SONY CORPORATIONVideo-Game Industry
PlayStation
The Right GroupErnie Thorpe
Hope Fitzgerald
Retania Swapsy-Hayes
Traci 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.
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 Arenas
Price/Quality.
Timing and Know-how.
Stronghold.
Financial Resources.
The Guide for Market Disruption The 7 S’s are
Stakeholder satisfaction Strategic soothsaying Speed Surprise Signals Shifting the rules of the market Simultaneous or sequential thrusts
Electronics Industry Focus 1972 Magnavox released the first home video
game system The Odyssey Many 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 child’s toy
Consumers spend billions of dollars on home video game systems
Advertising PlayStation commercials are always fresh,
quirky, weird, and different. Seem to be carefully crafted short films with
true artistic value behind the commercial façade.
They are often vibrant, innovative, and uplifting.
Current ad campaigns Fun 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
Game Purchasers(by Gender)
Male, 54%
Female, 46%
Why Play Games?Americans play video games for a
variety of reasons: 87% for fun 72% for a challenge 42% for the interactive social experience 36% because games provide a lot of
entertainment value for the money
Market Share Nintendo
GameCube Has held a strong
share Holds 37% of the
American market share
Microsoft Xbox Gaining shares Holds 20% of the
American market share
Sony PlayStation 2 Currently #1
worldwide Holds 43% of
American market share
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
Internal Factors External Factors
Strengths
Threats
Opportunities
Nintendo Gamecube
Maximize Strengths and Maximize Opportunities
Weaknesses
Maximize Strengths and Minimize Threats
Minimize Weaknesses and Maximize Opportunities
Minimize Weaknesses and Minimize Threats.
Potential Resource
Strengths Potential Resource
WeaknessesPotential Company
OpportunitiesPotential External
Threats
•Strong financial condition
•Strong brand name image/reputation
•Widely recognized market leader
•Technology
•Strong advertising/Marketing
•Game Variety
•Brand Equity
•Strong Buying Power
•2-player games
•Parts bought separately
•Serving additional customer groups
•Expanding product line
•Transferring skills to new products
•Take market share from rivals
•Acquisition of rivals
•Alliances or JVs to expand coverage
•Exploit new technologies
•Openings to extend brand name/image
•Entry of potential new competitors
•Loss of sales to substitutes
•Slowing market growth
•Growing leverage of customers or suppliers
•Reduced buyer needs for product
•Technological advances from competitors new products
Maximize Strengths and Opportunities
Strengths Strong financial
condition
Brand name image/reputation
Advertising/Marketing
Brand Equity
Buying Power
Serve additional Groups, make more “kiddie Games”
Opportunities Expand their
product line
Become more internet based
Take market share from rivals.
Minimize Weaknesses and Threats
Weaknesses
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 QualityNintendo’s Gamecube
Cost 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
Price
Nintendo’sGamecube
Advantage is price.
Price: $99.00 (From original $149.00 in 2002)
Less features- Lower prices.
The Product
Cost and QualityMicrosoft’s Xbox
Cost 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
modem Powerful processor, graphic card and
perfect DVD playing, Most advanced technology for the
most advanced in games.
The Product
Concerns: Fewest games available
PriceMicrosoft’s Xbox
Price: $179.00 (From original $299.00)
High-quality and High-cost product
Prices matches Sony’s
PlayStation.
The Product
Cost and QualitySony’s 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.
PriceSony’s 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 Quality
Sony PlayStation
Microsoft Xbox
Nintendo Gamecube
HIGHCost and QualityLOW
LOW
HIGH
P r i c e
Strongholds PlayStation released in more than 100
countries worldwide. The Sony PlayStation 2 sales have been
strongest in America, Europe, and Japan. Sony’s 70 million unit sales in their
strongholds: 16.18 million units in Japan (including Asia) 29.26 million units in North America 24.56 million units in Europe
PositionBased mostly on product features and
value added attachments Created the best game system at the time Added value with network adapter Bundled products to add value Created value added attachment – EyeToy
Interacts with PlayStation without controllers Sold 400,000 units in 2003
Worldwide Position
Sony's Worldwide Position(Units in Millions)
America, 29.26
Europe, 24.56
Japan, 16.18
Financial Resources
Resources are used to make or purchase the latest technological advances or to monitor its competitors anywhere they compete, eliminating surprises
Sony able to increase their branding in the market with introduction of Playstation
Sony derives 20% of corporate revenues with Playstation console and games
Innovations
Sony uses it core competencies to gain significant market share in video game industry
Sony consolidated sales for the year ended March 31, 2003 were $62.3 billion dollars
Sales such as these creates barrier to new entrants
Deep Pockets Sony able to secure and maintain place as
leader in video game market while experiencing decrease in sales
Able to divert money to R&D for semiconductors for use in future gaming business
Deep 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
innovation Excellent marketing Wide Distribution
Conclusion
“The leader faces the challenge of knowing when and how to
respond to the next revolution”
Sloan Management Review, 1999