Our strategy was to capture a high market share in the initial stages as our market is

highly dependent on the network externalities i.e., the value of a product or service
changes as the number of users increases or decreases. So, initially we undercut the
competition by selling the product price as low as $100 and provided subsidies for 5
games for the next 2 years. This resulted in an increase in the market share from 50%
to 71%. The strategy is to make the company profitable by capturing more royalty
from the developers.
Further, to capture more market share from 71% to 87%, we reduced the price to $85.
Till the 4th year we kept providing subsidies to game companies. However, we kept
the royalty high as most of the market share is now with us. The game manufacturers
would have no option but to favour the platform which has a dominance of 96% of the
market. This will result in higher revenues.
For the third cycle, the price was increased as now we control the market and this can
be used to increase our revenue. Meanwhile, providing subsidies was stopped.
Furthermore, we increased the royalty charged to 60%.
At the 6th year, with 96% of the market share, price of the console was increased to
$200 and $250 in the last year to boost revenues. Royalty charge was increased as
well. This was possible because of the network externality as our product dominated
the market and thus we could leverage the high market share to charge a high price
and earn higher profits, around 27 billion dollars by the end of the 10th year and still
having 94% market share.
The main objectives were to have a high market share and high profits which were
both achieved.