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SONY CORPORATION Video-Game Industry PlayStation

SONY CORPORATION Video-Game Industry PlayStation. The Right Group Ernie Thorpe Hope Fitzgerald Retania Swapsy-Hayes Traci Stallings. Purpose. Explore how Sony Corporation has produced creative disruption in the Video-game industry and sustained dominance. Overview Hypercompetition.

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SONY CORPORATION Video-Game Industry PlayStation

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  1. SONY CORPORATIONVideo-Game IndustryPlayStation The Right Group Ernie Thorpe Hope Fitzgerald Retania Swapsy-Hayes Traci Stallings

  2. Purpose Explore 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.

  3. Overview of Hypercompetition Is 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.

  4. History • 1st Two Pioneers 1944 • Ibuka • Morita • Discovery • Current Chairman and President • N. Ohga • N. Edei

  5. How To Sustain Competitive Advantage in an Hypercompetitive Environment? Continual Advantageis the Key: • Created • Eroded • Destroyed • Recreated through strategic maneuvering

  6. Twentieth Century Firms Competein 4 Major Arenas • Price/Quality. • Timing and Know-how. • Stronghold. • Financial Resources.

  7. 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

  8. 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

  9. 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)

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

  11. 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

  12. 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 Market Share • Sony PlayStation 2 • Currently #1 worldwide • Holds 43% of American market share

  13. U.S Market Share

  14. Statement • Hyper-Competition • Sony Corporation

  15. 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

  16. Internal Factors External Factors Strengths Weaknesses Nintendo Gamecube Threats Opportunities Minimize Weaknesses and Maximize Opportunities Maximize Strengths and Maximize Opportunities Maximize Strengths and Minimize Threats Minimize Weaknesses and Minimize Threats.

  17. Potential Resource Strengths Potential Resource Weaknesses Potential Company Opportunities Potential ExternalThreats • 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

  18. 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. Maximize Strengths and Opportunities

  19. 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 MinimizeWeaknesses and Threats

  20. Nintendo’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 Cost and Quality

  21. Nintendo’s Gamecube Advantage is price. Price: $99.00 (From original $149.00 in 2002) Less features- Lower prices. The Product Price

  22. Microsoft’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 Cost and Quality

  23. Microsoft’s Xbox Price: $179.00 (From original $299.00) High-quality and High-cost product Prices matches Sony’s PlayStation. The Product Price

  24. Sony’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. Cost and Quality

  25. Sony’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 Price

  26. Cost and Quality HIGH Sony PlayStation Microsoft Xbox Price Nintendo Gamecube LOW Cost and Quality HIGH LOW

  27. Timing and Know-How • Speed • Surprise • Marketing Know-How

  28. 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

  29. Position • Based 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

  30. Worldwide Position

  31. 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

  32. 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

  33. 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

  34. 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

  35. Conclusion “The leader faces the challenge of knowing when and how to respond to the next revolution” Sloan Management Review, 1999

  36. Questions?

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