The core rigidity of Japanese home video game companies

Abstract

Retail prices must be kept low in order to increase the diffusion of home video game hardware. In the 1980s and 1990s, when high-performance semiconductor prices were high, the performance of the hardware was limited. Owing to hardware restrictions, Japanese video game hardware developers had to improve their ability to increase the entertainment offered by their hardware. By the 2000s, home video game hardware that was the same spec as cutting-edge PC hardware came onto the market. As a result, consumers in the European and North American markets began to demand home video game software that could take advantage of high-performance hardware. This is when European and North American home video game developers began to flourish, as their experience with video game development on the PC meant that they had the ability to develop games that took advantage of high-level hardware functionality. At the same time, Japanese home video game developers were struggling in the global market, including North America, because the development organization and capabilities that they had built before 2000 acted as core rigidity.