Strategic Analysis of Sony, Activision, Nvidia, and Valve in the USA

This report conducts a strategic analysis of four major companies in the gaming industry: Sony Corporation, Activision Blizzard, Nvidia Corporation, and Valve Corp, focusing on their operations in the USA. It includes both industry-level and company-level analyses, examining the competitive environment using Porter's Five Forces and PESTLE analysis to understand market positions and business strategies. The report also delves into ethical and social responsibility issues faced by each company, providing insights into their approaches to these challenges. Furthermore, it includes stock summaries, sales and market share growth rates, and strategic group mapping to offer a comprehensive overview of each company's performance and strategic positioning within the gaming industry.

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Running Head: Department Of Business Management
Department Of Business Management

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Table of Contents
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................3
Industry Background.......................................................................................................................4
Stock summary................................................................................................................................7
Sales and Market Share growth rates...............................................................................................8
Ethics, Social Responsibility, and Current Events........................................................................10
PESTEL Analysis..........................................................................................................................13
Strategic group map.......................................................................................................................19
Summary........................................................................................................................................20
References......................................................................................................................................22

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Introduction
The following report has been designed with an objective of doing strategic analysis of four
organizations in the gaming industry. These four companies are: Sony Corporation, Activision
Blizzard, Nvidia Corporation, and Valve Corp. The report includes industry-level as well as
company-level analysis of each firm by targeting the USA region. The competitive environment
of the companies was assessed using Porter's Five Forces, and PESTLE Model, in order to
understand their market position and business strategies in detail. In addition to this, this report
also provides some key insights into the issues related to ethics, and social responsibilities
confronted by each company.

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Industry Background
The Gaming industry is considered the under entertainment sector which offers a wide range of
virtual games. These games were mainly played on personal computers initially. Later on
console gaming was developed which has lead the users to play game on a device (console)
which can be carried away or are compatible with television, CD and DVD players. At the
present time, the most popular form of gaming is mobile gaming where users are able to play
games on mobile devices and tablets. Online gaming is the current trend which is an evolutionary
change in the gaming industry and provides facility to chat, talk and download games from the
app store (Ell, 2018).
The Gaming industry is one of the fastest growing sectors at the present time. The world’s top
gaming companies generated nearly $94.1 billion in combined software. This indicates nearly a
29% growth in this sector in comparison to year 2016 (Wijman, 2018). In addition to this, the
overall gaming industry consists of mobile gaming, console games and PC games. The
maximum share of 46% is captured by mobile gaming followed by console games have 33%
share and the rest 21% is catered by PC games. The US games market contributed a total of $36
billion in year 2017 which is almost 30% of the global market. The US market also shows an
18% growth in comparison to year 2016 (Statista, 2018). The revenues are expected to be $90
billion by 2020 with an estimated number of 211 million people which is nearly 67% of the total
population.

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Figure 1: Source:Wijman, T. (2018)
History of gaming industry
The introduction of games was started in 1940 when American nuclear physicist Edward Condon
designed the first game named Nim. Another revolution took place in 1960 when arcade and
chess playing computer games was introduced. The core development in the gaming industry is
considered to be from the 1970s when console games were developed on a large level.
Thereafter, there is a continuous increase in the number of users. It can be estimated by the
success of the Sony PlayStation system that led to sales of 20 million units in 1990s. The
industry was unpredictable until the 2000s but later on after the introduction of various mobile
games has lead to boom. The number of users has increased continuously over the past decade
and ultimately led to several thousand billion users (Martin, 2015). In the year 2012-13 the
PlayStation 4 and Xbox One were introduced that allowed the gamers to feature screen remote

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control. At present time, gamers are playing online games and it is possible that virtual reality
gaming will be offered to the users in the near future.
Particulars Explanation SIC NAICS
Sony Corp Games, toys and audio and video
equipments for children
3944 334310
Activision Blizzard Data processing, Hosting and related
services
7374 518210
Nvidia Corp Electrical apparatus and equipments 5063 423610
Valve Corp Industrial valve manufacturing NA 332911
(Source: SICCODE.Com, 2019)
Figure 2: US video games revenue (Statista, 2018)
There is nearly $16460 million revenue in the year 2017 which has increased to $17051 in year
2018 and it is expected to increase year by year and reach to $18460 million till year 2023
(Statista, 2018).

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Figure 3: Number of gamers in US (Statista, 2018)
The above chart indicates that the mobile gamers are increasing day by day and it is having
highest impact in the overall video gaming industry.
Stock summary
Particulars Symbol Stock listed
at
Outstanding
shares
Market
value of
equity
Beta
coefficient
Dividend
paid
Sony Corp SNE NYSE 1.27 Billion $47.02 1.15 No
Activision
Blizzard
ATVI NASDAQ 751.15 million $41.75 1.20 No
Nvidia Corp NVDA NASDAQ 610 million $157.00 1.58 No
Valve Corp - - - - - No

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It is identified that Nividia Corp high market equity value as compared to Blizzard, Valve Corp
and Sony Corp. The main cause of high market equity value is that the company has proper
attention to attract different stakeholders as well as decreasing its operating expenses. In
addition, the companies have not paid dividend as the companies are growing rapidly and want
to invest as much as possible into further growth. Therefore, these companies had not paid
dividend.
Sales and Market Share growth rates
Particulars 2016 (Billion) 2017 (Billion) 2018 (Billion)
Sony Corp 813.00 763.00 855.00
Activision Blizzard 2.39 2.5 2.52
Nvidia Corp 5.01 6.91 9.71
Valve Corp 5.9 7.6 8.164
Sony Corp
Figure 4: Share prices for the period of year 2014- 2018 (MarketWatch, 2019)

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The above graph presents that the share price is continuously increasing after May 2016, which
is a positive sign of growth of the company in the associated industry. However, the share
volume is highly fluctuating. Overall, the performance of equity of Sony Corp is good in the
associated industry.
Activision Blizzard
Figure 5: Share price during the period of 2014-2018 (MarketWatch, 2019)
Nvidia Corporation
Figure 6: Share price of Nvidia Corp 2014-2018 (MarketWatch, 2019)

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The above graph is presenting that the share price of Nvidia Corporation is increasing from
September 2017. The increasing share price and traded volume is presenting that the investors
have positive expectations from the company for better return as the company will perform in the
entertainment industry.
From the analysis of the sales of Sony Corp indicates that the company is having huge sales
across the world and the sales of the company is faced a decline from 813 billion to 763.0 billion
in the year 2017 when compared with year 2016. This situation was incurred due to new entrance
in the industry and increased competition. On the other side, the sales of the company again
improved and reached to 855.00 billion in the year 2018 (MarketWatch, 2019). The analysis of
the sales of Activision Blizzard indicates continuous improvement in the sales of the company
during the three years of analysis from 2.39 in 2016 to 2.52 in year 2018. Similarly, the sales of
Nvidia Corp is also showing increasing trend and reached 9.71 billion at the end of year 2018.
Valve Corporation also faced a similar trend and have sales of 65.2, 68.5 and 81.64 billion in the
year 2016, 2017 and 2018 respectively (Reuters, 2019).
Ethics, Social Responsibility, and Current Events
Sony Corporation
Ethics: Sony's ethics and compliance programs strongly support the ethical business culture at
the global level, through a worldwide and regional compliance network (Sony, 2019). Moreover,
the senior management constantly communicate with the internal management to make them
understand the value of being honest to the customers and other stakeholders.

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Social Responsibility: Sony Corp. is highly committed to carry out activities which encourage a
healthy and positive social environment around the globe. The company also conducts a CSR
materiality assessment by incorporating the interests of stakeholders and encouraging
environmental initiatives, for making the focus areas of its CSR activities lawful.
Current Event: In 2018, an ethical allegation was made by BBC against Sony for its new video
game " Super Seducer", due to inclusion of violence, sex, drugs, and vulgarity (Sony, 2019).
According to a trade publication, this game was criticized for giving immoral decision to the
children and the whole society. In addition to this, the game received a number of negative
coverage from people who have never played the game. It was found unethical for Sony to sell a
product that promotes the idea that women are things. As a result, the company had to block this
new game before its launching, due to the negative social and ethical interest.
Activision Blizzard
Ethics: Activision Blizzard has strong values of integrity and honesty. The Executives make
every effort to conduct all business along the lines of the defined Core Values. The company's
Code of Conduct encloses general guidelines for operating business with the highest standards of
ethics.
Social Responsibility: Activision is committed to strictly comply with all of the rules, laws, and
environmental regulations in every city, and country, where the company operates (Activision,
2019). Moreover, the organization strive to act in a way that respects and protects the human
dignity and rights.
Current Event: In May 2018, Activision was ethically alleged for breaching the gambling law of
Belgium. The director of Belgian Gaming Commission (BGC) found that players of these games

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were "enticed and deceived", and the company failed to apply any protective measures for users
(adults and minors). As a result, the company could face a penalty of €800,000 for non-
compliance (Activision, 2019).
Nvidia Corporation
Ethics: Nvidia believes that the integrity with which the business is conducted is core to their
ability to run successfully and maintain reputation. The directors, managers, and employees are
committed to act with the highest degree of integrity, ethics and honesty.
Social Responsibility: Nvidia is dedicated to integrating environmental and social responsibility
into every aspect of the organization (Nvidia Corporation, 2019). The Directors strive to
champion the human rights of the employees, and carry out business operations using
environmentally friendly practices.
Current Event: In December 2018, Nvidia was alleged for making false and misleading
statements to the gaming market. The company declared that it earned around $1.35b more from
block chain and crypto. However, according to the analysis by RBC Capital Markets analyst,
Nvidia had actually earned nearly $1.95b (Nvidia Corporation, 2019). As a result, the company
could face issues due to this “crypto hangover.”
Valve Corp.
Ethics: Valve is committed to providing employees and managers with educational and training
opportunities in order to enable them to conduct fair and equitable businesses with a high level of
professional ethics (Valve Corporation, 2019).