The purpose of this thesis is to present and analyze the innovations in the home video game industry and their impact on the competitive strategies of the companies in the indus-try. The existing literature about business cycles and business dynamics is scarce from busi-ness administrative perspective. This thesis contributes to fill the gap in the academic literature. The choice of the home video game industry has been done, due to its fast growing economic nature and the rapid changes that can be noticed, especially for the last decade. A qualitative research method with secondary qualitative and quantitative data and primary qualitative data through interviews has been used for this thesis. The home video game industry is highly driven by technological product innovations. Incremental innovations do not affect in a significant way the dynamics within the industry. Radical innovations create a competitive advantage through differentiation and they increase market share for the company which followed this strategy. Disruptive innovations open new markets, change the business environment for every firm and generate a shift in consumer preferences. Hence, the company which implements a disruptive innovation gains extensive market share. Innovations are possible due to the strategic orientation a company aims to pursue. If a company pursues a high market orientation and a low inno-vation orientation it manufactures an upgraded product to keep customers satisfied. When the firm pursues a high market and innovation orientation, the final product includes cha-racteristics that the customers desire. While at the same time the product created offers services and features hard to be matched by the competition. Finally, if a firm pursues a high innovation orientation and a low market orientation strategy, it creates an easier and more convenient alternative on the existing products while being cheaper. At the same time this strategic orientation disregards the established customers' desires.The purpose of this thesis is to present and analyze the innovations in the home video game industry and their impact on the competitive strategies of the companies in the indus-try. The existing literature about business cycles and business dynamics is scarce from busi-ness administrative perspective. This thesis contributes to fill the gap in the academic litera-ture. The choice of the home video game industry has been done, due to its fast growing economic nature and the rapid changes that can be noticed, especially for the last decade. A qualitative research method with secondary qualitative and quantitative data and primary qualitative data through interviews has been used for this thesis.The home video game industry is highly driven by technological product innovations. Incremental innovations do not affect in a significant way the dynamics within the industry. Radical innovations create a competitive advantage through differentiation and they increase market share for the company which followed this strategy. Disruptive innovations open new markets, change the business environment for every firm and generate a shift in consumer preferences. Hence, the company which implements a disruptive innovation gains extensive market share. Innovations are possible due to the strategic orientation a company aims to pursue. If a company pursues a high market orientation and a low inno-vation orientation it manufactures an upgraded product to keep customers satisfied. When the firm pursues a high market and innovation orientation, the final product includes cha-racteristics that the customers desire. While at the same time the product created offers services and features hard to be matched by the competition. Finally, if a firm pursues a high innovation orientation and a low market orientation strategy, it creates an easier and more convenient alternative on the existing products while being cheaper. At the same time this strategic orientation disregards the established customers' desires.