SONY CORPORATION Video-Game Industry PlayStation

SONY CORPORATIONVideo-Game IndustryPlayStation The Right GroupErnie ThorpeHope FitzgeraldRetania Swapsy-HayesTraci Stallings

PurposeExplore how Sony Corporation has produced creative disruption in the Video-game industry and sustained dominance.

Overview Hypercompetition. Review Sony Corporate History.Introduce the Video-game industry.Corporate Analysis: Competing in 4 key arenas.

Overview of HypercompetitionIs The Era of Sustained Competition Dead?

The hypercompetitive environment is an environment that is destructively aggressive, undeniably intense, and ingeniously creative. Traditional players doing conventional business as usual will soon experience destructive disruption in their industries as the twentieth century players change the rules with new business practices and untapped technology.

History1st Two Pioneers 1944IbukaMoritaDiscoveryCurrent Chairman and President N. OhgaN. Edei

How To Sustain Competitive Advantage in an Hypercompetitive Environment? Continual Advantage is the Key: Created

Eroded

Destroyed

Recreated through strategic maneuvering

Twentieth Century Firms Compete in 4 Major ArenasPrice/Quality.

Timing and Know-how.

Stronghold.

Financial Resources.

The Guide for Market Disruption The 7 Ss are Stakeholder satisfactionStrategic soothsayingSpeedSurpriseSignalsShifting the rules of the marketSimultaneous or sequential thrusts

Electronics Industry Focus1972 Magnavox released the first home video game system The OdysseyMany home video game systems have come and gone while making and losing money in the process.Home video games systems have been seen as using cutting edge technology at times and at other times it has been seen as nothing more than a childs toyConsumers spend billions of dollars on home video game systems

AdvertisingPlayStation commercials are always fresh, quirky, weird, and different.Seem to be carefully crafted short films with true artistic value behind the commercial faade.They are often vibrant, innovative, and uplifting.Current ad campaignsFun Anyone? (U.K)Live in your world. Play in Ours. (U.S.A)

CustomersWomen 18 and older 26%6 to 17 year-old boys 21%Men age 18 and over 38%17% are players ages 50 and over

Why Play Games?Americans play video games for a variety of reasons: 87% for fun72% for a challenge42% for the interactive social experience36% because games provide a lot of entertainment value for the money

Market ShareNintendo GameCubeHas held a strong shareHolds 37% of the American market shareMicrosoft XboxGaining sharesHolds 20% of the American market shareSony PlayStation 2Currently #1 worldwideHolds 43% of American market share

U.S Market Share

Statement

Hyper-Competition Sony Corporation

SWOT Analysis

Isolate the key issues that will be important to the future of Sony

Should be addressed by subsequent marketing strategy.

There are four possible approaches

Minimize Weaknesses and Minimize Threats.

Maximize Strengths and OpportunitiesStrengthsStrong financial condition

Brand name image/reputation

Advertising/Marketing

Brand Equity

Buying Power

Serve additional Groups, make more kiddie Games

OpportunitiesExpand their product line

Become more internet based

Take market share from rivals.

Minimize Weaknesses and ThreatsWeaknesses

Does not have many weaknesses

Take advantage of maximizing every opportunity available in the video game industry

2-playered games

Lack extensive internet capabilities

Threats

Competitor, Microsoft, innovations of high-tech internet capabilities

Microsoft and first-mover position.

Sony is the leader and is favorable in the eyes of most game-playing consumers

Sony must minimize the threat of technological advances

Create more internet capabilities

Cost and QualityNintendos GamecubeCost and Quality: Low

Product Advantages:

Playful

Appealing design and small size.

Nintendo is a game-only machine Bright, fast graphics and great sound The Product

Concerns:

Kiddie machines. Younger-aged titles

PriceNintendosGamecube

Advantage is price.

Price: $99.00 (From original $149.00 in 2002)

Less features- Lower prices.

The Product

Cost and QualityMicrosofts XboxCost and Quality: High

Product Advantages:

Xbox is a PC without the monitor.Includes an 8-gigabyte hard disk. Only Game system with a built-in modemPowerful processor, graphic card and perfect DVD playing, Most advanced technology for the most advanced in games. The Product

Concerns: Fewest games available

PriceMicrosofts Xbox

Price: $179.00 (From original $299.00)

High-quality and High-cost product Prices matches Sonys PlayStation.

The Product

Cost and QualitySonys PlayStation

Cost and Quality: High

Product Advantages:

CD based, so that means it can hold tons and tons of information.

It is a 128-bit computer more powerful than a Pentium III.

It can play DVD movies, decode digital TV, and surf the Internet for less than $400;

offers a wide variety of games, great accessories and peripherals.

The Product

Only the PlayStation offers something for everyone, mom and dad too.

PriceSonys PlayStation

Incredible lineup of Greatest Hits

Delivers the best games for the best prices.

Price: $179.00 (From original $299.00)

CDs are cheap to make. Consumers pay less...

PlayStation and the Xbox are priced the same.The Product

Cost and QualitySony PlayStation

Microsoft XboxNintendo GamecubeHIGHCost and QualityLOWLOWHIGHPrice

Timing and Know-How SpeedSurpriseMarketing Know-How

StrongholdsPlayStation released in more than 100 countries worldwide.The Sony PlayStation 2 sales have been strongest in America, Europe, and Japan.Sonys 70 million unit sales in their strongholds:16.18 million units in Japan (including Asia)29.26 million units in North America24.56 million units in Europe

PositionBased mostly on product features and value added attachmentsCreated the best game system at the timeAdded value with network adapterBundled products to add valueCreated value added attachment EyeToyInteracts with PlayStation without controllersSold 400,000 units in 2003

Worldwide Position

Financial Resources

Resources are used to make or purchase the latest technological advances or to monitor its competitors anywhere they compete, eliminating surprisesSony able to increase their branding in the market with introduction of PlaystationSony derives 20% of corporate revenues with Playstation console and games

Innovations

Sony uses it core competencies to gain significant market share in video game industrySony consolidated sales for the year ended March 31, 2003 were $62.3 billion dollarsSales such as these creates barrier to new entrants

Deep PocketsSony able to secure and maintain place as leader in video game market while experiencing decrease in salesAble to divert money to R&D for semiconductors for use in future gaming businessDeep pockets allows Sony to outmaneuver opponents while maintaining place in the market

Strategic Intent

Sony able to signal strategic intent by utilizing vast financial resources. These areas would include:Brand name that means quality and innovationExcellent marketingWide Distribution

ConclusionThe leader faces the challenge of knowing when and how to respond to the next revolution Sloan Management Review, 1999

Questions?