The video game console market offers important lessons for the strategist. The video game console market is a network market in which Sony's PlayStation 2 (PS2) dominated over Microsoft's Xbox offering. This has been possible due to:
A) the low pricing of Xbox which eroded users' confidence in the product.
B) game developers favoring PS2 for its larger user base obtained because the PS2 was launched months before the Xbox.
C) the presence of several cheap, rival imitations which ate into Xbox's market share.
D) PS2's technical superiority over the Xbox.
E) the straddling strategy adopted by Microsoft to expand in both video game and DVD player markets.

Question

Quizplus · Accepted Answer

The PS2 had a larger user base partly because it was launched earlier than the Xbox, making it more attractive for game developers to create games for PS2. This is a classic example of network effects, where the value of a product increases as more people use it.

The Video Game Console Market Offers Important Lessons for the Strategist