Definition of business ecosystem

Increasingly, businesses operate in a broader network of related businesses offering particular products or services. This is known as a business ecosystem - a network of interlinked companies, such as suppliers and distributors, who interact with each other, primarily complementing or supplying key components of the value propositions (benefits for customers) within their products or services.

Console makers such as Sony or Nintendo work with independent game developers to develop an ecosystem around the games/ software. Some games/ software can only be played on their consoles. For example, the virtual painting and drawing software "Art Academy" can only be used on the Nintendo DS range (handheld consoles).

Building such an ecosystem around a core product increases its value to the user as such complements increase the scope of usage of the basic product. In the case of Sony or Nintendo, game consoles without the ancillary software have little or no value to the user.

Ecosystems also create strong barriers to entry for new competition, as potential entrants not only have to duplicate or better the core product, that is the console, but they also have to complete against the entire system of independent complementors and suppliers that form the network. [1]

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