Skip to main content
SpringerLink
Log in
Book cover

Industrial Competitiveness and Design Evolution pp 317–331Cite as

Creating New Demand: The Competition, Formation of Submarkets, and Platforms

  • Chapter
  • First Online:

Part of the book series: Evolutionary Economics and Social Complexity Science ((EESCS,volume 12))

Abstract

How do companies go about creating demand? This chapter presents the case of console games (home video games) in Japan. This market was formed as a completely new market in the 1980s. The early days of software for consoles (game software) are described, and the process of creating demand for this market is considered. Emphasis is placed on the impact of corporate competition on genres, the formation of submarkets, and platforms. Especially, we discuss the contribution of Space Invaders as a successful predecessor and the role of the Family Computer as a platform. Game software relies on an open architecture with paired (complementary) products. Since these markets are open, it is difficult to define them in a simple and consistent manner. Rather, they are more like agglomerations of multiple submarkets, within which interactions among companies take place. Diversity both within and across these submarkets attracts large numbers of consumers. Therefore, multiple submarkets coexist within the video game market and create huge demand as a whole. The combination of a platform and a successful predecessor enabled the coexistence of submarkets, brought about competition among companies, and was a driving force that stimulated vigorous demand for game software.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   99.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   129.00
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   129.00
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Games using computers can be categorized according to the hardware used. Computer games using hardware specifically designed to play games at home are called console games. A console game combines specialized hardware and the software running on that hardware. Other types of computer games are arcade games, using hardware for playing games in public businesses; PC games, using personal computers; handheld console games, using portable gaming hardware; and so on.

  2. 2.

    These figures exclude games that were merely different versions of existing products but ran on specific hardware (platforms). If these are included, the number of products increases to 9879.

  3. 3.

    For the history of home video games prior to 1983, see Fujita (1998, 1999a, 1999b, 2006), Akagi (2005), Uemura et al. (2013), Nakamura (2016), and Kondo (2017).

  4. 4.

    Arcade games are games placed by businesses in public places (bars, shopping malls, amusement arcades). Because arcade games used more expensive hardware than home video game consoles, technological standards remained high until the 1990s. See Akagi (2005) regarding the vicissitudes of the arcade game industry.

  5. 5.

    A classic Japanese game resembling tic-tac-toe.

  6. 6.

    The term “genre,” used loosely by both companies and users, is a subjective determination of product classification, rather than an objective indicator of product content. This chapter uses the term “genre” consistently with its usage by Ambit Inc. See Ikuine (2012) for the pros and cons of using “genre” as an index.

  7. 7.

    The breakdown of companies that introduced the first product in a genre are Nintendo with six genres, Namco with one genre, Hudson with one genre, Enix with two genres, SoftPro with one genre, and Toshiba EMI with one genre.

  8. 8.

    Fujii (2017) describes the early days of the RPG submarket and analyzes the strategies of Enix and Square, emphasizing the rivalry between the two companies, top management’s strategic decision-making, and the process of building a business system, along with organizational capability. This section is based on Fujii’s analysis.

  9. 9.

    This is also known as “J-RPG” because of its unique content.

  10. 10.

    Million sellers are products that have logged unit sales of 1 million or more. As the penetration of game consoles in Japanese homes at 10 million devices is considered to be the de facto standard, titles that have penetrated 10% of this hardware market are viewed as successful. See Ikuine (2012) for further details.

  11. 11.

    There were only two million-seller RPGs released by other companies, i.e., one by Nintendo and one by Sony Computer Entertainment (SCE).

  12. 12.

    Nevertheless, the so-called platform paradox proposed by Wada et al. (2014) occurred simultaneously.

References

  • Akagi M (2005) It starts with Pong (Sore ha Pong kara hajimatta: Akeido TV ge-mu no naritachi). Amusement Press Inc, Toyo (in Japanese)

    Google Scholar 

  • Aoyama Y, Izushi H (2003) Hardware gimmick or cultural innovation? Technological, cultural, and social foundations of the Japanese video game industry. Res Policy 32(3):423–444

    Article  Google Scholar 

  • Benner MJ, Tripsas M (2012) The influence of prior industry affiliation on framing in nascent industries: the evolution of digital cameras. Strateg Manag J 33(3):277–302

    Article  Google Scholar 

  • Clark KB, Fujimoto T (1991) Product development performance. Harvard Business School Press, Boston, MA

    Google Scholar 

  • Fujii D (2017) The management of technological innovation (Gijutsu teki inobeshon no manejiment). Chuou keizaisha, Tokyo (in Japanese)

    Google Scholar 

  • Fujita N (1998) The rise and collapse of American videogame industry -the rise of videogame industry (1)- (Beikoku ni okeru bideo gemu sangyo no keisei to kyugekina houkai). Kyoto Univ Econ Rev 162(5,6):54–71 (in Japanese). https://repository.kulib.kyoto-u.ac.jp/dspace/handle/2433/45249?mode=full

  • Fujita N (1999a) Japanese videogame industry before “Family Computer” the rise of videogame industry (2)- (Famikon tojo mae no nihon no bideo gemu sangyo). Kyoto Uni Econ Rev 163(3):59–76 (in Japanese). https://repository.kulib.kyoto-u.ac.jp/dspace/handle/2433/45271

  • Fujita N (1999b) The development of “Family Computer” and the rise of videogame industry -the rise of videogame industry (3)- (Famikon kaihatsu to bideo gemu sangyo keisei katei no sougouteki kousatsu). Kyoto Uni Eco Rev 163(5,6):69–86 (in Japanese). https://repository.kulib.kyoto-u.ac.jp/dspace/handle/2433/45282

  • Fujita N (2006) The formation and evolution of the modern video game industry: from the technological history perspective (Gendai bideo ge-mu sangyo no keisei to hatten). Ph.D. Dissertation, Kyoto University (in Japanese). https://repository.kulib.kyoto-u.ac.jp/dspace/handle/2433/143921?mode=full

  • Ikuine F (2012) Development productivity dilemma: the innovation patterns in the digital age (Kaihatsu seisan-sei no jirenma: Dejitaru-ka jidai no inobeishon Patan). Yuhikaku, Tokyo (in Japanese)

    Google Scholar 

  • Izushi H, Aoyama Y (2006) Industry evolution and cross-sectoral skill transfers: a comparative analysis of the video game industry in Japan, the United States, and the United Kingdom. Environ Plan A 38(10):1843–1861

    Article  Google Scholar 

  • Kohashi R, Kagono T (1995) The exchange and development of images: a study of the Japanese video game industry. Paper presented at the Hitotsubashi-organization science conference on Asian research in organizations: emerging paradigms in organization studies. Kunitachi, Tokyo

    Google Scholar 

  • Kondo H (2017) The formation of global supply chain: the case of home video game consoles in Japan. (gemu sangyo ni okeru sapurai chein no kokusaika: kateiyo gemu sijou no hatten to buhin kosei no henka). In: Abe E (ed) Global companies: the historical perspective of globalization. Bunshindo, Tokyo (in Japanese)

    Google Scholar 

  • Miyao M (2011) New product development to redefine product categories: a study with the social shaping of technology approach (Seihin kategori wo saiteigi suru shin-seihin kaihatsu: gijutsu no syakaiteki keisei apurochi ni yoru kento). Organ Sci 44(3):120–131 (in Japanese)

    Google Scholar 

  • Miyao M (2016) New product development and market creation (Seihin kaihatsu to shijo souzou: Gijutsu no shakaiteki keisei apurochi ni yoru tankyu). Hakuto shobo, Tokyo (in Japanese)

    Google Scholar 

  • Nakamura A (2016) The evolution of the home video game console of the early days in the North America: Atari, Inc. and Nintendo of America Inc. (Hokubei dejitaru gemu sangyo keiseiki ni okeru kateiyou bideo gemu sennyo purattofomu keisei ni kansuru hikaku jirei kenkyu). Ritsumeikan Uni Coll Images Sci J 9:19–43 (in Japanese)

    Google Scholar 

  • Nakazwa T et al (2016). Counterattack of Monodukuri (Monodukuri kara no hangeki) Chikuma shobo, Tokyo (in Japanese)

    Google Scholar 

  • Numagami T et al (1992) Competition as interlocution: reinterpretation for competitive behavior in calculator industry (Taiwa toshiteno kyoso: Dentaku sangyo niokeru kyoso kodo no saikaishaku). Organ Sci 26(2):64–79 (in Japanese)

    Google Scholar 

  • Shintaku J et al (eds) (2003) Economic analysis on game industry (Gemu sangyo no keizai bunseki: Kontentsu sangyo hatten no kozo to senryaku). Toyo Keizai Shimpo-sha, Tokyo (in Japanese)

    Google Scholar 

  • Storz C (2008) Dynamics in innovation systems: evidence from Japan’s game software industry. Res Policy 37(9):1480–1491

    Article  Google Scholar 

  • Subramanian AM et al (2011) Capability reconfiguration of incumbent firms: Nintendo in the video game industry. Technovation 31(5):228–239

    Article  Google Scholar 

  • Tatsumoto H (2017) Platform strategy for global market: the strategic use of open standards and the management of business ecosystem. (Prattofohm kigyo no guro-baru senryaku). Yuhikaku, Tokyo (in Jpananese)

    Google Scholar 

  • Uemura M et al (2013) The life and times of the Nintendo Famicom: the birth of TV games (Famikon to sono jidai). NTT Shuppan, Tokyo (in Japanese)

    Google Scholar 

  • Wada T (2017) History of Japanese role-playing games. Annals Bus Adm Sci 16:137. https://doi.org/10.7880/abas.0170228a

    Article  Google Scholar 

  • Wada T, Ichikoji T (2016) Different perception of continuity about innovation: where the MMORPG came from (Gijutsu ninshiki no chigai ni yoru inobeshon no renzokusei ninshiki no sai: MMORPG ha dokokara kitanoka). In: Hosoi K (chair), the second Kyoto game conference, symposium conducted at the Ritsumeikan Center for Game Studies, Ritsumeikan Univeristy, Kyoto

    Google Scholar 

  • Wada T et al (2014) Platform paradox. Annals Bus Adm Sci 13:91–103. https://doi.org/10.7880/abas.13.91

    Article  Google Scholar 

Data

  • CESA Games White Paper (2002). Computer Entertainment Suppliers Association, Tokyo

    Google Scholar 

  • Data provided by Ambit Co., Ltd.

    Google Scholar 

  • Data provided by Media Create Co., Ltd.

    Google Scholar 

  • Research for Information and Media Society (1995). Dentsu Innovation Institute, Tokyo

    Google Scholar 

  • The Toy Journal (1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000). Tokyo Toy and Doll Wholesalers Cooperative Association, Tokyo

    Google Scholar 

  • White Paper on Leisure (1982, 1983, 1984, 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000). Leisure Development Center, Tokyo

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Engineering, Information and Systems, University of Tsukuba, Tsukuba, Ibaraki, Japan

    Fumihiko Ikuine

Authors
  1. Fumihiko Ikuine
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Fumihiko Ikuine .

Editor information

Editors and Affiliations

  1. Graduate School of Economics, The University of Tokyo, Bunkyo-Ku, Tokyo, Japan

    Takahiro Fujimoto

  2. Faculty of Engineering, Information and Systems, University of Tsukuba, Tsukuba, Ibaraki, Japan

    Fumihiko Ikuine

Rights and permissions

Reprints and permissions

Copyright information

© 2018 Springer Japan KK, part of Springer Nature

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Ikuine, F. (2018). Creating New Demand: The Competition, Formation of Submarkets, and Platforms. In: Fujimoto, T., Ikuine, F. (eds) Industrial Competitiveness and Design Evolution. Evolutionary Economics and Social Complexity Science, vol 12. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55145-4_11

Download citation

Publish with us

Policies and ethics

Search

Navigation