Executive Summary
Sony Computer Entertainment Inc. has the unique distinction of being the first and only company to have had market leadership for 2 consecutive console generations. However, in recent times, the ecosystem has changed to include a larger audience and usability has trumped technological superiority as a key metric in generating buyer interest. In 2008, Nintendo’s Wii had 2 times the market share that Sony’s offering, the Play Station 3, had. I feel Sony should assess the following options. (1) Focus on catering to its niche advance game segment and focus on leveraging its progress form the previous 2 generations. (2) Respond to Wii onslaught by developing its previous generation console to include a low end offering that
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Sony must focus on remaining in this unique segment and leveraging its perceived uniqueness as a technology leader. Instead of competing on Nintendo’s terms, Sony should not react but exercise “Ukemi” by furthering its position in the serious gaming segment.
It is notable (From Exhibit 2b in the Responding to Wii case – Harvard Business Review) that Nintendo has been successful in keeping positive operating profits despite being a weak competitor during the previous 2 generations. Nintendo has shown prudence in waiting out 2 battles and coming up with a unique offering which has changed the way the market perceives gaming. Sony should concede defeat this generation of gaming, while maintaining balance through strong service to existing market.
Sony should target the serious gamers and not react to Wii in terms of re assessing its differentiation strategy.
The positioning question
While Sony is losing market share in the console market, it is winning the “Battle for the living room” with Microsoft. With momentum gained from the previous 2 generations and technological superiority of Sony’s offering, Microsoft has taken a bigger blow, with almost double the operating loss of Sony. (Sony operating loss of $1246.1 M vs Microsoft $2066 M, from Exhibit 2b in the Responding to Wii case – Harvard Business Review).
Sony has a broad offering in consumer electronics segment that it can leverage to provide a comprehensive
Nintendo’s strategy for pricing of consoles and games was to lock-in the network effects consoles offered by pricing them at- or below- cost and reaping profits by pricing video games at significant margin. Nintendo took these actions because it knew that if consumers used the NES/ Famicom console, they would be a captive audience for its higher-margin video games which were necessarily more perishable from a consumer taste perspective. This affected the value created by
I decided to do my research on Sony due to the advancement in technology and the competition between companies such as Microsoft, Apple, and Sony. I have been around long enough to know about Sony’s products but the real reason that attracted me to them for this essay is because I actually believe that they are having a negative trend. I am starting to see less Sony items in stores and I haven’t really heard much about them. Whereas companies such as Apple are constantly being talked about and you often see people walking around with some type of apple product in their hands. Today we are going to research Sony through a horizontal analysis and through different ratio analyses. Let’s see what we find!
• Every company produce video game for different consoles, consoles are developed new generations fast, game developer should compete to gain license for new generation console.
Sony can also differentiate themselves in the market by employing a consumer-focused positioning strategy. A consumer-focused positioning strategy revolves around consumers. This strategy can be tailor made to the audience by using social media, apps, and other online platforms to engage, access, and directly communicate with consumers (Positioning(marketing), n.d.). Being consumer focused is in line with Sony’s new planning
To achieve a distinction, I will be exploring the future of the gaming industry on each of the various platforms.
As sales of Nintendo’s Wii and DS dominate the PlayStation 3 and Xbox 360, and PlayStation Portable, respectively, the pressure continues to mount on Sony and Microsoft to move to the next level in the ongoing console wars. Sales of the Wii in 2008
Sony, Microsoft and Nintendo have been competing for a decade with Sony dominating the market throughout most of the years because of their superior technological products. The video games industry faces an entirely new rivalry situation. In 2008, Sony lost its strong position on the market, because of Nintendo’s success with their dynamic Wii over Sony’s high-tech PlayStation 3 and Windows’ Xbox 360. Although the Wii was technologically much less advanced than PS3 and Xbox 360, the Wii's cheaper price, ease of use, innovative motion-sensitive controller, and simple but fun games, made the console a hit all demographics from 9 to 65 years old, male and female. All these factors resulted in Nintendo’s Wii dominating sales and surpassing Sony’s by an impressive ratio of 2:1.
Threat of Substitutes: The main substitute for a video game console would be a personal computer. They can both be used for playing different types of video games and be used for entertainment. The threat of this substitute edging out video game consoles is very low, because they are not completely similar. If anything, video game consoles are edging out personal computers in the gaming industry. The threat of substitutes in the video game is not very high. In 2008, this was not a very strong force in the video game industry.
Overall, the market response to these three consoles has been surprising. Nintendo Wii, has outsold its rivals and more surprisingly, Sony’s PS2 has outsold PS3. This has let Microsoft and Sony with the enormous challenge of competing with a rival possessing two key advantages: a lower cost console and a product with a sound response in the market.
Global Video Game Console Industries must try to maintain a sustainable competitive advantage through innovation such as creating an upgraded version of the game every year or increase their on and off line presence to better satisfy their customers. There are many competitors in the Video Game industry that include PlayStation 3, Xbox 360 and Wii. These gaming consoles compete in terms of price, durability and loyalty. With Intensity Rivalry being a major determinant of competitiveness, video game companies work towards dominating the industry as well as gaining the major part of the industry profit pool. (Blackwell, 2002)
“To become a leading global provider of networked consumer electronics, entertainment and services.” That’s the mission of Sony, producer of the Sony Playstation. Sony, information and
1. What, if anything, should Sony do to turn around the sales of the PS3?
The introduction of smart phones and tablets have change the gamers’ way on playing video games. These new gadgets allow people to be 24-7 connected on the internet and the amount of games available online that can be play on a telephone or a tablet is huge. Therefore, mobile device gaming is a segment with a fast growth rate at the moment, though the world is in a recession.
The main obstacle facing a start-up video game console company from entering the industry is saturation of the market from the larger video game console makers or the “big three” Nintendo, Microsoft, and Sony. The big three tend to release new game consoles around the same time frame and compete head to head for sales. During the time frame it is impossible for a new entry to jump into the fray. 2010 was a banner year for video console sales Sony’s PS3 sold 14 million units followed by Microsoft’s Xbox 360 13 million and surprisingly Nintendo’s Wii led the big three selling 17 million units. After the 2010 release of all three consoles sales started to decline for each company. Nintendo took the largest sales loss at 72% in 2013 only 747,000 were sold compared
I recently entered a sector of the home entertainment market by purchasing a Playstation 3. The Playstation 3(PS3) is Sony Computer Entertainment’s third video game console which competes in the current seventh generation of consoles alongside Microsoft’s Xbox 360 and Nintendo’s Wii.