Responding To WII

Naveen | Ameya | Janhavi | Prabodh | Rohit

AGENDA

History Market Share

Competitive Analysis
Corporate Strategy Recommendations

LEADERS BY GENERATION
First Generation (8-bit)

1976 - 1983
Second Generation (8 -bit)

Atari

1983 - 1988
Third Generation (16-bit)

Nintendo

1988 - 1994
Fourth Generation(32 / 64- bit)

Sega

1994 - 1998
Fifth Generation (128-bit)

Sony

1998 - 2005
Sixth Generation (128-bit)

Sony

2005 - 2012
Seventh Generation

Nintendo

2013 - 2016

RECENT DEVELOPMENTS
September : Sony launches PlayStation Move and PlayStation Eye

2010

November : Microsoft launches Kinect

2011

April and May: Worst cyber attack hits Sony September: Sony released a free download which enables 3D Global price cut in PS3 which boosts sales Sony Entertainment Network : PlayStation Network, Qriocity music and video-on-demand services

2012

Nintendo launched the Wii U with its Game Pad controller. The Game Pad a second screen tablet-like controller is the most important change Wii U fails to make an impact as it is considered just an extension of Wii Launched Sony Vita to compete with Nintendo 3DS in the handheld segment.

2013

Later this year, Seventh generation launch: Sony PlayStation 4 and Microsoft Xbox One Industry moving towards digitalisation and cloud E3 Expo analyst: PS4 an edge over Xbox One More powerful machine, US$100 less and with no used game Digital Rights Management (DRM)

GAME REVENUES
1400 1200 1000
959 780 730 1017 1053 902 865 1284

Yen bn

805 707

800 600

400
200 0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

GAME OPERATING PROFITS

100 50 0
68 43 9

59

48 29 2

Yen bn

-50
-56

-100 -150 -200 -250 FY04 FY05 FY06

-232 -125

FY07

FY08

FY09

FY10

FY11

FY12

FY13

INDUSTRY ANALYSIS
Buyer Power
6 10

Industry Rivalry
2 2

Supplier Power

Threat of new entrants

Competition from Substitutes

IMPLICATIONS Substitutes on the rise leading to higher bargaining power of buyers Product differentiation is the key New games required to remain attractive Develop technology for new 3D games like Oculus Strategic alliance or M&A with game developers

INTERNAL ANALYSIS
Integrated platform allows multiple functions like streaming music and multi player gaming Backward compatibility gives leadership opportunity Perfect launch time of PS4 might allow Sony achieve market leadership Open platform allows decreasing cost of console thereby improving operating margin to double digits Only gaming console to adapt Blu-ray technology - inimitable advantage Organization has been restructured and gaming has been made a standalone segment Significant portion of R&D being directed towards developing gaming technology
Imitable Organized

Valuable

Rare

CORPORATE RESTRUCTURE
Gaming business, mobile segment and digital imaging - 3 main pillars of electronic business 70% of total sales and 85% of operating income of electronic business to be earned from the pillar segments by FY2015 Game standalone segment from FY2012

Consumer Products and Services

Television Home Audio & Video Digital Imaging Personal and mobile products Game Other

Game

STRATEGY & IMPLEMENTATION

5 Key Aspects for a competitive sustainable advantage:

Operations

Localization

Digital Market

Sony

Media Recreational Centre

Game Development

OPERATIONS
Loss Leader Strategy
Continue the loss leader strategy to drive out Nintendo from the market Short Term Taking hit on hardware sales Long Term Situation similar to Pepsi Coke competition Hardware margins improve by capitalizing on x86 architecture

Deals with Top Publishers

Strike deal with top publishers and offer royalty discounts to publish more games for Sony Short Term A high number of games available for Sonys console Long Term Dedicated game users on Sonys console

Subscriber Fees
Focus on encouraging offline gamers to join online community through incentives such as Leaderboards, gaming charts etc. Short Term Online community starts to grow Long Term Steady source of revenue from subscriber fee

DIGITAL MARKET
Now
PlayStation Network has more than 90 million users Aug 2012 acquired Gaikai, worlds no. 1 cloud gaming co. for US $ 380 m 2014: Biggest differentiator, as expected to go full-fledged with cloud gaming

Short Run

Capitalize on this market and technology at the soonest Big hype for this new technology. Sell storage space through cloud and make it compatible with all its devices Android OS supported in its tablet and mobile phone segment Enhance it to its consoles in order to sync its products Help download various applications from the internet

Long Run

Partner with Google: create exclusive applications and support systems

GAME DEVELOPMENT
Ramp up Internal Development
As Sonys current internal games portfolio is small, it should increase its developments internally to offer wide variety of games Short Run More games raising the attraction of its consoles Long Run More loyalty and games that can be played across Sony devices

Encourage External Developers

Sony should encourage external developers by providing them software support and simplifying their game development process Short Run Higher development of external games Long Run Developer more inclined towards development of games for Sony

Continue Used Games

Used games attract customers which might not be interested in buying a new version of the game, however incentives should be added for customers who buy new versions Short Run More customers on Sonys devices Long Run Online community grows

MEDIA RECREATIONAL CENTER (MRC)

Integrate the PS console in the TV or the projector

Battle for Drawing Room Space Forefront of technology innovation: Bravia, 3D TVs, PS, 4K Offer a wide range of drawing room products TVs, tablets, cameras. Entertainment : Sony music and movies label, Sony Entertainment Network

Focus on network services: One stop shop

Launch 3D games with its Move controller: immersive experience of virtual reality

LOCALIZATION
Sony enjoys a global presence with a good distribution system Largest Video game sales from Western Europe (30%) and North America (25%) Leaders in the Middle East and Africa markets

Short run Focus on Emerging Markets: The Middle East, Asia and Africa

These regions lack infrastructure and technology but have a growing population
Sell its older consoles i.e. PS 3 and used games from the developed market

Long run

Introduce new products as and when the infrastructure develops

CONCLUSION
Revenue Focus on Online Networks & Game Royalty

Customers

Boost Games Development

Lure through Cloud and Recreation

Markets
Grow Online Community Capture hardware market share

Q&A