sonyplaystation3-13077276444318-phpapp01-110610124807-phpapp01 by shrey420


									FAHIM AHMED

Content-                      Slide Page-

I. Introduction               3
II. Industry Trends           4-14
III. Industry Competition     15-18
IV. Internal Company Trends   19-28
V. Target Audience Analysis   29-35
VI. Media Issues              36-41
VII. SWOT Analysis            42-47
VIII.Product Positioning      48-50
IX. Recommendations           51-52

       INTRODUCTION: Video Game Market & PlayStation 3
I.     In the future the global video gaming market will be driven primarily by online gaming
       and mobile gaming. While console gaming will continue to be the largest
       segment, its market share is expected to decline. However, there is a strong growth
       in the number of casual gamers because the demographic profile of video gamers is
       changing as the content offered on video game consoles enhances.

II.     The Seventh Generation of consoles primarily focuses on the consoles released since 2005
       •     Wireless Controllers
       •     Hi-Definition Graphics
       •     Online Network

III.   Sony Computer Entertainment launched the PlayStation 3 in the United States in 2006.
       Despite the fact that the PS3 has arguably the best raw computing power and the Blu-Ray
       feature in comparison to its competition, it is falling behind in the race for market share.

       •    An effective strategy would keep Sony from losing its leading role in the video
            game industry and our research and presentation offer such a strategy.


     INDUSTRY TRENDS: Total Size                                           SONY
I.   Total Size of Global Video Gaming Market:
     •   Expected—Compound Annual Growth Rate of 8.9% over the period
         2008-2013 and is expected to reach $76.1 Billion by 2013

II. Total Size of United States Market:
     •   2008 reached   $21 Billion
III. Total Size of Global Video Gaming Console Market:
     •             11% to $532.7 Million in February 2009 from
         Current— Climbed

         $481.4 Million in February 2008
IV. Total Size of United States Game Console Market:
     •   2008 reached  $8.9 Billion
     •   The United States accounts for 34.3% of the global market's value
    INDUSTRY TRENDS: Sales                                         SONY

I. Game & Virtual World Company Growth:

    •   2008 112 companies funding raised $936.8 Million
    •   2007 62 companies funding raised $618 Million

II. Game Console Hardware, Software & Accessories:
    •   August 2009— $18.1 Billion
    •   August 2008— $21.2 Billion

    •   Sales    18.2% in first 8 months

      INDUSTRY TRENDS: Social                                                    SONY
I.    Social Game Platforms:
       • Revolves around connecting players
           in multiplayer matches with access to
           instant messaging and simple            IV. Game Design for a Social Network:
           communication methods
       • Pioneer of social game platforms
           from seventh generation consoles
           was Xbox Live in 2005

II.   Within the last 5 years Video Game
      Consoles have improved social gaming
      • The services allow you to download
           games, game demos, trailers, TV
           shows, and movies

III. Social gaming is spreading beyond the
     borders of game platforms:
      • 5,000 games on Facebook which has
         200 Million users                                       Source:
      INDUSTRY TRENDS: Economic                                                     SONY
I.    Production:
      • Games are interactive, intuitive and realistic more
          than ever because of the advancement of technology
      • Multiplayer Online Games- Allows you to play
          with people across the world simultaneously
      • Music Games-

II.   Distribution:
      •                                                     month, over 7,000 titles
           Game Fly- rent games with no late-fee for $15.95 a
      •    Over 4,000 GameStop stores around the United States and they offer Trade-In
      •    Distributing games direct to users over the internet, gaming platforms, and downloads

III. Consumption:
     • The gamer is encouraged to become a part of the script
     •       Impacts-Improves dexterity and computer literacy
     •       Impacts-Some studies show violent games lead to an increased level of aggression
     • Entertainment Software Rating Board (ESRB)- Self-regulatory organization that assigns
         age and content ratings by enforcing guidelines and ensures online privacy principles
      INDUSTRY TRENDS: Political                                           SONY
I.    Entertainment Software Association (ESA):
       • Video Game Voter Network
       • Exists to empower Americans to take action
           against threats to the video game entertainment
       • Oppose efforts to regulate the content of
           entertainment media
       • Proposals to criminalize the certain sale of video
           games to minors
       • Enable gamers to stay educated about issues and
           contact federal, state, and local officials

II.   Family Protection Entertainment Act:
       • Puts government regulation on the sale of violent
          and sexually explicit video games to minors
       • Instates federal checks and balances on the ESRB
          to make sure they are rating appropriately
       • Investigates instances
       • Authority to register complaints
       • Has the right to conduct random, annual audits of
          retailers                                                              9
      INDUSTRY TRENDS: Lifestyle                                             SONY
I.    Video Games are Addictive:
      •   A survey found that  88%     of US kids
          played video games at least occasionally,
          and on average children play about   13
          Hours of video games a week
      •   Those showing signs of addiction could
          log   26 Hours almost 1:10 kids
II.   Interactive:
       • Meet new people through social game
       • Create Avatar character and live a
           second life in the social game platform

       INDUSTRY TRENDS: Area of Growth                                                                         SONY
I.    Game Advertising Platform
      • According to Park Associates in-game
         advertising spending will reach $800                          III. How Video Gamers exposed to
         Million by 2012                                                    In-game Advertising respond:
      • According to Yankee Group in-game                              KEY METRIC                        %
         advertising spending will reach $971
         Million by 2011                                               Brand Familiarity                 +64%

II.   Massive Incorporated:                               Brand Rating                                +37%

      • Pioneer In-game Advertising Platform              Purchase Consideration +41%
      • Massive Network enables marketers to
          reach and engage the millions of young          Ad Recall                                   +41%
          adult males playing games everyday              Ad Rating                                   +69%
      • Advertisers can utilize a broad range of ad
                                                       Nielsen Entertainment executed study for Massive in January 2007. Data
          units available across titles in the Massive from surveys with 600+ gamers in North America who played Need For Speed
                                                       Carbon on Xbox 360 & PC platforms. Game published by Electronic Arts.
      • Ad campaigns can be targeted to meet
          specific geographic needs and timing needs
      • The dynamic technology allows for creative
          to be updated and changed as needed
   INDUSTRY TRENDS: Area of Growth                                                                SONY

Around Game                         In Game Environment Ads                 In Game Immersive Ads
Environment Ads                     • Display- banners, digital video       • Interactive Elements- computer
• Display- banners, digital video     ads, billboards, retail store front     terminals, branded racing cars,
  ads                                                                         cell phones

      INDUSTRY TRENDS: Seasonal                                               SONY
I.   Sales of videogame software and consoles rose 1% year-
     over-year to $1.28 Billion in September, the monthly rise
     was the first since February

II. The sales growth, which met expectations, came amid price
    cuts on the three major videogame consoles--Sony Corp.'s
    PlayStation 3, Microsoft Corp.'s Xbox 360 and Nintendo Co.
    Ltd.’s Wii

III. The stronger numbers suggest consumer spending on home
     entertainment is picking up in time for the crucial holiday
     shopping season

IV. "There's a dark cloud hanging over the industry because of
     the recession, and people wonder if consumers are going
     to be there this holiday season," Jesse Divnich, an
     analyst with research group EEDAR, told Reuters, adding that
     software holiday sales in the US from October through
     December could be down 1% compared to last year’s sales.       Source:
      INDUSTRY TRENDS: Consumer’s Relationship SONY

I.    The consumer’s relationship with the video III. The social game platform allows for the
      game industry changed from product to           service and product being offered by the
      service                                         game console to directly reach the
                                                      consumers they already have and often
II.   “We saw was that our customers were             reward their loyal customers
      really ahead of us in adopting the Internet      • Free Game Downloads
      and seeing the potential that the Internet       • Free Game Upgrades
      had for redefining the relationship              • Free Demos
      between content creators and gamers...           • Promotional Videos for Upcoming
      The new world will be very different. You            Games
      will be connecting directly to the               • Hardware Themes for your Desktop
      customers, sell to them directly," – Gabe        • Digital Magazines with Interactive
      Newell, Co-founder of Valve Software                 Content Source:

INDUSTRY COMPETITION                                          SONY

 Microsoft Corp.'s (MSFT) Xbox 360   Nintendo Co. Ltd.'s (NTDOY) Wii

                    I.    PS3 sales fell back 13% this week after the
                          increase last week that was presumably
                          attributable to Uncharted 2. But the big
                          news is that finally the PS3 is able to show
                          a year on year - year to date increase
                          when compared to 2008 for the first time
                          in 2009.

                    II.   Again this week we see a slight increase in
                          Wii sales, but they are still down to the
                          comparable period in 2008. The Wii still
                          dominates the home console market and
                          indeed this week it outsold the 360 and
                          PS3 combined.

                    III. The 360 continues to undersell
                         corresponding 2008 weekly sales by quite
                         a margin and it may fall below the 2008
                         number soon unless something significant
                         happens to reverse the trend.
      INDUSTRY COMPETITION: Differences                                           SONY
                         Wii                    Xbox 360               PS3
Consumers:               Beginners              Hardcore Gamers        Hardcore Gamers
                         Young Gamers           Sports Fans            Blue Ray Viewers
                         Families               388 titles E10+ &      214 titles E10+ &
                         Elders                 under                  under
                         955 titles available
                         791 titles E10+ &
Cost:                    $199.99                $199.99-$299.99        $299.99
Communicate:             Wii Network            Xbox LIVE              PlayStation Network
Ad Budget:               $200 Million           $944.9 Million         $150 Million
I.    Trends in Ad-Spending for Video Game Consoles:
       • New Marketplace— A place with different cost structures and different hardware
       • Software delivery methods change
II.   Consoles become truly Multi-Purpose Home Entertainment Platforms
       • Direct delivery (streamed digital content or real-time game play)
       • Music, movie, digital video recording (DVR)
       • Gaming enabled devices                                                         18

     INTERNAL COMPANY TRENDS: PlayStation History
•   1988: In the early years of video games, Nintendo owned the market and had a over-whelming market share. Sony first
    entered the market in 1988 with a business deal between Nintendo and Sony, where Sony would develop a CD-ROM drive
    for the Super Nintendo. Through this business deal, Sony acquired the rights to start developing the originally Playstation,
    called at that time Super Disc. The Super Disc would be able to play both Super Nintendo cartridges, as well as, games
    developed as CD-ROMS.
•    1991: Sony and Nintendo’s partnership continued to grow, in fact, one of the original “could-be” names for the Playstation
    was “Nintendo Play Station”. It was during that 1991 that relationships between the two companies began to deteriorate.
    Nintendo started to resent having to rely on Sony and Sony’s money in order to produce audio chips needed for the Super
    Nintendo. Sony, however, was drawing on support from their many company affiliates, such as Sony Music and Columbia
    Pictures to develop new software (other than video games) for the Playstation. Nintendo eventually broke their alliance
    completed with Sony during 1991 and announced that their company would begin partnering with Phillips (and American
    company) and Sony’s largest rivals.
•   1992: The first proto-type of the Playstation was dumped after the production of just over 200 consoles. Sony has never
    given a reason as to why they started production over.
•   1994: December 3, 1994, Sony launched the sales of their first Playstation in Japan, priced at $387 and sold closed to
    300,000 units within the first 30 days.
•   1995: September 9, 1995, Sony launched the sale of their Playstation in the United States, priced at $299. There were only
    17 games available at this time for the Playstation first generation console.
•   1996: Over 200 games were produced to be played on the Playstation, Sony began the market share holder in the video
    game industry.
•   1999: Sony made public that they were developing the second generation of the PlayStation, to be called PS2. The newer
    console would stand upright, have backwards compatibility to play the older games of Playstation, produce better graphics,
    and play video games in a DVD format.
•   2000: The PS2 was released for sale in Japan, the United States, and Europe at the price of $299. During the opening
    weekend around the world, the PS2 sold 1 million units.
•   2003: Sony began production on the PS3.
•   2006: The PS3 was released on November 16th with two different models, one model was priced at $500 and the other
    was priced at $600.
•   2009: Sony announces the release of the new PS3 slim priced at $349; a smaller model of the original PS3.    Source:
         INTERNAL COMPANY TRENDS: Current Consoles

 Price: $349.99                         Price: $299.99                       Price: $399.99                         Price: $299.99
                                        In the Box:                          In the Box:                            In the Box:
In the Box:
                                        PlayStation®3 120GB system            PlayStation®3 160GB system              PlayStation®3 80GB system
PlayStation®3 250GB system
                                        DUALSHOCK®3 wireless controller       DUALSHOCK®3 wireless controller         DUALSHOCK®3 wireless controller
DUALSHOCK®3 wireless controller
                                        Free PlayStation®Network              Free PlayStation®Network                Free PlayStation®Network
Free PlayStation®Network
                                        membership                            membership                              membership
                                        AC power cord                         AC power cord                           AC power cord
AC power cord
                                        AV cable                              AV cable                                AV cable
AV cable
                                        USB cable                             USB cable                               USB cable
USB cable
                                                                              Uncharted: Drake's Fortune™
                                                                                                                      Dimensions: 325mm (W) x
Dimensions: 290mm (W) x                Dimensions: 290mm (W) x                                                      98mm (H) x 274mm (D)
                                                                              PAIN™ downloadable game
65mm (H) x 290mm (D)                    65mm (H) x 290mm (D)                  voucher                                 Backwards Compatibility: Does
Backwards Compatibility: Does          Backwards Compatibility: Does                                                not play Playstation 2 games,
                                        not play Playstation 2 games,                                                 however, will still play the original
not play Playstation 2 games,                                                 Dimensions: 325mm (W) x
however, will still play the original   however, will still play the original 98mm (H) x 274mm (D)                    Playstation titles.
Playstation titles.                     Playstation titles.
                                                                              Backwards Compatibility: Does
                                                                              not play Playstation 2 games,
                                                                              however, will still play the original
                                                                              Playstation titles.                                                   21
     INTERNAL COMPANY TRENDS: Brand Positioning
I.   “Nearly three years after the device launched and quickly fell behind its two major competitors, Sony is
     attempting to reposition its Playstation 3 video game console as an all-in-one entertainment device.”
     Sony’s new advertisement campaign for the PS3 will focus directly on the blue-ray capabilities of the
     device, as well as, the capabilities of downloading movies directly off the internet onto the PS3.”
II. Late in August of 2009, consumers noticed a vast price cut in the PS3 pricing structure. For the first
     time in the history of the existence of the PS3, Sony priced the PS3 (not as prestigious pricing) but as
     competitive pricing. At $299 the PS3 is now in direct competition with the price range of the XBOX 360
     and the Nintendo Wii. (The XBOX 360 cost, depending on which make or model of the product, cost
     anywhere from $199-$299. The Nintendo Wii, on the other hand, is priced at $249.)
III. "We have been a game company for years and we would never walk away from that, but research
     confirmed there is a larger proposition under our nose," said Peter Dille, senior vice president of
     marketing for Sony Computer Entertainment America. "We wanted to reposition as a total
     entertainment solution. We felt like we can really own entertainment.“
IV. Sony’s repositioning strategy will now focus on moms and families, an area in the gaming industry that
     the Nintendo Wii has excelled in gaining a large market share. Sony’s goal is to promote in all-in-one
     access hub to all entertainment. For instance, Sony is still the only large console on the market that can
     play blue-ray DVDs, stream live videos over the internet, have a free wireless online network to every
     consumer who purchases a PS3, and have video game playing capabilities.
V. "A year or two ago, the idea of an all-in-one media hub was kind of a foreign idea among the mass
     market," Divnich noted. "Today thanks to new technologies like the iPhone, we've warmed up to the
     idea of products that meet all our multimedia needs."
                                       Fall 200


It is imperative for one to understand the exchange rates between countries! Due to
         the fact that Sony is not an American country, you must take note that all
    monetary value that we discuss during the internal company will be in the form of
                                the YEN and not the DOLLAR.

                                    •     1 USD=90.025 JPY
                                •       1 JPY= 0.010990 USD

   JPY       ¥ 100     ¥ 250            ¥ 500    ¥ 1000    ¥ 5000    ¥ 10000    ¥ 25000

   USD       $ 1.11    $ 2.78           $ 5.55   $ 11.11   $ 55.54   $ 111.08   $ 277.7

INTERNAL COMPANY TRENDS: Sales                                    SONY
               A decline in sales is expected due to the
            negative impact from the appreciation of the
                yen and a decrease in sales for the PS2
                business. We anticipate that the Game
            business will continue to record a loss due to
            the negative impact from the appreciation of
            the yen and a further decrease in sales of PS2
              business despite our expectation that the
             profitability of the PS3 business will improve
               due to hardware cost reductions and an
                 enhanced line-up of software titles.

              COMPANY TRENDS: Game      SONY

      INTERNAL COMPANY TRENDS: Forecasting for Fiscal
I.     This graph shows that during the fiscal year of
      2008, 10.06 million PS3s were sold, this results in
       a 10% increase of sales from the previous fiscal
         year when only 9.12 million PS3s were sold.

II.    Sony forecasted that they would sale a total of
        250 million software units in the fiscal year of
       2008, however, in reality Sony only managed to
         sale 103.7 software in the PS3 division, 50.3
      software in the PSP division, and 83.5 software in
          the PS2 division for a total of 237.5 million
       software units sold. Sony This means that Sony
             missed their forecasted sales by 6%.

III. For the fiscal year of 2009 Sony has forecasted
      that the Sony company will sale 13 million PS3
     consoles, 15 PSP hand-held consoles, and 5 PS2
      consoles. Similarly Sony has predicted that the
       Sony company will sale 240 million pieces of
            software for the fiscal year of 2009.                    28

    TARGET AUDIENCE ANALYSIS: Statistics                                                     SONY
•   In 2012, the industry predicts 190   Million households will own next generation-type consoles

•   Over 148   Million of these 190 Households will have consoles that connect to the internet

•   The average age of a video game player is 35 years old and has been playing games for over 13 years

• 40% of all gamers are women

•   From 2003 to 2006, the industry's yearly growth rate grew above 17%

•   During this time the U.S. Economy grew less than 4% rate

•   The top 5 states with video gamers are the following: California, Washington, Texas, New York and

•   Game software sales totaled $6.6     Billion with 153.9 Million units sold in the year 2008
• 38% of homes in America have a video game console                                                30
     TARGET AUDIENCE ANALYSIS: Customers                     SONY
I.     Sony PlayStation 3:
     •     Hardcore Gamers
          –     People who largely devote
                their leisure time to playing or
                reading about video games
          –     Practice Games to become
                skilled players
     •     Customers Enjoy Playing Different
           Game Genres
          –     Racing
          –     Shooting
          –     Role-playing
     •     The target market is college
           students who could enjoy the
           consoles or the portable mini
           game pieces
TARGET AUDIENCE ANALYSIS: Women                        SONY
                I.     Number of Female Gamers is Increasing
                       •   Studies show that 40% of average
                           gamers are female

                II.    Youth College Explorer surveyed 360 people
                       between the ages of 18 to 30
                       •   Found that women average 2.7
                           Hours of gaming a week vs. male
                           counterpart at 2.9 Hours per week
                       •   Women are generally viewed as casual

                III.   Games like Nintendo’s Wii Fitness, Guitar
                       Hero and Pac-Man have been huge hits with
                       the female demographic
   TARGET AUDIENCE ANALYSIS: Women                                     SONY
• Although this is an industry dominated by males
  being the main target, the video game industry
  wants to expand and find other audiences that will
  increase the bulk of their market. Recent
  inclinations suggest that a huge portion of their
  market is female

• The video game industry is leaning towards that
  image of not having a stereotypical gamer of being
  a male in their late teen years

• According to researcher in the industry, James
  Weaver suggests that women who play video
  games show signs of depression and poor eating
  habits in comparison to women who don’t game

• Women who were surveyed reported that they play      Source:
  video games to get to relieve stress and tension            
    TARGET AUDIENCE ANALYSIS: Males                                            SONY
•   In the video game industry the games are generally developed
    by and for men. A recent study revealed that 89% of game
    developers are male, tested by young men and marketed to
    young men anywhere from the ages of 12 to      39

•   A male dominated industry

•   It is reported according to studies put together by a team at
    Stanford University, that males picked up on the rules of the
    video game worked quicker than females

•   Males in college play violent video games more than any
    other genre of game

•   Young males are two to three times more likely to become
    addicted to playing video games than females

•   Males have a reputation of being known as “hardcore” gamers                      34
       TARGET AUDIENCE ANALYSIS: Potential Audience
 I.      Research shows that NEW Target Markets with Different Segments have
        • Women make up 1/3 of game playing market

        • Target Age shift from 13-17 to 18-35

        • The NEW potential average age of gamers is 29

Source: Peter Lewis. (2005, June). Not just playing around. Review of medium_being_reviewed title_of_work_reviewed_in_italics.   35
Fortune, 151(12), 126-128. Retrieved November 1, 2009, from ABI/INFORM Global. (Document ID: 850863851).

    MEDIA ISSUES: Integrated Marketing Opportunities
• Advertising
    – Sony’s new advertising plan for Europe is set to $134,388,496.78
    – The 2007 campaign was called: ‘This Is Living,’ using emotions as their key
    – It since then gone very aggressive with their more conventional 2009 ‘It Only Does
      Everything’ Campaign
• Sales Promotion
    – There is a mini-site for almost every exclusive PS3 game released or set to be released
    – In 2008, Sony offered a PlayStation-branded credit card for opportunities of financing.
      There was a $150 off your PS3 purchase if you signed up for the credit card before the
      end of December that year
    – Sony is promoting their price cut to $299 heavily
• Public Relations
    – Sony's response to complaints about the $600 price tag? "It's probably too cheap. As with
      the PS and PS2, we believe people who like games will, without question, purchase it.”
      Ken Kutaragi, Sony Computer Entertainment chief, 2006
    – Sony is working their way up considering they did not live up
      to the hype on launch. It was not as “revolutionary” and did not                  Source:
      give the “4-d experience” Kataragi promised it would in 2005,
      leaving them with broken promises                                                  37
   MEDIA ISSUES: Media Issues                                            SONY

• Entitlement- A way to make used games function as inexpensive
   – A console would “offer an incentive to a user of a software product
     when this user shares the product with others, or when the user plays
     the product.” It is a method of attracting buyers to future games.

• Internet Teaser Trailers and Commericals-
   – Being runned on networks like Cartoon Network, G4, SyFy, and Spike,
     Sony’s new campaign is capturing audiences through humor.

• Blogging
   – Leaked game specs, new and upcoming buzz about the PS3 causes a
     frenzy among bloggers in forums and review sites.

MEDIA ISSUES: Media Vehicles                                          SONY

• Qore
   – Give PS3 users early access to game related content at a level of
     quality, interactivity and depth, such as exclusive news, developer
     interviews, in-depth game previews and behind-the-scenes looks at
     PlayStation games, special access to game demos, special beta
     invitations, game add-ons and other downloadable game-related

• Magazine Ads
   – According to bloggers, they feel magazines are most effective because
     “you can actually see a main theme in a picture rather than a 30
     second advertisement
MEDIA ISSUES: Media Issues                                   SONY

• The best way to expose the PS3 to
  the public is by the use of
  television, internet, and
  magazines. Sony needs to get
  their message out first before
  they can be creative with their ads

• PS3 needs to spend money on
  marketing games rather than just
  the system. Microsoft spent
  nearly a half billion dollars to
  create a big enough hype and
  quantify sales for Halo 3

MEDIA ISSUES: Potential Media Cures                       SONY

                • Emphasize and be aggressive on advertisements

                • Mimic the Iphone campaign Apple used. Show
                  how this product can be used, the many
                  different functions, rather than just stating the

                • Use the national press. Networks like CNN and
                  the New York Times breaking news to any new
                  products and software by Sony will grab
                  attention to the many viewers and readers


       SWOT ANALYSIS: Strengths                                                SONY
I.      The company is an established and well known brand name of both Sony and
        PlayStation (PS)
       •    According to the customer loyalty engagement index by Brand Keys, Sony
            ranks in the top 5 for many different categories for 2009 (5th for computers,
            4th for digital cameras, 2nd for DVD players, 2nd for HDTV, 5th for wireless

II.     Sony is starting to bring in more exclusive games to the system.
       •    Sony currently owns 159 exclusive game titles compared to the 117 games
            for Xbox 360 (Excludes console games, which are games exclusive to the
            relative system as well as the arcade)

III.    PS3 has the best raw computing power and graphics compared to competitors
        with strong multimedia support.
       •    Sony is the only system to incorporate Blu-ray, a technology co-engineered
            by Sony, into the device. Blu-ray single-handed took HD-DVDs out of the
            market                                                   Source:
       SWOT ANALYSIS: Weaknesses                                                          SONY
I.      Game developers find PS3 ‘too complicated’ to develop for.
       • Game developer Valve states "The PC and the 360 are just more straightforward. We
         can focus on what we want to do, which is make game experiences, instead of sweating
         bullets over obscure architectural decisions they make with their platform.”
       • Square Enix's president and CEO, Yoichi Wada finds the system ‘over-engineered’ and
         ‘mismatched’ to gamer needs

II.     Sony decisions questioned by game developers.
       • Sony implemented a 16 cents per Gigabyte fee to publishers for paid and free
         downloadable content, something that is free for the Xbox, the web, and anywhere
         else. This adds to the already pay cost for creating a demo, a process that can run six

III.    It is estimated that the Sony games division’s operating losses this year could

        come in at $400     Million to $1.5 Billion, leading to Sony announcing an
        overall operating loss of more than $1.2 Billion for 2009
SWOT ANALYSIS: Weaknesses             SONY

     SWOT ANALYSIS: Opportunities                                                                                       SONY
•   With prices lowered by $100 as well as a redesigned ‘slim’ version, Sony has the opportunity to increase sales as it becomes
    settled in a more competitive price range with the Xbox 360 and the Nintendo Wii
     –    Sales of PlayStation 3 hardware have grown during the second quarter for 2009 to 3.2     Million, compared to 2.4
          Million in the previous year.
     –    Sony also sold 23.9 Million PlayStation 3 games during the period, up from the 21.2 Million in 2008

     –    Nintendo posted a major 52% slip in fiscal first-half of 2009 profit, partly due to the competitive price cuts of the Xbox 360
          and the PS3
•   Synergy opportunities are causing first party developers to excel and third party to keep in pace and increase game productivity
      – First party studios such as Insomniac, Naughty Dog and Guerilla Games are starting to form close-knit relationships and offer
          each other advice and tech tips with their ongoing projects
      – Third party developers are finding it easier to first develop on the PS3 and then bringing it together to port over to the Xbox
          360 rather than trying to split up Xbox 360 code to port over to the PS3
•   Adding more content to the PS3 is key to attracting more PS3 buyers
      – Sony is beefing up PlayStation Network’s offerings of games, movies, music, comics, TV shows, social networking, and other
          online services.
            • With Xbox 360 the only system offering Netflix, Sony reached a deal with Netflix, offering unlimited
              streaming videos and movies to the estimated 9 Million PS3 users
            •   The company is looking to take advantage of the high storage capacity of the media in Blu-ray and put both a full length
                high definition film and a PS3 game on the same disc by the time 2010 rings in
                    – On October 28, 2009, it was announced that the demo for the PS3 game, God of War III, will be included with
                        the Blu-ray of District 9 on the same disc
•   Opportunities to release add-on products to enhance the PlayStation experience
     – The announcement of a motion controller set to be released in Spring 2010 provides competition for Nintendo’s motion
         controlled Wii. It was also announced that it will not be a peripheral but instead a standalone hardware platform compatible
         with the PS3                                                                                                         46
      SWOT ANALYSIS: Threats                                                         SONY
I.    Nintendo Wii
      •   Nintendo’s $200 Million marketing campaign of the Wii as an “anyone-can-play”
          and a “family-oriented system” continue to steal sales from Sony and Microsoft.
      •   Until Sony releases it’s motion controller, the Wii will continue to be considered the
          exclusive system for interactive motion play

II.   Xbox 360
      • Exclusive Titles
      • Much Larger Online User Base

III. Mod-chip development
     • The 1st mod chip was rumored to be produced by Belzar, supporting PlayStation 2 and
        PlayStation 3 bootlegged games. This can further hinder sales for Sony as their strong
        effort to prevent piracy may go in vain

IV. PlayStation 2
    • With backward-compatibility of PS2 games removed for the new ‘slim’ PS3, consumers
         could possibly steal focus from the PlayStation 2

    Product Positioning                                                    SONY

• Sony’s marketing campaign has deemed the newly released PS3 as the “total
  entertainment solution.” However Sony had switched their position for the PS3

• "Sony first unveiled the PS3 as a mighty home electronics product. Then, after
  some badgering from game companies, it shifted the position of the console closer
  to a game machine. (The future of the PS3) would be tough if its marketing
  strategy is not straightened up.” -Square Enix President Yoichi Wada, 2007

• With the release of the slim version, Sony repositioned the PS3 as an all-purpose
  entertainment system once again

    Product Positioning                                                   SONY
• PS3’s changing focus between an all-in-one system and a core gaming console
  drew criticism from core gamers and analysts, claiming not to produce enough top
  notch games to satisfy their needs as is Xbox 360

• According to NPD group, consumers in the U.S. have bought just over 8    Million
   PS3s through the end of July, compared with more than 15    Million Xbox 360s

• Xbox is clearly capturing the core gamer audience with their high-end games such
  as Halo and Gears of War

• Wii is capturing the family-oriented audience with their interactive system

• Sony does not need to reposition their market campaign, but it does need to stick
  with their main focus and that is to make it an all-in-one entertainment system


       RECOMMENDATIONS: PlayStation 3                                        SONY
                Sony should seek to maximize the value of the
  PS3 and to aggressively market it as not only a powerful video game console
                                   but also an
                      affordable home entertainment hub

I. Effectively market the PS3 as an affordable home entertainment hub
     • PlayStation Network should offer games, movies, music, comics, TV shows,
        social networking, and other online services

II. Imitate Wii’s motion sensing controller and offer it as an add-on for the PS3

III.   Use the PS3 to fill different customer niches and encourage PS2 owners to
       gradually upgrade to the PS3 by eliminating PS2 productions

IV. Leverage its core capabilities and exploit synergies between the PS3 and other
     Sony products
    • Blu-Ray



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