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.
 Review Sony Corporate History.
 Introduce the Video-game industry.
 Corporate Analysis: Competing in 4 key
arenas.
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.
History
 1st
Two Pioneers 1944
 Ibuka
 Morita
 Discovery
 Current
 N.
Chairman and President
Ohga
 N. 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 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)
Customers
 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
Game Purchasers
(by Gender)
Female,
46%
Male, 54%
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


 Sony
PlayStation 2
#1
worldwide
 Holds 43% of
American market
share
Has held a strong
share
Holds 37% of the
American market
share
 Currently

Microsoft Xbox


Gaining shares
Holds 20% of the
American market
share
U.S Market Share
U.S. Market Share
Microsoft,
20%
Nintendo,
37%
Sony, 43%
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
Internal
Factors
Strengths
Weaknesses
Nintendo Gamecube
External
Factors
Threats
Maximize Strengths and
Maximize Opportunities
Minimize
Weaknesses and
Maximize
Opportunities
Opportunities
Maximize Strengths
and Minimize Threats
Minimize Weaknesses
and Minimize Threats.
Potential Resource
Potential Resource
Potential Company
Potential External
Strengths
•Strong financial
Weaknesses
Opportunities
Threats
•2-player games
condition
•Strong brand
name
image/reputation
•Widely
recognized
market leader
•Technology
•Parts bought
separately
•Serving
•Entry of
additional
customer groups
potential new
competitors
•Expanding
•Loss of sales to
product line
•Transferring
skills to new
products
•Take market
share from rivals
•Strong
•Acquisition of
advertising/Mark
eting
rivals
•Game Variety
•Brand Equity
•Strong Buying
Power
•Alliances or JVs
to expand
coverage
•Exploit new
technologies
•Openings 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
Opportunities

Strong financial
condition

Expand their
product line

Brand name
image/reputation

Become more
internet based

Advertising/Marketing  Take market share
from rivals.
 Brand Equity

Buying Power

Serve additional Groups, make
more “kiddie Games”
Minimize Weaknesses
and Threats
Weaknesses
Threats

Competitor, Microsoft,
innovations of high-tech
internet capabilities
Take advantage of
maximizing every
opportunity available
in the video game
industry

Microsoft and first-mover
position.

Sony is the leader and is
favorable in the eyes of most
game-playing consumers

2-playered games

Sony must minimize the threat
of technological advances

Lack extensive
internet capabilities

Create more internet
capabilities

Does not have many
weaknesses

Cost and Quality
Nintendo’s Gamecube
The Product
Cost and Quality: Low
Product Advantages:

Playful

Appealing design and small
size.
Concerns:


Nintendo is a game-only
machine
Bright, fast graphics and
great sound

“Kiddie machines”.

“Younger-aged” titles
Price
Nintendo’s
Gamecube

Advantage is price.

Price: $99.00 (From
original $149.00 in 2002)

Less features- Lower
prices.
The Product
Cost and Quality
Microsoft’s Xbox
Cost and Quality: High
The Product
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.
Concerns: Fewest
games available
Price
Microsoft’s Xbox
Price: $179.00 (From original
$299.00)

High-quality and High-cost
product

Prices matches Sony’s
PlayStation.
The Product
Cost and Quality
Sony’s PlayStation
The Product
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.
Only the PlayStation
offers something for
everyone, mom and dad
too.
Price
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
Cost and Quality
HIGH
Sony
PlayStation
Microsoft
Xbox
P
r
i
c
e
Nintendo
Gamecub
e
LOW
LOW
Cost and Quality
HIGH
Timing and Know-How
 Speed
 Surprise
 Marketing
Know-How
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
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

Worldwide Position
Sony's Worldwide Position
(Units in Millions)
Japan,
16.18
Europe,
24.56
America,
29.26
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
Questions?