Co-Opetition - Adam M. Brandenburger [136]
25. For an argument promoting favorable treatment toward buying coalitions, see Jonathan M. Jacobson and Gary J. Dorman, “Joint Purchasing, Monopsony, and Antitrust,” Antitrust Bulletin, Spring 1991, pp. 1–79.
26. Some of the information in the following story is drawn from “Power Play (C): 3DO in 32-Bit Video Games,” Harvard Business School Publishing, 9-795-104, 1995.
27. “Ego Trip,” Marketing Computers, April 1994, p. 18.
28. Personal interview, August 23, 1994.
29. “3DO Faces Revolt by Game Developers over Fee to Cut Manufacturers’ Losses,” Wall Street Journal, October 24, 1994, p. B3.
30. Matsushita had 15 percent ownership of 3DO. That helped, but it wasn’t enough.
31. Fortune, July 10, 1995, p. 20.
32. This analogy comes from Harvard Business School professor Michael Porter.
33. Tom Peters, The Tom Peters Seminar: Crazy Times Call for Crazy Organizations (New York: Vintage, 1994, p. 52).
34. Stephen Goddard, Getting There: The Epic Struggle between Road and Rail in the American Century (New York: Basic Books, 1994), chapter 7.
35. The problem is that the company that exits won’t be around to reap any of the benefits. That’s why it makes sense for one company in the industry to buy another, essentially paying it to exit the game.
5. Added Values
1. “Can Nintendo Keep Winning?” Fortune, November 5, 1990, p. 131. However, as of 1995, Sony had the highest market capitalization.
2. David Sheff, Game Over: How Nintendo Conquered the World (New York: Vintage Books, 1993), p. 71. We recommend this book highly; it helped us greatly in telling the Nintendo story.
3. Some of the information in the following story is drawn from “Power Play (A): Nintendo in 8-Bit Video Games,” Harvard Business School Publishing, 9-795-102, 1995.
4. Ibid, p. 14.
5. In an interview. Trip Hawkins, the founder of Electronic Arts, talked about his delay in getting into video games:
It was my biggest mistake since starting the company.… Everyone figured [Nintendo] would be a Cabbage Patch doll kind of thing—that it would hold up for another year and then go the way of Atari and Coleco and the other video game systems that had disappeared.… There was another factor that kept us on the sidelines.… If you made software for Nintendo, you were restricted from moving to other video game machines for two years.… We didn’t want to put all our eggs in one basket. But after a while there were so many Nintendos out that it was a moot point. (Upside, August/September 1990, p. 48)
6. “Nintendo Paces Videogames: Attention Turns to Adults and New Product Tie-Ins,” Advertising Age, January 30, 1989, p. 24; “Marketer of the Year,” Adweek, November 27, 1989, p. 15. A temporary worldwide chip shortage had something to do with the cartridge shortage. But there was more to it than that.
7. See Gary Becker, “A Note on Restaurant Pricing and Other Examples of Social Influences on Price,” Journal of Political Economy, 1991, pp. 1109–16.
8. According to a 1990 “Q” survey. See USA Weekend, July 22, 1990, p. 14.
9. See “Will Justice Department Probe Nintendo?” HFD—The Weekly Home Furnishings Newspaper,” vol. 63, no. 51, p. 103.
10. Barrons, December 23, 1991.
11. On a separate issue, Nintendo made a settlement with the Federal Trade Commission in which it agreed to stop requiring retailers to adhere to a minimum price for the game console. Furthermore, Nintendo would give previous buyers a $5-off coupon toward future purchases of Nintendo game cartridges.
12. For more on the story of DeBeers and diamonds, see Debra Spar, The Cooperative Edge: The Internal Politics of International Cartels (Ithaca, N.Y.: Cornell University Press, 1994), pp. 39–87.
13. See “DeBeers Consolidated Mines Ltd. (A),” Harvard Business School Publishing, 9-391-076, 1990.
14. Wall Street Journal, October 31, 1994.
15. Because of capital adequacy requirements, declining profits actually lead to less capacity in the insurance business.
16. Personal conversation with Bob Cozzi.
17. New York Times, May 16, 1993.
18. Personal conversation with Bob Cozzi.
19. Michael Porter