses by the gains they have in other games online. Most of these companies have more than one game/app out there.

Barriers to entry that the firms such as Nintendo are going to experience include; intellectual properties such as patents, these are legal barriers are which prevent the firms from using certain technologies when developing their games. The other barrier is the existence of strong brands such as Sony and King Digital Entertainment which have loyal customers. This is a barrier since firms have to spend a lot in advertising which may prove to be expensive and unprofitable. These are strategic barriers to entry since they are actions that have been taken by the existing firms in the market to discourage potential entrant.