Management Accounting Case Book

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

Nicholas J. Fessler, The University of Texas at Tyler

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.

This case is perhaps best suited for use in a junior-level cost accounting course for accounting majors, but it has also been successfully used in a master of accountancy course. 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).

Keywords: video game industry, parent and subsidiary, what-if analysis, return on investment, transfer pricing.

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

Nicholas J. FesslerThe University of Texas at Tyler

College of Business and TechnologyDepartment of Accounting, Finance, & ...