Gaming industry rivalry is having a significant impact on brands

Written by Kadida, CNN

This story was originally published in November 2017 and was updated in October 2018.

It’s been a fiercely competitive gaming market. Nintendo brought back its iconic Mario for the console’s 25th anniversary, and Sony released its PlayStation 4 Pro for improved graphics and more powerful games, undercutting its PlayStation 2.

But the rivalry between Sony and Microsoft has also pitted one of their major suppliers against each other.

Drone pioneer Zico , a startup based in China, has been forced to ship its accessories from the US, where the company has a manufacturing plant. The company said it is losing out on orders because of the rivalry, and notes that back in 2013, when its products were first released, these conflicts were not such a big deal.

PlayStation and Xbox have had their supply chain woes, says Kiselev

Only a few big companies are in the business of making consoles. However, Sony, Microsoft and Nintendo sell more of their consoles than any other two companies combined, according to the market research firm IHS Markit. And so much of these products’ supply chains are controlled by a few companies that they can’t be choosy with their suppliers.

“Most of the components are made in dozens of plants, many of which are vertically integrated,” said Paul Fach, an industrial designer specializing in “next-generation computing” at the Norwegian University of Science and Technology.

Unsurprisingly, the middleman gets more profits, which have fueled the battles between companies. But the following factors have a role, too.

Investment firms have shown huge interest in the gaming industry in recent years, he added. Companies that produce console designs can make new games for consoles, which can get noticed by investors and increased sales, which in turn helps increase their order size.

Fach noted that the PlayStation and Xbox games are not aimed at a specific demographic and, so, can’t be made specifically for high-end gaming players. They also are not programmed for “realistic world issues,” such as the amount of people in the stadium, the condition of the atmosphere or stadiums’ seating arrangements.

‘Gaming pressure’

Microsoft and Sony did not immediately respond to requests for comment.

In early June, China launched a campaign against gaming games, requiring a 24-hour daily shutdown to curb what it called “the impact of the harmful impact” of game addiction on minors. The ban was widely seen as a response to President Xi Jinping’s efforts to bring more Chinese children into education and less into sports or gaming.

“People find it hard to rationalize children playing games after a while,” Dr. Matthew Walker, an addiction expert at Loughborough University in the UK, told CNN in June. “On the other hand, those parents or guardians, who feel concerned about the amount of time their children are spending gaming, understand that they are an investment, and may feel pressured by people with ‘gaming stress.’ “

“It’s not about gaming in the traditional sense, but an investment that can actually be a form of cognitive enhancement, with its own set of health benefits,” he added.

On its website, Zico lists features such as micro chips and micro-lithium batteries that facilitate super-fast battery charging for its products.

Earlier this year, Zico, which has developed its gaming and lifestyle website and e-commerce platform, raised $1.25 million in funding from venture capitalist firm 21st Century Partners in order to scale its business.

Even without competition, it is difficult to enter a business like this in China, Dr. Fach said.

“In China, going into large industries and local industries is very difficult. There is only very small experience in designing and selling parts to manufacturers. It’s really a trick to get into the ecosystem,” he said.

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