3DO entered the video game market in 1994 but faced significant challenges. It launched an expensive $700 console in an already established market dominated by Nintendo and Sega's cheaper systems. 3DO's business model lacked formal agreements between developers and manufacturers, resulting in quality control issues and high costs. For the console to succeed, 3DO needed to adapt to market trends, lower prices, and focus on building brand loyalty through improved marketing.

1. 3DO
Power Play: 3DO in 32-bit Video Games
By: Christina Connolly

2. competitive analysis
1994 Nintendo Sega 3DO
Market Share 45% 45% 7%
Retail Price $250 $400 $700
Net Sales $4.7B $4B $21M
Virtual Reality First CD-ROM
Special Offerings Super FX Chip Theme Parks system

3. competitive
800
700
layout
600
500
Retail Price
400
300
200
100
0
Nintendo Sega 3DO
0.0300
0.0700
5.0
Ninten
Sega
0.4500
4.5 3DO
Others
4.0
0.4500
3.5
3.0
Net Sales
2.5
2.0
1.5
1.0
0.5
0
Nintendo Sega 3DO

4. product lifecycle
• 1994 video game
industry
• CD Rom systems

5. impact of profitability
Threat/Power
Gaming Industry
Competitive Intensity High
Low
Bargaining power of
Suppliers
Bargaining power of
Customers
Threat of New
Entrants
Threat from
Substitutes
Profit

6. perceptual map
Popularity
(market share)
High
Retail Price
Low High
Low

7. value chain
3DO
Console Game
Manufacturers Developers
Distribution
Retail
Gamer

8. the situation
3DO is a laggard entrant into the video game industry.
While they are attempting to be first to market with
premiere technology, their competitors are using the
same technology as an upgrade, undercutting 3DO in
cost and capitalizing on their popularity

9. product and dilemmas
 Launching an expensive product in a capitalized market while
larger players are offering comparable upgrades at a fraction
of the cost
 Disjointed production system
 Single port console
 5 button controller

10. consumer and dilemmas
 Young demographic with minimal disposable income
 Loyalty to larger market players
 Demand Side Increasing Returns
 Popularity of a console hold great value within each
social network

11. technology and dilemmas
 Introducer of CD-ROM consoles
 First time video consoles can be used for more than just games
 Pictures
 Videos
 Licensing of manufacturing and game development
 Required no accountability of quality
 Laggard to market, leading to decreased efficiency and high
retail cost
 Lack of accountability led to sub-par game publishing
 Inferior graphics
 Generic Soundtracks

12. partnering and dilemmas
 Retail
 Panasonic
 Manufacturing
 Matsushita
 AT&T
 Sanyo
 Toshiba
 GoldStar
 Samsung
 300 Software Developers
 Widespread licensing led to a competition among the partners and a
lack of accountability for quality of the product

13. business model
“that is missing one part”
Trip Hawkins’ initial goal:
Console
Concept
Required
Technology
Hawkins:
(Dave Needle)
“my goal is
to be out to
Game market first”
Development
(independent Gamer
developers)

14. business model issues
• no contract of mutual expectations
Game Development
• no quality requirements
(independent developers) • no time pressure
Console Concept
• missing a piece, and no formal
agreements to fill it
Required Technology
(Dave Needle)
• entering an already competitive market
Hawkins: “my
• requires the consumer to be the test market
goal is to be out • limits market research
to market first” • increases likelihood of error
• may decrease quality of product
• The gamer is paying premium costs for minimal
Gamer consideration

15. suggestions
 Adapt to market trends
 Multi-player console
 6 button controller
 Maintain control over product
 Licensing standards
 Focus on efficiency (as opposed to speed)
 A product is only useful if consumers will use it
 Decreased retail price
 Marketing
 Capitalize on consumer identity to produce brand loyalty

16. Sources
 quot;Essays.cc - Nintendo.quot; Free Essays, Cliff Notes & Term Paper Database. 21
Mar. 2009 <http://www.essays.cc/free_essays/b2/iev101.shtml>.
 quot;Game Genre Lifecycle: Part I.quot; Lost Garden. 21 Mar. 2009 <http://
lostgarden.com/2005/05/game-genre-lifecycle-part-i.html>.
 quot;Power Play (C): 3DO in 32-bit Video Games.quot; Harvard Business School
(1995): 1-9.
 quot;The Video Game Critic's 3DO Console Review Page.quot; Video Game Reviews
by the Video Game Critic. 21 Mar. 2009 <http://www.videogamecritic.net/
3doinfo.htm>.