Competing With the World of Warcraft - Journal Post 2

I am a huge gamer. I love video games and especially World of Warcraft (WoW). Being the budding strategist that I am I began to think about what it would be like competing with WoW thus I began thinking about a 5 forces analysis of the MMORPG industry in which WoW is the market giant. The Microsoft of the industry.

Barriers to Entry - high - in 2008 the CEO of Activision estimated that it would take a company between $500 Million and $1 Billion dollars to create a competitive game to WoW (and that is true even for other large game makers like Microsoft and EA Sports) and thus make it difficult to enter then industry. http://www.wired.com/gamelife/2008/02/activision-ceo/

Supplier Power - medium - The suppliers to the industry are the video game designers. The best designers are hard to get but there are plenty of other designers to hire. The trick is getting the right designers who have the right skill and the right passion to keep the game exciting for both new and old players

Buyer Power - High - there are a lot of substitutes in the video game industry in general and several other MMORPG games that people can play instead of WoW giving the buyers (game subscribers) a lot of power and forcing WoW to continually innovate and respond to player concerns. If WoW stopped trying to keep its players and attract new ones through innovation the players would get bored and leave.

Rivalry - Low - There are lots of other video game makers but in the MMORPG, WoW really has not competitors. Most new MMORPG games don't have the sustaining power that WoW does. I constantly hear players say they are going to leave and try a new game but those games just do not last. This is an interesting industry in that new games are always coming out but none can stand up to WoW and so they quickly fade.

Substitutes - High - there are a lot of substitutes for WoW. Other video games (PC, Mac, XBox, PS3, Wii, etc) that people can play and different formats that they can play in. WoW also has to compete with TV, movies, and sports for peoples time. One of the downsides of being in an entertainment company is the high amount of substitutes so you constantly have to make people believe that they should play your game instead of choosing other forms of entertainment. This keep the game new and exciting even though it has been around since 2004.

Blizzard Entertainment (who makes WoW) is in a really powerful and enviable position but if they are not careful they could loose it through alienating old players and failing to pickup new ones. http://outdps.com/2011/09/06/competing-interests-in-the-wow-playerbase/