Marketing Strategy For Sony Playstation Essay

3385 words - 14 pages

Sony Marketing Assignment

Stefan van der Fluit
(1122828)

Analyse issues in the Company Case from a Strategy perspective, and then discuss one of the
issues identified. (50% marks)
Stefan van der Fluit (1122828)
Gaming has been around ever since the invention of computers, being a great form of
inexpensive entertainment. In 1993 Sony realized the true potential gaming had to offer
and decided that they wanted a piece of the cake; Sony Computer Entertainment was
born. A year later, Sony’s released the PlayStation. Ever since then the PlayStation
brand has been a true icon amongst the gaming and home en tertainment community.
Due to the rise in competition, Sony has to keep on ...view middle of the document...

Since game-consoles all tend to offer the same things nowadays, whi ch is
being able to play games, as well as offering new ways to enjoy different kinds of
multimedia such as streaming video’s, browsing the internet etc., there isn’t that much
product differentiation. Especially now that both Sony and Microsoft have relea sed
accessories to compete with Nintendo’s ‘Motion -Free’ controls (this used to be
Nintendo’s differentiator as it was the on ly console to offer this new form of gaming). As
the game-consoles are also similarly priced (thanks to both Sony and Microsoft cutting
their prices), there is a relatively low buyer switching cost. Nowadays customers also
have access to immense amounts of information (mostly through the internet) bef ore
making their purchase (Reviews, comparisons etc.) Sony must offer their best in order to

1
2

(Städtler, 2010)
(Rose, n.d.)

convince that their console is worth buying. Therefore the bargaining power of buyers is:
Relatively High.

Threat of Substitutes:
Console gaming has come into quite a lot of trouble lately with the rise of mobile
gaming. Since the release of the iOS and Android mobile operating system, both Sony
and Nintendo (who both offer portable gaming systems) have seen noticeable impacts
on the sales of these systems.3 Both iOS and Android game sales now account for 8%
of the total video game market.4

5

Another potential substitution threat for console gaming is the relatively new concept of
Cloud-Gaming. Games are streamed to any sort of media device, and therefore do not
need to be able to actually house the required hardware to play these games. OnLive is
currently the number one deliverer of Cloud -Gaming and offers its services in both the
United States and the UK (with further EU expansions already planned). It poses as a
threat simply because Cloud-Gaming will solve numerous problems which publishers
currently suffer from such as piracy and low-profit margins.6 Also as Steve Perlman’s
(CEO of OnLive) research company is currently developing a new form of wireless data

3

(KÜNZLER, 2011)
(Farago, 2011)
5
(KÜNZLER, 2011)
6
(Datamonitor 360, 2009)
4

transmission, internet speed will not pose as a problem for this technology .7 Therefore
the threat of substitutes is: Relatively High.

Threat of new Entrants:
The possibility that there will be a new entrant into the game -console industry is
quite unlikely, for many reasons. The technological know -how is quite high, and would
require significant capital to invest into, in order to be able to compete with current
competitors; the fixed costs to produce such consoles would also be quite high (When
Sony first launched the PS3 the manufacturing costs amounted to roughly 800 USD per
unit, meaning Sony had to accept losses on each console sold. Now however they
managed to reduce the costs by 50%)8. Sony also holds an impressive portfolio of
patents, which would make it hard...

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