A Declaration of War: A Case of Competition in the Video Game Industry

A Declaration of War: A Case of Competition in the Video Game Industry

  • Case
  • Teaching Notes
  • Supplementary Resources
Abstract

This case places students in the context of the video game industry and a developing competition between the best-selling video game in history, the Active Duty series, and Video Game Entertainment’s directly competing product, the TrueWar series. The industry is enormous—the best-selling video games have higher sales than the best-selling movies, and video game development costs (all of which are incurred prior to earning any revenue) can amount to hundreds of millions of dollars. Many students participate in this segment of the entertainment industry as consumers. This fictionalized case helps students better understand the business behind the entertainment. In the context of a parent and subsidiary organization, instructors can use the case to discuss accounting topics such as what-if analysis, transfer pricing, return on investment (ROI) calculations, and product line evaluation (the purchase of a subsidiary business). The case primarily covers cost and managerial accounting topics but does so in a context where consolidated financial statements are prepared by the parent company.

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