1. The situation Electronic Arts put itself into could have been avoided using SWOT analysis. The company’s executives should have evaluated the situation on the market and determine external threats such as growing competition from Activision Blizzard. They should have realized the key features of Activision success on the road to Olympus of the gaming world. Electronic Arts had many opportunities to compete with Activision while the company was in the process of its initial development. These opportunities were in different business plains, from simple acquisition of a competitor when it could have been possible to intellectual spying on the success factors of the growing company (“SWOT analysis,” n. d.).
At the same time, EA had numerous strengths it did not consider as such. The primary focuses of the company were profit and revenue but not talents’ search. It does not mean that the firm acquired any companies that had nice ideas to fulfill in order to sell these ideas in form of average games. Electronic Arts had the major strength – it was the ability to purchase any developer of a perspective product, with talents, creative developers, and vision inside in a bundle. However, it became the major weakness as well. Inappropriate priorities have led the company to the result it has today – many own developing studios but lack of successful products.
2. The situation can also be explained using Porter’s generic strategies theory. EA utilized the focus strategy extensively. It focused on the production of game series. It is understandable in terms of management because if some product or line of products provides stable revenue, this product (or products) should be developed further. EA has several lines of such products, from FIFA to Need for Speed. The company’s own studios have worked on these game series for decades and eventually, they have become unable to produce revolutionary or, at least, high-quality products. In other words, game series regress over time. It results in the loss of customers’ interest because they begin to realize that there is nothing to pay money for anymore.
The situation can be improved if EA applies the differentiation strategy (“Porter's generic strategies,” n. d.). The company should be more agile in the way it conducts business because such stiffness has led to the current situation. While Activision seeks for new opportunities in terms of improving the quality of work ‘environment’ for its studios, EA keeps pushing its studios to do what brings the greatest revenue at the moment. In addition, EA should use differentiation strategy because it would boost the effectiveness of sales, marketing, and most importantly, it would increase the diversity of product lines and improve the quality of the products, gaining competitive advantage on the market.
3. Activision Blizzard gained leadership in the competition with EA. The policy of Robert Kotick, the CEO of Activision, regarding the independency of the game-developing studios allowed Activision to become one of the major players on the targeted market. According to the Miles and Snow’s typology theory (Barney & Griffin, 1992), Activision Blizzard should use the strategy of analyzer. It does not presuppose a very active search for new opportunities and various innovations, but it also does not concentrate on the existing achievements too much. It is the ideal combination of market share maintenance strategy and innovation search strategy.
Analyzer strategy fits large companies most of all. The company has both experience and desire to develop further so using this strategy would allow Activision Blizzard to keep the existing market share and develop new, innovative products simultaneously. Such an approach can be implemented if a company is large enough and has sufficient resources to support both vectors of development. Activision Blizzard is the recognized brand name in the gaming world; they have the love and loyalty of customers. It means that even inappropriate steps in the company’s development will be tolerated to a certain extent, which is beneficial for the strategy choice as well.
4. Uniqueness of the product is the only way to compete on the market of video games. It is fair for the small video-game start-ups only, though. EA and Activision Blizzard have numerous studios with hundreds of talented game developers that produce AAA+ quality products every year or two. Competition in such conditions is very difficult and laborious. It is not appropriate for a small company. Therefore, quality of the product and its idea should become the cornerstones of the future success. It does not matter how long the process of game development and production will take – it has to be great in order to capture the attention of gamers. The quality is so important because of the perspectives of the small company also. It is unlikely to become a direct competitor for EA and Activision Blizzard, but it can become one of the leading star-studios of these publishers. Such course of actions is rather appropriate for start-up actually.
5. Activision is the company with a rather unique attitude towards studios of games’ development. The company provides its game developers with freedom using which they are able to create masterpieces of the gaming world. Financial support and freedom of expression combine into the most appropriate approach to the process of game development. It is clear that Activision sets certain boundaries and timelines for studios it owns. However, the company does not encourage game developers to create obviously average products in order to keep the pace of games’ series going. The focus of the company is the product quality along with the appropriate deadlines for its creation.
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