Vintendo normally produces video games which it sells in the video game stores. The cost to produce a video game includes $25 unit variable cost and $8 unit fixed cost. The average price of a video game is $80. Vintendo has been approached by an outside vendor who has proposed to digitize the video games for Vintendo which can then sell the video games directly to players as a downloadable option. Using the following independent assumptions, apply the insource versus outsource decision-making process to determine if Vintendo should continue to make its video games or outsource for a digitized version.
a. Vintendo can purchase a digitized version of each video game, the price being offered by the outside vendor will be $20, with Vintendo still incurring $10 of unit variable cost for game design and $4 of unit fixed cost. Although, this means of providing video gaming is trending, should Vintendo continue to make traditional video games or purchase a digitized version to sell?
b. Vintendo can purchase a digitized version of each video game, the price being offered by the outside vendor will be $15, with Vintendo still incurring $10 of unit variable cost for game design and $4 of unit fixed cost. Although, this means of providing video gaming is trending, should Vintendo continue to make traditional video games or purchase a digitized version to sell?

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The Answer of Vintendo normally produces video games which it sells in the video game stores. The cost to produce a video game includes $25 unit variable cost and $8 unit fixed cost. The average price of a video game is $80. Vintendo has been approached by an outside vendor who has proposed to digitize the video games for Vintendo which can then sell the video games directly to players as a downloadable option. Using the following independent assumptions, apply the insource versus outsource decision-making process to determine if Vintendo should continue to make its video games or outsource for a digitized version.
a. Vintendo can purchase a digitized version of each video game, the price being offered by the outside vendor will be $20, with Vintendo still incurring $10 of unit variable cost for game design and $4 of unit fixed cost. Although, this means of providing video gaming is trending, should Vintendo continue to make traditional video games or purchase a digitized version to sell?
b. Vintendo can purchase a digitized version of each video game, the price being offered by the outside vendor will be $15, with Vintendo still incurring $10 of unit variable cost for game design and $4 of unit fixed cost. Although, this means of providing video gaming is trending, should Vintendo continue to make traditional video games or purchase a digitized version to sell?

Vintendo Normally Produces Video Games Which It Sells in the Video