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Marketing; Video Game Industry

PESTEL Analysis of the Video Game Industry

Macro environment factors that affect the industry’s competitiveness are political, economic, technology, social, legal, and environmental issues. First, video games must adhere to the country’s political regulations, such as government requirements on business licensing and taxation.

Secondly, the economy affects the competitiveness of the industry since any products and services’ sales depend on the consumers’ financial ability to make purchases. For instance, inflation leads to an increase in product prices in the industry, hence reducing the demand and overall profitability (Ozalp & Kretschmer, 2019). The video game industry is also impacted by social factors such as population demographic since men and boys are more into video games than women, and so are the young people.

Technology plays a vital role in the videogame sector since there are always new developments coming up. Thus, to be competitive, a video game company must continuously create games with advanced features. Ozalp and Kretschmer, (2019) posits that legal and environmental policies and regulations also significantly impact the video game industry. For instance, plays in the industry must adhere to the laws and regulations (such as tax policies) to avoid lawsuits and losses. It is also essential to follow the environmental policies increasingly being introduced to safeguard the environment amidst the increasing global warming.

Factors Affecting the Success of Video Game Market

Several factors shape an industry’s operating environment by influencing its ability to achieve aims and functions in the most appropriate ways. These factors include customer satisfaction, competition, laws and regulations, and public opinion and reputation (Valentine & Powers, 2013). These elements are critical to the future of the video game market since they influence consumers’ choices and activities and determine the market risks and opportunities.

How Value is created in the Video Game Industry

The video game industry’s value structure entails creating a coherent relationship between the producers of video games, the system builders, distributors, and end-users (consumers/players) (Marchand & Hennig-Thurau, 2013). Therefore, value creation is achieved by bringing together the distribution circuits (digital and physical) and communication circuits that link game producers and consumers.

How a Firm Competes in the Video Game Industry

With the high number of videos released each year, video game firms should focus on strategies that will make them stand out in the market and attract and retain more customers (Ozalp & Kretschmer, 2019). Hence, in addition to effective marketing, the firms should engage in product and cost differentiation and have a positive reputation to earn customer referrals. The firms should also ensure their games satisfy the needs of their target consumers.


Marchand, A., & Hennig-Thurau, T. (2013). Value creation in the video game industry: Industry economics, consumer benefits, and research opportunities. Journal of Interactive Marketing, 27(3), 141-157.

Ozalp, H., & Kretschmer, T. (2019). Follow the crowd or follow the trailblazer? The differential role of firm experience in product entry decisions in the US video game industry. Journal of Management Studies, 56(7), 1452-1481.

Valentine, D. B., & Powers, T. L. (2013). Generation Y values and lifestyle segments. Journal of consumer marketing.

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