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Company Analysis: Konami

Company Analysis: Konami

The Konami Corporation is one of the leading companies that deal with video games developing. The company also produces toys, charge cards, anime, vending and slot machines, amusement machines and other kinds of goods. The company was founded in 1969 by Kagemasa KĊzuki and intended to be a jukebox rental and repair business. There are multiple numbers of masterpieces creditable to Konami up today, such as Castelvania, Contra, Metal Gear, Pro Evolution Soccer, Teenage Mutant Ninja Turtles and Silent Hill. In 2006 Konami run their producer department, they are producers of films that based on popular franchises, such as Silent Hill (2006) and Metal Gear Solid that was announced in April 2006. The game industry is well developed today, and this involves an increase in the number of game developers and game publishers and that leads to the strong competition between them.

Since the Konami Corporation deals with lot of industries the video games software industry could be separated from the others. For analyzing of this branch PESTEL method should be adopted. Therefore, Porter’s 5 forces and SWOT models should be applied for the company itself.

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PESTEL

Political:

One of the best Konami’s masterpiece Silent Hill series was fall within the scope of the restrictions because of the its specific content. Due to high impact of violence and cruelty in this game Konami has to change the content according to local laws and customs. For example, the first game of the series was released in two versions: American (uncensored) and European/Japanese (censored), and the sixth game Silent Hill: Homecoming was banned in Germany. However, most of the videogames were developed considering international distribution, i.e. in English. That is why Konami has to invite English-speaking voice actors, and that means that the company needs to be friendly predisposed and meet the demands of the other countries.

Economic:

The company produces video gaming software mostly for consoles and in s lesser extent for personal computers. In the most of the countries people are using special video gaming systems (consoles) for playing games. Only in a few countries (mostly in Eastern Europe) the cost of the consoles is much higher than cost of PC. According to this, Konami has to develop video games for PC also, if the company wants to earn additional profit.

Social:

The abovementioned game Silent Hill is a survival horror by its genre. In fact, there are a lot of metaphors, psychological horror and taboo topics in the game that’s why not every person can play such games. Therefore, this social aspect might have a negative impact on sales. However, Silent Hill 3 was topped sales in Japan, Great Britain and Russia. At the same time, another Konami’s famous series Metal Gear Solid was received positively by all the fans of stealth-actions.

Technological:

The whole business of Konami Corporation concerns using modern technology. They are making vending machines, Pachinko Slot Machines, software for mobile phones and online games. The company deals with such consoles as Sony PlayStation 2, Sony PlayStation 3, Sony PlayStation Portable, PlayStation Vita, Microsoft Xbox 360, Nintendo Wii, Nintendo DS and Nintendo 3DS as well as PC. When the Xbox One and PlayStation 4 were announced, the Konami choose the right policy which is to keep up with the fashion. The new game Metal Gear Solid V: The Phantom Pain will be available on next gen consoles.

Environmental:

These factors can affect game developing department, but not in a great extent. Game developing business conducts mostly in a virtual world, so the only environmental factor that could affect the business is the current consumption.

Legal:

As well as the every result of intellectual and creative activities, video games may be illegally copied and sold. Every fake copy of the game is the violation of the law of property. There should apply the new methods of copy prevention.

Porter Five Forces Analysis

Bargaining Power of Suppliers: Low cost of switching suppliers. Inputs have little impact on costs. High competition among suppliers.

Bargaining Power of Customers: Limited buyer choice. Large number of customers. Product is important to customer. Low dependency on distributors. Limited buyer information availability. Low buyer price sensitivity.

Intensity of Existing Rivalry: Fast industry growth rate. Large industry size. Low Storage costs.

Threat of Substitutes: Substantial product differentiation.

Threat of New Competitors: High learning curve. Customers are loyal to existing brand. Patents limit new competition. Advanced technologies are required. Strong brand names are important. Strong distribution network required.

SWOT

Strengths. The Konami Corporation has Extensive Content Library. This means, that only the company has the power of holder of their content. In other words, this Content Library gives monopoly rights to the holder, so that he could demand any payments for any use of the information given by the Konami Corporation. Also, video games could improve reflexes of the player. Video games require a lot of attention, so involving hand-to-eye co-ordination the gamer could improve his performance in sensory and perceptual tasks. Those skills could be useful to the drivers for example. It may lead to lower the number of accidents on the roads. Also, a lot of Konami video games include puzzles, which are improve human brain as well.

Weaknesses. Among the weaknesses of Konami Corporation are taxes. There are many of them. Also, company has a high loan rate which has negative impact on the company’s image as well as taxes. The number of games released over a particular period of time is very little, so the productivity of the company is also low. However, this only plays upon crowd that waiting for the next masterpiece’s heart-strings. The amount of games is too small although. Thus, for example, for now, there is only one game that comes out for the eighth generation of consoles and that is Metal Gear Solid V. The company also has a low debt rating.

Opportunities.There is a boom in a video game industry today, so the company has a lot of opportunities and chances. For example, the lack of backward compatibility that Sony PlayStation 4 gaming console has could play on hands for Sony and Konami companies and in cooperate with the Sony Company, Konami may release their long-awaited hits only for PS 4, and as the discs for game consoles are more expensive, it could increase revenue. However, it is also a risk of not getting income at all. One should trace that the video game that is about to release is sure a masterpiece, but no one can predict anything. There is also need to pay attention to the online video games phenomenon. Konami will receive regular income from regular player’s capital contributions in the game developing this industry. Increased demand for the video games and the eighth generation of console’s coming out still plays on hands of Konami Corporation.

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Threats. The most dangerous threat to the company, which is engaged in the production and publishing of video games can be connected with technical problems. A flaw design is always annoys fans and they do not forget such things. There is also a risk to release a common-or-garden video game at the same time with a popular franchise game from the company-competitor; such video game can be simply missed. If the prices of video games will be changed that will affect all developers and publishers and, therefore, it will not be the biggest failure of the company. The company employs such talented people as Akira Yamaoka, for example. He was responsible for creating the soundtracks for the Silent Hill video game series. Since he is withdraw from the project, his fans were unhappy with the latest in a series of Silent Hill game. It may also affect on revenues. While developing a new game from one of Konami’s famous series of video games the company should take care of that the developers of the current episode were the same people as for the development of the previous one.

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