MANAGING THE OFFER PLAYSTATION REPORT 2013

CHRISTIAN DY3129634MANAGING THE OFFERMEL GODFREY

IntroductionThis report will be discussing recommendations for Sony PlayStation. These will be based on the market in which PlayStation operates (video gaming). It will also be based on recommendations in a presentation that was delivered in class, in depth research in which has been carried out and also including theories.

Market DefinitionThe market can be subdivided into three categories. These are the video gaming software, which include the physical and digital sales of games for both static and handheld consoles. We also have video gaming which the actual hardware of both a static and handheld console and last is the video gaming accessories, which may include headsets, controllers and console/pad stickers. These three categories also include casual gaming in which are downloaded onto phones and tablets.

Company BackgroundAs posted on the Sony’s official website, their mission statement reads “The Sony Group is primarily focused on the Electronics, Game (such as PlayStation) and Financial Services sectors. Not only do we represent a wide range of businesses, but we remain globally unique. Our aim is to fully leverage this uniqueness in aggressively carrying out our convergence strategy so that we can continue to emotionally touch and excite our customers”. (Sony.net)

First RecommendationThe first recommendation in which PlayStation should carry forward would be to reach out into the mobile phone market. This can be done through new product development. According to Paul Trott’s Innovation management and new product development (fifth edition, 2013, pg. 430), new product development can be divided into three categories. This is new to the world products, new product lines and additions to product lines. In terms of where PlayStations potential mobile phone would fit into this category it would be new product lines as it is not new to the market but new to the firms existing product line. (Appendix A and B talks about NPD and S.W.O.T)

Reaching out into the mobile market will not only increase Sony PlayStation’s product line but also give a competitor advantage over their main rivals Xbox in which Sony have already taken advantage of with their other products such as the PSP vita and PSP GO. Although this does not pose a direct competition to Xbox as these can be seen as a phone with PlayStation capabilities, it can eat away Xbox’s overall share in the gaming market. Xbox only sell home video gaming consoles, from the first ever Xbox, to the Xbox 360 and Xbox one, Microsoft (Microsoft own the Xbox brand) haven’t branched out into other sectors of the gaming market in terms of handheld consoles. This may be due to the vision Xbox have, of having an “all in one games and entertainment system” and do not have any other product apart from the Xbox 360 and recently developed Xbox one. In terms of reaching out into the mobile phone market Sony have the option to build the PlayStation technology onto an existing phone in which they can use the

PlayStation brand to market the phone. A good example of this would be the N-gage that was created by the Nokia brand. The base of the phone was similar to the Nokia 3650 with the S60 interface. The N-gage phone had the same capabilities of the then, up to date software such as Bluetooth connectivity, multimedia messaging (MMS) and WAP over GPRS. It also had better gaming graphics thanks to the n-gage software, which was installed on the phone and was the only phone to have an online gaming platform known as ngage arena. It proved to be a major hit with consumers, which 2004 have sold 1.4 million products worldwide (according to IGN) after only being launched the year before. However the hit also proved to be short term as the ngage ceased production in 2010. The launch price of the N-gage, which was supposed to rival Gameboy advance, was roughly £182 (converted from current US Dollar), whereas the Gameboy advance cost £60. We can see that Nokia priced the N-gage at a high price compared to the Gameboy. This may be due to the fact that the N-gage was the first of its kind. Sony may not be able to take the same approach

Sony have already had previous experience in the phone market with the partnership of Swedish telecommunications Equipment Company Ericcson which then led onto buying out Ericcson shares in the company. Sony’s phone company now operates under the name of Sony Mobile Communications. Sony has never attempted putting their PlayStation brand onto one of the Sony phones and now is the time to do so. In 2012 the average monthly expenditure on telecommunication services prices was 58.2% for mobile phones and data (See appendix E). This means that consumers see their mobile phones as a priority over fixed voice and fixed internet bills (fixed in terms of home calls and internet), Sony can exploit this by not only increasing their product phone range by introducing PlayStation features onto one of their existing phones but also gives them a competitor advantage as they bring something different to the market.

SECOND RECOMMENDATION

Titled games that were exclusive to Sony PlayStation should be sold on app stores and created by Sony’s own developers. This can be through a range of different app stores including the android app and apple’s app store. According to Apple’s official website the number of apps which were downloaded in 2012 were 20 billion and a total of 40 billion apps have been downloaded out of the 775,000 apps worldwide.

Ten years since the apple app store has been opened there are just over 237,000 game apps, which represent 18% of the total app store. It is also the number one category in the app store with the most amounts of apps in a category. What this means for a company like Sony PlayStation is that gaming has become an important aspect to the consumer and is popular for everyone as they can play games on the spot or in their spare time. Sony should capitalize on this statistic by producing games exclusive to their business.

Casual gaming is becoming increasingly popular and in October 2013 had increased from 176,000 to 181,000 game apps in November 2013 in terms of active apps (See

Appendix C). This shows that there is a potential growth in app stores for Sony to sell their titled games to developers or even use their own developers to make apps for phones and tablets. The other major app store is the play store, androids official app store. The total number of apps which android have are 975,000 according to their official website (android.com). Distismo reported in 2012 that game accounts for 66% of revenue from apps (Appendix D), and for a company like Sony who produces games can see that they are able to benefit from the app stores having high revenue in the app store. It can benefit the company as Sony deals with gaming and it shows that there is an established and popular market for game apps. In the U.K market the popularity of games in Apple’s App store is eighth in the world showing that there is a demand for casual games.

Not only are there only two major app stores, there are now several different app stores to choose from. Distimo.com tracks the usage of apps and gives numerical data show that there are 9 app stores. What this means for a company like Sony PlayStation is that they are able to commercialise their exclusive title games app to a mass.

In terms of creating apps in the 2012 budget the government announced provisions to introduce tax relief for video games production. This is beneficial for Sony as they are able to benefit from reduced development costs and as a result maybe increase the amount of investment into the actual research of game development for apps.

Third Recommendation

Marketing their product so that consumers view their product not only as a gaming console but also a complete entertainment hub.

In order for consumers to view the Sony PlayStation game console as a complete entertainment hub they will have to change the way consumers view their product. . Once an attitude towards a certain product has been established it is hard to change this idea of what consumers may have about Sony PlayStation.

So rather than change the consumers perception of what Sony PlayStation is about, Sony should not change their image to their consumers but use this as a base to develop consumers understanding about their product further. A recent report from forbes.com stated that the upcoming PlayStation 4 (PS4) was marketed towards the “core gamers” but also stated that Sony are making the right steps to make sure that Sony will change the way we consume non-game media. In order to compete with Xbox One’s statement of being the complete games and entertainment system PS4 will have a new Internet TV service. The previous PS3 did have TV services but was never one of the key aspects talked about when being marketed. Furthermore, Sony has also announced that a variant of the PS Vita can be used in addition to the PS4.

The way that Sony are now marketing their products can now be seen as being a complete entertainment hub. Using the PS Vita TV and PS4 they are now fusing their products together to have dual purposes, which in the eyes of the consumer is an effective way of showing that they want to bring a complete entertainment hub. As a

result this can improve the growth of the product and the company. It is an improvement of the previous product (PS3) and in terms of growth will be able to give a competitor advantage and possibly stay ahead of the competition. Like most consoles the planning of the PS4 was before the launch at the E3 (Electronic Entertainment Expo) where developers showcase their consoles and games.

APPENDICIES

Appendix AThe first step of new product development (NPD) is being able to generate the idea and Sony would be to carry out an S.W.O.T analysis (See Appendix B). Generating the idea can come from a variety of sources whether it is internal or external. An internal source may be employees who already work for the company or using data, which has been previously collected by the company. A way of external factors would be through consultants and market research about the environment that Sony works in. The next stage of NPD would be to screen the idea. Screening the idea involves going through variable ideas and picking the most viable one in terms of a variety of questions such as whether it will be able to be developed further, will it be able to compete in the market and most importantly will it bring revenue to the company. The third stage in NPD is concept development and testing. At this stage the company will start physically creating the idea and test it. As Sony already has a phone range they may be able to incorporate this with their PlayStation brand. An example of this may be using various phone ranges and testing PlayStation features with it. This can include PlayStations game card into their phone for better gaming graphics to the user interface they have on the PlayStations. The next process is business analytic. These will include collecting data over a period of time in term of metrics that will provide valuable criticism. The next stage will be beta tests. For PlayStation and their parent company they should do a mixture of tests that include discussion groups for both gamers and phone users to get an opinion on the actual product. These discussion groups will be valuable as it allows them to tweak some aspects of their product to make it more suitable to the consumer. Discussion groups are a good way of seeing what consumers think of the product, which will help towards making the final product. Step six of the NPD is the product development. Now is where the product will start to form and start putting the idea into practice. This will include all aspects of the business including the marketing team, which will market the product, the financial team will sort out the financial accounting of the product and the product development team will start to make the final product (in this case the phone). The next step is commercialization. The product has now been introduced into the market and customers are purchasing the product. The business has to make sure the distribution channels are in line with what the business needs and wants and the advertising department will have to make sure the product stays in the minds of the consumers.

Appendix BA key strength of the company would be that they have prior knowledge of both the phone market and games console market. This is not only an advantage due to the fact that they have knowledge of both markets but also have the capability of producing a gaming phone in which they do not need to go else where for expertise. This is a huge advantage in itself as Sony are able to do their own R & D in house rather than source different areas in which they may not have the expertise in, they

can use both their mobile and gaming departments to produce a gaming phone of a high caliber. A weakness of Sony producing a gaming phone would be that having a phone with a high gaming integration system would run the risk of draining the battery out too quickly as the graphics card and other internal hardware would use too much power. Thus questioning whether the battery life performance will be able to perform on a daily basis with the phone carrying out other tasks than playing games. An opportunity for Sony would be that they could possibly create a niche market. This is because of whom they target the phone to. A casual gamer will not spend hours and hours playing games on their phones and will use most features of the phone, in comparison to serious gamers who play games at a high level and possibly use their phones more to do with ‘leveling up’ in games rather than use a phones other features. As a result of identifying whom the target market will be the barrier of entry into a phone market. Barriers of entry in a mobile phone market would be the massive players who already dominate the market. Apple and Samsung have taken over the majority of the phone market; as of September 2012 apple have a sales turnover of 982,298, and Samsung a sales turnover of 2,142,25. (Mobile Phones,2013, Key Note)

Appendix C

This graphs represents active applications on Apple’s app store in the U.S. Although this shows a different demographic to the UK it shows the sheer amount of active users using different apps and the market which is growing at a healthy rate.

Appendix D

Appendix E

Appendix F

REFERENCES

Books

Paul Trott. 2013. Fifth Edition. Innovation management and new product development PG.430

Journals

Ian Barclay, Mark Benson. 1990. New Product Development. Leadership & Organization Development. PG.24-30. Vol. 11. No. 6. ISSN: 0143-7739

Reports

Katie Hughes (July 2013) Video Gaming. Second Edition. KeyNote.Leah Trutt (July 2013) Mobile Phones. Ninth Edition. Keynote

Websites

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Xbox Wire. 2013. [ONLINE] Available at: http://news.xbox.com/2013/11/xbox-one-complete-games-entertainment. [Accessed 05 December 2013].Device Details -- Nokia 3650. 2013.[ONLINE] Available at: http://developer.nokia.com/Devices/Device_specifications/3650/. [Accessed 09 December 2013].Shane Riley. 2013. Game Boy Advance [ONLINE] Available at: http://www.giantbomb.com/game-boy-advance/3045-4/. [Accessed 09 December 2013]Distimo. 2013. Apple App Store, United Kingdom, Top Overall, Free, 2013-12-08. [ONLINE] Available at: http://www.distimo.com/leaderboards/apple-app-store-for-iphone/united-kingdom/top-overall/free. [Accessed 09 December 2013].