INSTITUTE OF

MANAGEMENTTECHNOLOGY NAGPUR

Project
On
SONY COMPUTER ENTERTAINMENT

SUBMITTEDBY: SUBMITTED TO:

SALONIKOTHARI Dr.
GAJAVAELLIV.S ANKITA SINGH
SAKSHI CHHAPARWAL
SAYAN SAMANTA
SATYA PRAKASHGUPTA
(SECTION-E, GROUP-1)
 INDEX

Introduction Page 3

Nature of Industry Page 4

Company Profile Page 4-5

Factors of production Page 5-6

Demand Forces Page 7-8

Elasticity of Demand/price/Cross Page 9

Market Structure Page 10

SWOT Analyis Page 11

Porter’s 5 Forces Model Page 12-13

Conclusion Page 14

Appendix Page 15

References Page 16

Bibliography Page 17

Reprots Page 18
Introduction
Sony Computer Entertainment Inc is the company which manufactures, distributes,
markets and sells Playstation. Sony Computer Entertainment is a division of the Sony
Corporation. Sony Computer Entertainment Inc is based in Tokyo, Japan with
subsidiary divisions in America, Europe, Korea, China and Japan.¹ Playstation is the
leader in market share and PlayStation 2 is the most popular gaming platform in North
America, Europe/PAL territories and Japan/Asia, the only gaming platform to enjoy
such widespread global success.
Key competitors of SCE are Microsoft and Nintendo. Industry is facing the change, that
the new generation consoles will bring with Playstation 3, from SCE, the already
launched XBOX 360 from Microsoft, and REVOLUTION from Nintendo.
The electronic game industry is in the middle of a transformation as it has evolved from
a niche industry into one of the most dominant sector in the media and entertainment
business³. Capitalising on technological advances SCE can exploit this spectacular
growth that has the potential to continue through the end of the decade.

The aim of this project is to analyze the external and internal factors of production, to
analyze demand – supply demand force, elasticity of demand, price elasticity, cross
elasticity ,market structure, SWOT analysis, porter’s five forces of Sony Computer
Entertainment. This study will take a deeper view assessing the complete market
structure of SCE.
We chose the specific company because of its rich economical parameters & unique
brand personality.
Nature of Industry

The Indian Media and Entertainment (M&E) industry is a developing division for the economy and
is making high development strides. Demonstrating its strength to the world, the Indian M&E
industry is on the cusp of a solid period of development, sponsored by rising buyer request and
improving promoting incomes. The business has been generally determined by expanding
digitisation and higher web use in the course of the most recent decade. Web has nearly turned into a
prevailing press for diversion for the majority of the individuals.

The Indian promoting industry is anticipated to be the second quickest developing publicizing market
in Asia after China. At present, promoting income represents around 0.38% of India's total national
output.

About Company:
Sony Computer Entertainment Inc is the organization which makes, circulates, markets and sells
Playstation. Sony Computer Entertainment is a division of the Sony Corporation. Sony Computer
Entertainment Inc is situated in Tokyo, Japan with backup divisions in America, Europe, Korea,
China and Japan. Playstation is the pioneer in piece of the pie and PlayStation 4 is the most well-
known gaming stage in North America, Europe/PAL domains and Japan/Asia, the main gaming stage
to appreciate such boundless worldwide achievement.
We picked the particular organization in light of its rich and extraordinary brand character yet
additionally due to the development the organization can accomplish abusing and deciphering the
outside condition, superior to the contenders.
About product:
PlayStation is a video gaming brand that comprises of four home computer game consoles, just as a
media focus, an online administration, a line of controllers, two handhelds and a telephone, just as
numerous magazines. It was made and claimed by Sony Interactive Entertainment on December 3,
1994, with the dispatch of the first PlayStation in Japan, and has been possessed by that organization
from that point onward.

Generation of ps:
Playstation Launched on Dec 3,1994
Playstation 2 Launched on March 4,2000
Playstation 3 Launched on Nov 11,2006
Playstation 4 Launched on Feb 22,2014

Factors of production
Land:
FOXCONN : A Taiwanese multinational electronics contract manufacturing company engaged by
Sony to manufacture the PlayStation, it is headquartered in Tucheng, New Taipei , Taiwan.

Labour:
The workers inside Sony’s HQ designed and made improvements to the design. Sony has over
100,000 employees engaging is a wide array of work from administration to management.
Capital:
Capital is distinctive in the facts that although they are a good, they only indirectly satisfy human
wants and needs. Capital consists of many things like buildings, machinery, transportation
and infrastructure. Eg : Processing Chips, High End Graphic Cards

Entrepreneurship:

Like in every successful company, their management teams consisting of competent and able individuals who
make good use of the other 3 resources to maximize profit and productivity. People such as Kenichiro

Yoshida, CEO of Sony does this well.

 Analysis of price & supply –demand forces
PRICE

When the price of PlayStation falls, the consumers respond by increasing the quantity of PlayStation
Demanded.

Change in price of product substitutes

The XBOX and Wii are substitutes of playstation. When these consoles falls in price, the demand for
playstation decreases.

Expectation of price fall

When the price of playstation is expected to fall in future, the demand for its games also decreases, as
consumers will want to buy them later
Increase in consumer income

Playstation games are a normal good. So an increase in consumer’s income increases the demand for
playstation games.

Preference Changes
Today, people rather choose the PC instead of choosing console gaming because their preferences
had changed. This actually causes a decrease in demand.
Elasticity of demand
“THE DEMAND OF PLAYSTATION IS ELSATIC”
considered a luxury product.
gamers usually never give up gaming.
product has been in the market since 1994 and running fast and
smooth in 2014 with ps4 powering up sales all over the world.
has very close substitutes.

Income elasticity
Its target market is high middle class and elite class people thus the income of lower middle-class and lower-
class people an increase in income will raise the demand of the product.

Cross elasticity

Change in demand of one good due to change in price of another good. As in high end gadgets price doesn’t
matter. Most current owners of such gadgets tend to have purchase a console previously the customer has
potentially developed an attitude towards it.
Market structure
They belong in the oligopoly market
High barriers to entry
Small number of dominant seller
Product Differentiation
High barriers to entry
High economics of sales means it will be efficient to enter the market only
with a huge amount of output level.
However, it is not wise to enter the market by this way, as it is not certain
consumers will buy.
They might also face closure should any of the 3 major firms as discussed try
To put them down.

Small number of dominant seller

There are only a handful of noticeable sellers that are large enough to be named as dominant.
Swot analysis

Strength
Sony brand
Exclusive games
Graphics
PlayStation network free
Stores online a lot of free products
Integrated products and lines
PS4 bestselling console till date

Weakness
Expensive consoles
Linux based OS
No Standardized storage options
Bluetooth system prevents use of universal remote
Not many exclusives

Opportunities
Streaming Videos
Loyalty
Increasing gaming options

Threats
Competition
Changing demographics
Recession
Disruption & digital transformation
Porter’s 5 forces model
Intensity of Rivalry Among Existing Competitors:
Computer game industry is set apart by an oligopolistic authority over equipment (reassures) by the
three key players and enormous challenge. Sony and Microsoft appear to pursue the second way of
aggressive methodology through hostile vital moves trying to separate its items with developments in
promoting and innovation. Every firm center methodology depends on a similar fundamental
business rule: the cash is in the product since improvement and assembling costs keep comforts at an
earn back the original investment deal cost in most customer's cost focuses. The restrictive idea of
the support advertise diminishes the opportunity for any soul of collaboration between the
oligopolistic firms. Computer games are presently a standard – based industry, with the normal
significance of first mover advantage, mass acknowledgment of the item and specialized
advancement.

Threats of new entrants:

The console market segment is highly competitive and requires significant capital for entry. In
fact since Nintendo and SEGA popularized consoles in the late 80’s, only SONY and MICROSOFT
have been able to enter the market successfully, Sony technology know-how and marketing resources
gave them the advantage to enter the market and dominate it. Technology changes with each
generation of consoles, so relationships with suppliers such as CPU and graphics chip makers are
critical. Without similar resources, it will be difficult for a new player to repeat such an entry. New
entrants would also have to face the battle of an installed base of users and software that current
players possess. Sony has a very strong product differentiation Which means that it has a very strong
brand identification and customer loyalty, which comes from past advertising, customer service,
product differences or simply being first into the industry.This means that there are very strong
barriers to entry for new companies that will have to create a new brand from scratch and risk
their investments.

Threat of substitutes:

Sony competes in two different areas. The first area is the direct competition with the rest of the
players where Sony tries to persuade new customers to buy its consoles (handheld or normal) rather
than a substitute and broadens its installed base 11 (market penetration). The other indirect
competition occurs in broader context where Sony competes on the entertainment consumer
expenditure for substitute products as CD’s, DVD’s and PC games.

Bargaining power of suppliers:

In the video game industry the most important suppliers are the suppliers of processor chips because
there lays the power of each machine to handle more information and richer content. Sony
plans to take the lead in the new generation with and along with Toshiba and IBM created a new chip
called “cell” which it is said that it will revolutionize the industry. These kind of collaborations will
significantly increase the cost of Sony’s cost over the life of the product but it will keep making
money from software titles.
Bargaining Power of Buyers
Software titles to sell into the second section of buyers ,consumers. In the light of the fierce
competition and wide variety of substitutes consumers enjoy a strong bargaining power. At the
same time, Game Industry specialists claim that the development of specific There are two main
buyers of SCEE products: retail outlets that buy consoles game communities might create strong
consumer attachment both to a specific game title and to a game platform.

New entrants Low

Suppliers Low Competitors High Buyers (bargaining power)

High

Substitutes
High

Adopted from Porter (1990)

Conclusion
This report has studied the external and internal environment of Sony Computer
Entertainment Inc. using the tools that I think are the most appropriate for the specific
task. The findings showed that Sony faces a very challenging external environment
which is in the stage of great changes. A children's market until the early 90s, the
mainstream computer and video game user-base is now well into the 18-35 market,
thanks to an ageing base of gamers, game aesthetics which a broader range of people
can associate with but perhaps most importantly, Sony's novel concept of targeting an
older demographic when PlayStation launched. Moreover Software plays a
considerably more important role than hardware in determining the long-term success
of a console. Few people buy consoles based on hardware alone; most buy consoles
based on software releases and a regular flow of high quality software is therefore
essential. Sony’s internal environment analysis showed that Sony has a great potential
for the future if it continues to show the same novelty in marketing, relationships and
technology.
Appendix 1

Video Game Industry Primer Piper Jaffray Equity Research, May 2014
References

http://www.us.playstation.com/News/PressReleases/338

http://www.scee.presscentre.com/Content/Detail.asp?
ReleaseID=2294&NewsAreaID=17

http://www.deloitte.com/dtt/cda/doc/content/DR_Moore%27s%20Law
%20Final_May2004%282%29.pdf

http://homepages.wmich.edu/~e2oquist/PROJECT3.htm

Finlay, P.N Strategic Management : An Introduction to Business and Corporate

http://www.theesa.com/archives/EF%20Courts%20and%20Rulings%20Final%20--
%20August%202006.pdf http://www.gamesindustry.biz/content_page.php?
aid=3832
http://academic.mintel.com/sinatra/academic/search_results/show&&type=RCItem &
page=0&noaccess_page=0/display/id=68221
Michael E. Porter. 1980. COMPETITIVE STRATEGY TECHNIQUES FOR
ANALYZING
INDUSTRIES AND COMPETITORS. New York: Free press

11http://www.themanager.org/Strategy/BeyondPorter.htm

Video Game Business to Double by 2011, Driven by Online and Mobile

Gaming Press Release ABI Research.htm
http://www.themanager.org/Strategy/BeyondPorter.h
tm
http://www.themanager.org/Strategy/BeyondPorter.
htm

http://www.gamesinvestor.com/Thinkpieces/Next-gen_PC_market/next-
gen_pc_market.html
http://www.gamesinvestor.com/Thinkpieces/Next-
gen_PC_market/next- gen_pc_market.html
17http:/www.dfcint.com/game_article/feb04article.html