Huber.C+Strategy+Report

include component="backlinks" page="Huber.C" limit="10" TO: Proximity video team FROM: Chris Huber DATE: March 1, 2010 SUBJECT: Sony PlayStation 3 Strategy Analysis

Below is my strategy analysis for Sony PlayStation 3. While PS3 is currently trailing in console sales compared to the other competition there is reason to believe the consumer base will shift towards PS3 for reliable and extensive features of the PS3 including both free and pay, streaming video content and other exclusive online content.

**Profile** Sony Corporation (Sony), incorporated on May 7, 1946, sells various electronic devices for both private and business sectors. Sony is segmented into 5 major areas. Sony Computer Entertainment Inc. (SCEI) is one of these five segments which makes and sells PlayStation 2 (PS2),PlayStation Portable(PSP) and PLAYSTATION 3 (PS3) hardware and related software. Sony's CEO is Howard Stringer.(Reuters 2010)

PlayStation 3 Revenue comes from three main sources
 * Console purchase
 * Accessories
 * Downloadable content

Sony has sold 33.5 million PS3 units as of December 2009 (wikipedia.org 2010). The PS3 allows access through Wi-Fi to the online content through the PlayStation Network and Netflix. The PlayStation Network provides free and pay downloadable content including full length movies and TV shows, Games (many of which are exclusive to PlayStation Platforms) and content used to customize your PS3(PlayStation.com 2010). The PS3 allows existing Netflix members to stream video content at no charge additional charge. PS3 has also created PlayStation Home, a virtual environment based on the "freemium" model according to Jack Buser, Director of Playstation Home**. ** In PlayStation Home one can create a fairly lifelike avatar, play 3D graphic intensive games, go to the movies and if you wish, purchase virtual content including clothes, furniture and real estate.


 * Competitive Landscape**

The primary force in the gaming console landscape is the rivalry among existing competitors. The PS3 is rivaled by the Nintendo Wii and Microsoft's Xbox 360. Of the three systems, none has all the capabilities of the other two. For example the Wii and PS3 utilize a control that registers orientation of the control, and the Xbox and PS3 both support 1080p video as well as internal hard disks while the Wii has neither. The Wii provides a truly unique gaming interface with the Wii remote, while PS3 and Xbox allow classically inclined gamers to use a paddle-style interface and play visually superior games.

Currently the Wii holds approximately 49% of the market for 7th generation consoles followed by Xbox with 28%and PS3 with 23%.(vgcharts.com). The Xbox 360's failure rate has been reported as 54% by Phil Villarreal (consumerist.com), which is staggering compared the 10% for PS3 and 6% for Wii.

**PS3's strategy**
 * Free online content (for which competitors charge)-Netflix, online multiplayer, online content downloads through the PlayStation Network
 * Exclusive game sequels (if a consumer wants to play a certain game they must purchase a PS3)
 * Improved game console and price reduction(PS3 Slim released for $299)

**Gen-Y implications**

As far as competition between the PS3 Wii and Xbox 360 goes, the Wii is in a league of it's own geared towards a new healthy lifestyle and family gaming. The PS3 and Xbox 360 compete for a distinct niche for Gen Y gamers who want to use a standard paddle interface to play various styles of games including first person online shooter, role play games(RPGs) and strategy games which are likely to contain adult and violent themes.

The Xbox 360 has a loyal fan base from the original Xbox and is marketed as an inexpensive gaming system that is meant to be as good as the PS3. Due to a 54.2% failure rating, of the Xbox 360, reported by Phil Villareal of consumerist.com, the Xbox fan base will become fed up with a poorly made system as well as yearly subscriptions for online multiplayer.

For Gen Y gamers loyal to the PS2, which is the highest selling console ever, the new reduced price and updates on the PS3 will make the purchase of a new system more palatable. PS3 also offers a social networking option through PlayStation Home as well as a possible collaboration with Facebook to allow a user to link and display his PlayStation Network profile with his Facebook page at no extra charge.

The PS3 will continue to expand on the capabilities of the PS3 and continue to grow its loyal fan base by converting Xbox and convincing PlayStation 2 owners to upgrade.

**References**

Reuters, Sony Corporation (2010). Retrieved February 28, 2010 from __ [] __

Wikipedia. (January 2010). PlayStation 3. Retrieved February 28, 2010 from []

Playstation.Blog, Retrieved February 28, 2010 from []

Worldwide Weekly Chart on Ending 20th 2010(February 20, 2010). Retrieved February 28, 2010 from []