Sony Video Game Situation Analysis

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The project is talking about the Video Game Industry.

My part is to analyze the Sony video game.

Requirements are listed in (1)file

The industry introduction is in (2)file

The sample is in (3)file

Please use Times New Roman, 12, double space

13 pages not include reference page

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Situation analysis for Sony 1. SWOT analysis 2. Key customers 3. Economic (i.e. revenue from video game occupy how many percent of whole Sony company) 4. Tring to predict what’s the next curve or shifts for Sony video game 5. What’s the next thing that will catch the gamers be interested in 6. Predict how the company will develop in 3-5 years 7. What are the competitors, how it differentiates from competitors 8. How the Sony video game operate in different country (i.e. Japan, China and North America) 9. Could add some charts 10. Please cite all the references Competitive Strategy Consultancy: Mirage Inc. Members (Group One) Xiaoyu Qiao, Hailan Jiang, Isnigdha Chaturvedi What is the industry? Video Game industry is the economic sector involved in the development, marketing, and monetization of video games. My team at Mirage consultancy has chosen it this quarter to analyze and predict the trends in the future. Why does it interest you? 3 out of 5 people admit to playing on a daily basis, serves as a testament to the widespread video game culture within American society. Since its commercial birth in the 1950s as a technological oddity at a science fair, gaming has blossomed into o ​ ne of the most profitable entertainment industries in the world.​ The mobile technology boom in recent years has revolutionised the industry and opened the doors to a new generation of gamers. Indeed, gaming has become so integrated with modern popular culture that now even grandmas can name a few video games. Video games are more than just a booming entertainment business — they're reshaping the way we interact with the world. The gaming industry inspires innovation by constantly pushing the boundaries of what's possible, driving companies like Google and Microsoft to create new technology to serve the billions of gamers around the world. As Peter Drucker said, innovation and marketing is the essence of any management and industry to survive for a long term.The global Video Games market size is about US$83.1 billion in 2019 and it accounts for 54.2% of the Digital Media market.​ ​ The video game industry is growing so fast that​ some believe it will reach over $300 billion​ by 2025. With billions of dollars in profit and​ over 2.5 billion gamers around the world​, we can expect video game platforms to continue developing in 2020. Who are the key players large and small? Leaders based on the YOY growth 1. 2. 3. Sony Microsoft Alphabet based on 2018 Revenue 1. 2. 3. Tencent Sony Microsoft Followers 1. 2. 3. Electronic Arts (EA) - creator of most sports game franchise - NBA, FIFA Take Two Interactive - creator of Grand Thief Auto Activision Blizzard Entertainment - creator of world warcraft Up and comers 1. Thunderful - swedish company 2. Sea Limited - founder of a southeast Asian regional gaming platform called Garena In trouble 1. Atari - known as the grandpa of video games 2. THQ - developers of WWE Smackdown 3. SEGA - kings of the golden age of arcade with games like Sonic the hedgehog and Atron Belt _______________________________________________________ Source: https://techcrunch.com/2015/10/31/the-history-of-gaming-an-evolving-community/ https://markets.businessinsider.com/news/stocks/5-ways-the-video-game-industry-will-ch ange-in-the-next-decade-2019-7-1028394586 https://www.businessinsider.com/video-game-industry-120-billion-future-innovation-20199 https://www.forbes.com/sites/ilkerkoksal/2019/11/08/video-gaming-industry--its-revenue-s hift/#4509cc16663e https://techjury.net/stats-about/video-game-demographics/#gref https://www.fool.com/investing/2019/05/17/these-6-giants-control-half-the-global-video-g ame.aspx https://www.forbes.com/sites/kevinanderton/2019/06/26/the-business-of-video-games-ma rket-share-for-gaming-platforms-in-2019-infographic/#5b8bef7e7b25 https://builtin.com/media-gaming/gaming-companies https://www.thegamer.com/15-video-games-companies-that-died-because-of-bad-decisi ons/ https://www.fool.com/investing/2020/01/15/the-fastest-growing-video-game-company-yo uve-never.aspx Chen Pengyu Chen Strategy Paper 1011-Competitive Strategy 05.10.19 1 / 12 Chen Background and High Level Overview Our group chose the Amusement Park Industry for our project. The global market for Amusement Park Industry is forecast to reach $44.3 billion by 2020, driven by the recovery in leisure spending, rise in international tourism, and growth of the middle class population in more and more countries. The US is the largest market worldwide and Asia-Pacific led by China is expected to emerge as the fastest growing market. Over the five years to 2023, industry revenue is expected to rise at an annualized rate of 1.5% to $19.9 billion, which represents the effects of a stabilizing US economy. Growing number of businesses and 4.8% annual growth rate on 2013-2018. o Size: The global amusement parks market size as I mentioned above, will reach $44.3 billion by 2020. o Growth Rate: The expected compound annual growth rate for this industry is 5.8% from last year to 2025. o Trends: Some of the newest trends in Amusement Parks Industry are virtual reality, video games, dinosaurs’ projects and artificial intelligence robots. o Key Recent Events: l Plopsaland De Panne in De Panne, Belgium, has a new virtual reality wooden roller coaster called “Heidi The Ride.” l The Kraken Virtual Reality (VR) Roller Coaster in summer 2017 at SeaWorld Orlando. The company that I chose in this industry is the Walt Disney Company: Now the Walt Disney Company is a diversified worldwide entertainment company with operations in four business segments: Media Networks, Parks and Resorts, Studio Entertainment and Consumer Products. It is an American diversified multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios in Burbank, California. It is the world's largest independent media conglomerate in terms of revenue, ahead of NBCUniversal and WarnerMedia, which are owned by telecommunications giants Comcast and AT&T respectively. It already has a market capitalization about $155 billion making it arguably the most valuable content creators in the world in 2018. 2 / 12 Chen — Key Differentiation: 1. The Walt Disney Company’s target audience is mainly family and friends. It is for younger kids and it is the place to spend time with family or sweet friends. 2. The Walt Disney Company has the most valuable original contents that you can’t find in other places. 3. It is a worldwide company and located in 4 different countries. — Key Opportunities: 1. VR technology 2. Mobile Market — Key Challenges: 1. Keep the service standard the same in all 6 parks. 2. Limited target audience. — The Walt Disney Company’s Success in the Future 1. Expanding the market in different countries, like some developing countries. 2. Create more new IP. 3. Partner with tech companies. 3 / 12 Chen Market Industry Analysis 1. 4 Ps Analysis a) Price Because the Walt Disney Company is the first and only multinational mass media and entertainment conglomerate, it has two pricing strategy separately. i. Market-oriented pricing strategy: It uses for common products like movies. The company will adjust the price baes on competitor’s price and market needs. ii. Value-based pricing strategy It uses for the products at the company’s parks and resorts. b) Place i. Movie theaters ii. Disney stores (Disney Baby, Disney Gallery, and others) iii. Official websites (Go.com and others) iv. Mobile apps v. Licensees and other parties (cable, satellite, telecommunications service providers, and others) c) Product i. Media Networks (cable, television, and radio programs) ii. Parks and Resorts (Walt Disney World Resort, Disneyland Paris, themed hotels, and others) iii. Studio Entertainment (motion pictures, direct-to-video content, musical recordings, and stage plays) iv. Consumer Products & Interactive Media (Books, magazines, comic books, video games, merchandise, and online video content) d) Promotion The Walt Disney Company uses different promotion strategies based on different kind of products. Advertising is the main strategy in this part and it is very efficient for movies selling and parks tickets selling. i. Advertising: major strategy ii. Direct Selling: to firms like Marvel and Pixar iii. Sponsorship: for nonprofit organizations iv. Sales Promotion: Disney outlet stores, ticket package, etc. 4 / 12 Chen v. Public Relations: to build a strong brand image 2. SWOT Analysis a) Strengths i. Popular and Strong Brand Image ii. Lots of original contents iii. Strong cooperative growth among business segments iv. It has wide diversification of business v. The Walt Disney is financially strong b) Weakness i. Limited expansion: only expanded in 4 countries ii. Mobile market: no famous mobile game apps and not much promotion for theme park and resorts apps iii. Limited target audience; Disney’s audiences are mainly 2-14 years old kids and their family. iv. Slow new character development: Disney needs to create have more new characters and IPs. c) Opportunities i. Technological innovation: 1. Partner with some tech companies to bring the newest technology to theme parks’ projects. 2. Partner with some game companies to develop new projects and bring VR tech into new projects. ii. Expanding worldwide: Disney can definitely expand its business in some new countries or even in developing countries. d) Threats 1. Hard to keep the service standard all the same: I think it is hard to keep the service standard in all parks and resorts the same. There is a lot of bad service review on one of the theme park. 2. Competition: The Walt Disney Company’s main competitors are Universal Studio, Sea World and Six Flags. Except for those main competitors, local theme parks and businesses are also Disney’s 5 / 12 Chen threats because their tickets are much cheaper than Disney and their culture are more suitable with the local community; 3. High operating cost: Disney needs huge numbers of employees. 4. Fake products: fake Disney products like toys will lower Disney’s brand image and deduct a huge amount of the profit from its products line. 3. Porter’s 5 Forces Industry Internal Competition Universal Studio is the biggest competitor for ✭✭ Disney. But they have different target audiences and content. People who like Universal are more like to enjoyed exciting projects and played with friends. Threat of the New Entrants Companies needs a lot of money to build an ✭ amusement park, so it is not a common investment choose. It is hard for new entrants to get in. Bargaining Power of Buyers Even the total number of Disney’s customer ✭✭ increased these years but the growth percent decreased a lot in recent years. Bargaining Power of Suppliers The Walt Disney has its own factories ✭ worldwide. Too many factories want to work with Disney. Threat of the Substitutes The Walt Disney has so many original and ✭ valuable content that you can only enjoy them in the Disney theme parks. This graph shows the total number of customers ( hundred million-orange ) increased and the growth rate (grey)decreased. 6 / 12 Chen Customer Analysis Ø Segmentation, Target Audience, and Positioning • Geographic It is the location of Disney’s parks. Disney likes to locate in the world’s most visited places like Europe, Japan, US, and China. • Demographic Mainly targets are children from 2-14 years old and their families. • Psychographic Average income families, who live in urban areas. • Target Audience is varying from children, to tweens, to teenagers and even adults who are young at heart. • Positioning The Walt Disney Company is the only entertainment and media company in the world that combines products, services, and experiences across many sectors. It mainly focuses on children, parents, friends, and family all over the world. • How will they change in the next 5 years? I don’t think their target audience, positioning and segmentation will change too much in the next 5 years. Because all their parks, resorts, product lines, promotion strategies build up based on their positioning and target audience. If the Walt Disney company change its positioning and target audience in the next 5 years, they will have a lot of stuff to change in their theme parks. Ø Pricing & Distribution • How are you priced vs. your competition? Ø Theme Park Tickets There are several types of tickets, except after hours’ tickets and seasonal events tickets, normal theme park ticket price is differentiating by how many days you are going and how many parks you want to go in one day. Usually, a one park per day ticket cost $109. But if you stay longer in the theme park it will be much cheaper. For example, if you buy one park per day ticket for 6 days, it will only cost $70 each day. The Walt Disney Company also have special offers for the local 7 / 12 Chen community. If you live in the same state with any of Disney theme park, your ticket will be much cheaper than people from other states. Ø Annual Passes Disney offers annual passes for their customers. Price started from $894 for normal parks and $139 for water parks. Ø Vacation Packages In order to promote Disney theme park resorts, Disney offer Resort Hotel Packages for their customers. If you live in their resorts, your park ticket will be a little cheaper, and you can have special magic hours than other customers. What is that means? It means you can access to the parks one hour before normal operating hours and leave the park one hour later than the operating hours. You will also have some special entrances and free shuttles to take you back to your hotel. • How will your distribution change? Ø Brick & Mortar Disney is trying to save its retail store. The close several locations in the US, even closed one near where I live. Ø Online Disney is focusing on digital marketing right now, which is cheaper than a Brick & Mortar store and more convenience for customers. Ø New products or areas of concentration? • Mobile game app I think some new mobile game app from Disney will be a good choice. There are some Disney mobile game apps in the app store, but none of them are famous. Not even much promotion for those apps. So since the digital market is much bigger than before, I think Disney should try to develop some attractive and creative mobile game app for both kids and adults. 8 / 12 Chen Measurement of Your Strategy’s Future Success Factors of Measurement Importance Sales ✭✭✭ New Products ✭✭✭✭✭ Margins ✭✭✭ New Markets ✭✭✭✭ New Customer Segment ✭✭✭✭ First, sales and margins are important for the Walt Disney Company’s future success. Since it still the top#2 company in this industry with strong brand image and enough money, the company don’t need to worry about these two parts that much. For the new products and new markets part, I think they are more important than sales and margins because slow content creation is one of Disney’s weakness. The Walt Disney Company have to create more new content and more new products to attract customers from different age groups. And as I mentioned on Disney’s SWOT, I think Disney should expand its market into other countries, so I think new markers is also very important. If the Walt Disney Company can create more new products and expand in new markets, I think the can also add new customer segment in their positioning. The company can partner with game and technology companies and bring new stuff to new projects. It will get more new customers who like new things and exciting projects. For example, it can add VR interaction ride in the theme park to attract teens who like to enjoy highspeed projects. Summary I think in the next five years, the Walt Disney will bring more new technology into its game projects. Add VR in its games to make interaction with players. Maybe it can create a virtual amusement world on customers’ phone. Like customers can put on their glasses and linked it to their phone, to enjoy the virtual amusement experience as in the theme parks at home. I think it will be a really cool idea, because Disney’s ticket is not that cheap, and count flight tickets and hotel cost, one Disney trip will cost a lot. If Disney can create a virtual amusement world on customers’ phone, it will expand its 9 / 12 Chen customer segments and let more people have the ability to visit Disney. Also, I think the Walt Disney Company will expand its market into different countries in the next five years. The new location for Disney will have very splendid culture, so Disney can add a little bit of the local culture in the theme parks to make it different from other Disney theme parks. Next, I think the Walt Disney Company will create more new IP and new content in the next five years to keep the existing customers and gain new customers. Overall, the Walt Disney Company is a strong company in this industry and I believe it will still be the top company in this industry in the future. 10 / 12 Chen Word Cited: Datta, H., Ailawadi, K. L., & van Heerde, H. J. (2017). How well does consumer-based brand equity align with sales-based brand equity and marketing-mix response? Journal of Marketing, 81(3), 1-20. Dileep, M. R., & Mathew, V. (2017). Marketing of Tourism Industry: Enhancing Services through Marketing Mix Elements. In Strategic Marketing Management and Tactics in the Service Industry (pp. 304-329). IGI Global. Jackson, G., & Ahuja, V. (2016). Dawn of the digital age and the evolution of the marketing mix. Journal of Direct, Data and Digital Marketing Practice, 17(3), 170186. Liu, Y., Li, K. J., Chen, H., & Balachander, S. (2017). The effects of products’ aesthetic design on demand and marketing-mix effectiveness: The role of segment prototypicality and brand consistency. Journal of Marketing, 81(1), 83-102. Stead, M., & Hastings, G. (2018). Advertising in the social marketing mix: Getting the balance right. In Social Marketing (pp. 29-43). Psychology Press. Steenkamp, J. B. (2017). Global Marketing Mix Decisions: Global Integration, Not Standardization. In Global Brand Strategy (pp. 75-109). Palgrave Macmillan, London. https://www.thewaltdisneycompany.com/about/ https://www.thewaltdisneycompany.com/disney-named-worlds-most-reputablecompany/ https://www.sec.gov/Archives/edgar/data/1001039/000100103918000187/fy2018_q4 x10k.htm https://www.selectusa.gov/media-entertainment-industry-united-states http://panmore.com/walt-disney-company-swot-analysis-recommendations https://thepointsguy.com/guide/new-disney-world-attractions-in-2019/ https://www.strategyr.com/MarketResearch/Amusement_Parks_Theme_Parks_Marke t_Trends.asp https://www.ibisworld.com/industry-trends/market-research-reports/artsentertainment-recreation/amusement-parks.html http://thewaltdisneyco.blogspot.com/2011/11/chapter-8-segmenting-targetingmarkets.html https://www.themeparkinsider.com/flume/201812/6472/ 11 / 12 Chen http://panmore.com/walt-disney-company-marketing-mix-4ps-analysis 12 / 12
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Running Head: VIDEO GAME INDUSTRY

Situation Analysis for Sony Video Game
Student’s name
Institutional affiliation
Date

VIDEO GAME INDUSTRY

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Background and Overview of the Sony Company
The Sony Corporation commonly referred to as Sony, is a multinational company based in
Tokyo, Japan. Sony deals in the design, production, and distribution of gaming apparatus,
electronics, and other entertainment consumer services such as music, films, and TV shows.
Since our project is dealing with the Video Game industry, this essay is a situational analysis of
the Sony Video game (Pesce, 2019). It is thus important to note that Sony produces the largest
video game consoles in the video game industry. SONY has produced and published very many
video games through its Sony Interactive entertainment. The video games are mainly produced
for PlayStation consoles; in order of date of production include PlayStation, PlayStation 1,
PlayStation 2, PlayStation 3, PlayStation 4, PlayStation Portable, and PlayStation Vita.
1. SWOT Analysis of the Sony Video Game
SWOT is a planning technique that aids an organization in strategically to identify the
strengths, weaknesses, opportunities and threats facing the organization, and how to handle each
to ensure the ultimate growth and profitability of the organization.
a) Strengths


Strong backing of the video games by Sony’s excellent reputation in the electronics and
entertainment consumer products. Many Game developers such as Ubisoft choose to
experiment and develop their games through the PlayStation (Bhasin, 2019). This has
seen video games experience high sales as consumers trust Sony products.



Variety of unique and popular games for each generation of PlayStation, which is only
exclusively found in the Sony Video game (Bush, 2019). For instance, Uncharted and

VIDEO GAME INDUSTRY

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God of Wars games in PlayStation 4 and others such as Final Fantasy 7 Remake, The
Last of Us Part II, Persona 5 Royal, and Ghost of Tsushima video games.


Highly differentiated gaming consoles. The PlayStation can even allow gamers to play
remotely and also access other games by the use of the Move technology. The
PlayStation 4 even has dual shock controllers that make the gaming experience even
more exciting (Bhasin, 2019). The PlayStation vita offers variants that are handheld, a
factor that lacks in competitor products.



High storage capacity which allows users to install a variety of games. For instance, the
PlayStation 4 has a storage capacity of 500GB or one terabyte.



High-quality cameras with visual graphics and HDMI displays. None of the competitors’
products have attained the 4k resolution present in the Sony Video games.



Highly advanced technologies in the PlayStations, such as the incorporation of cloudbased storage and access. This allows gamers to access the games via cloud platforms.



High customization to meet the needs of different customers (Bush, 2019). For instance,
the PlayStation offers a monthly payment plan for gamers, which is more affordable and
preferable compared to the quarterly payment plans offered by competitors such as Xbox.

b) Weaknesses


Frequent need for upgrades due to the use of operating systems that are closed. When
Sony develops a new gaming console, it is usually in the latest version of the games
(Bush, 2019). This means that the gaming console before that loses much value as gamers
want the new experience. Consumers are finding these costs too expensive to keep up
with; thus, they look for cheaper gaming alternatives.

VIDEO GAME INDUSTRY


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High promotion and advertising costs due to the presence of able and significant
competitors. There is, therefore, a need for Sony to market its products lavishly to lure
consumers (Bhasin, 2019). Sometimes these high promotion costs do not match with the
sales; thus, the company incurs losses.



Poor quality support of mouse and keyboard functions, as compared to those of PC
gaming.



Expensive games that have made gamers turn into cheaper alternatives such as mobile
games and Xbox.

c) Opportunities


The advancement in technology, such as affordable bandwidths and high internet speeds
in almost all areas of the world, including developing countries, has opened larger and
new markets for the Sony Video game (Bush, 2019). This is made better by the fact that
the games can be accessed through smartphones, a commodity that has become a
necessity for most people in the world, not just gamers.



Availability of new gaming platforms for the Sony Video game. This is due to the
advancements made in artificial intelligence, gaming online, smartphones, robotics, and
virtual reality (Bhasin, 2019). With Sony's already existent and well-established
distribution channels, these advancements will widen the scope of the video game, which
will, in turn, learn to increased sales for games and their hardware.

d) Threats


Presence of mobile games. Mobile games are a fast-growing threat to most gaming
consoles, including the Sony video game. This is because the mobile games are more
affordable, easier to access, and easier to use compared to the Sony video game (Bush,

VIDEO GAME INDUSTRY

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2019). This has seen the sales and prices of Sony gaming consoles drop significantly at
an alarming rate.


High and significant co...


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