Sonys Playstation Network [PSN]

Marketing plan

Bharath Karthikeyan PDSSM [2011-12]

I. II.

III. IV. V.

VI.

Executive Summary Situation Analysis A. Category/Competitor Definition B. Category Analysis 1. Aggregate market factors a. Brand awareness b. Well-known products c. Revenue, headcount and number of sales d. Plans for 2012 Restructuring e. Media f. Suppliers g. Distributors 2. SWOT Analysis 3. PESTEL and Environmental factors a. Socio- Cultural Environment b. Political/ Legal Environment c. Technological factors d. Ecological Environment e. Micro environment analysis C. Company and competitor analysis 1. Marketing mix 2. Profits 3. Expected future strategies Objectives A. Marketing objectives Product/Brand Strategy A. Customer Target Supporting Market Programs A. Price B. Promotion C. Place D. Competition E. Global Market Outlook F. Future Trends Conclusion

I. Executive Summary:
Sony Computer Entertainment, Inc. Branch: Entertainment Media Focus: Research & Development of Hardware and Software Game development studio Subsidiary of Sony Corporation 2nd-largest Japanese electronics company Core business: entertainment electronics Slogan: make. Believe Mission Statement: "to become a leading global provider of networked consumer electronics, entertainment and services." Sony, one of the market leaders in entertainment media has captured nearly 33% of the current video game industry with its new range of product line ups. The Playstation3 video game system and the Playstation Vita are Sonys latest entertainment devices in the industry. The Playstation systems are an expensive range of entertainment devices which targets the developed and growing economy segments across the world. The Device becomes a onetime investment for any buyer as it is not a commodity. Hence, Sony had devised the strategy for independent game developers to make games for its entertainment systems and Playstation can simply charge them for the licensing costs and marketing. This strategy is not something new and has been around us for more than 20 years now! Evolution is very much necessary as the world has become a market for even a local business through the advent of internet. Sony has realised the potential of a huge market capability through the internet media. In the year 2006, Sony had revealed its new line up of media services online for its entertainment consoles. This is called the Playstation network or simply the PSN network. The PSN network offers its subscribers/audience a means to buy games using the internet. The access to the PSN network comes free of cost for all the game console owners but to buy anything out of the online store, the users have to pay online using credit cards or any other online biller. The launch of the PSN network has helped Sony in many ways. The PSN network allows users to digitally acquire game software without going to a store to physically purchase it. The online service allows portability, as the service can be availed anywhere where there is internet connectivity. The PSN network offers downloadable content for games, issues patches for any fixes required by the game, lets Sony deploy marketing schemes like sales and discounts on its games and many more. The other promising feature of the PSN network is the interconnectivity it offers to all the users of the system. Any PSN user can connect to another PSN user to play a game together. Hence the network acts as a bridge to players across the globe.

All these said, in the year 2011 the PSN network was hacked by a group of piracy group and Sony had stored credit card info of all its customers on its servers. The hackers were able to grab some crucial user information but the credit card details were securely stored and hence a major threat was avoided. The Pirate group had made the PSN network inaccessible for its gamers for a period of 2 months. The users of the PSN network most felt frustrated by this result as many gamers have become serious users of this service. After a 2 month struggle, Sony was able to resolve the issue and come back with a new promise on security through a third party and also rewarded its gamers for their patience by offering two games free of cost. A very smart move by the company as all the gamers want as a compensation is just more games! The PSN network even after all this chaos has evolved and now offering varied services through its store, a perfect example of a marketing mix strategy. Other than games PSN network had started offering music, movies and other downloadable entertainment home media. The PSN network is a standalone marketing plan execution by Sony.

II. SITUATION ANALYSIS

A. Category/Competitor Definition
Category
The main customers for Sonys PS3 are the hardcore gaming community. These people are usually men from the ages of 15-30. However, with the Playstation 3s support for Blu-ray technology, the secondary customers would be those interested in the highest quality of movie entertainment; this group could be anyone of any age.

The PlayStation Store is an online virtual market available to users of Sony's PlayStation 3, PlayStation Vita and PlayStation Portable game consoles via the PlayStation Network. The Store offers a range of downloadable content both for purchase and available free of charge. Available content includes full games, add-on content, playable demos, themes and game and movie trailers. The service is accessible through an icon on the XMB on the PS3 and PSP. The PS3 store can also be accessed on the PSP via a Remote Play connection to the PS3. The PSP store is also available via the PC application, Media Go. As of September 24, 2009, there have been over 600 million downloads from the PlayStation Store worldwide. The PlayStation Store is updated with new content each Tuesday in North America, and each Wednesday in PAL regions. In May 2010 this was changed from Thursdays to allow PSP games to be released digitally, closer to the time they are released on UMD. The PlayStation Store was unavailable worldwide due to a PlayStation Network outage in April 2011. The service has been fully restored in Sony's American and European markets since June 2, 2011

Competitors
Sonys two big rivals in the gaming industry are Nintendo (who have been in the gaming business for over 20 years) and Microsoft (who have only been in the console gaming business for less than 10 Years). With this heated competition, Sony is forced to give their customers the latest and greatest in gaming technology and experience.

XBOX LIVE Services Xbox Live (trademarked as Xbox LIVE) is an online multiplayer gaming and digital media delivery service created and operated by Microsoft Corporation. It is currently the only online gaming service on consoles that charges users a fee to play multiplayer gaming. It was first made available to the Xbox system in 2002. An updated version of the service became available for the Xbox 360 console at that system's launch in 2005. The service was extended in 2007 on the Windows platform, named Games for Windows Live, which makes most aspects of the system available on Windows computers. Microsoft has announced plans to extend Live to other platforms such as handhelds and mobile phones as part of the Live Anywhere initiative.With Microsoft's new mobile operating system, Windows Phone, full Xbox Live functionality is integrated into new Windows Phones that launched in late 2010.

The Xbox Live service is available as both a free and subscription-based service, known as Xbox Live Free and Xbox Live Gold respectively, with several features such as online gaming restricted to the Gold service. Prior to October 2010, the free service was known as Xbox Live Silver. It was announced on June 10, 2011 that the service is going to be fully integrated into Microsoft's upcoming Windows 8 Wii Shop Channel The Wii Shop Channel is an online shop for the Wii video game console that allows users to download Virtual Console and WiiWare games, and new channels. Downloading may require redeeming Wii Points. The channel launched with Wii on November 19, 2006. Available software is currently organized into three sections: Virtual Console, WiiWare, and Wii Channels. The Virtual Console allows users to download classic games from past video game consoles. There are currently over 300 games available in North America and, as of December 31, 2007, over 10 million games have been downloaded worldwide. All games are exact replicas of the originals with no updated features or graphics, with the exception of Pokmon Snap which was updated to allow in-game pictures to be posted to the Wii Message Board. New games are added weekly at 9 A.M. Pacific Time every Thursday (previously every Monday) in North America, Tuesdays in Japan and South Korea, and Fridays in Europe, Australia and New Zealand. Consoles include both Nintendo systems, such as the Nintendo Entertainment System, Super Nintendo Entertainment System and Nintendo 64, and non-Nintendo systems, such as the Sega Mega Drive/Genesis, Sega Master System, PC Engine/TurboGrafx-16, MSX, Neo Geo and Commodore 64 (Europe and North America only). Each system has a base starting price for games on that system. All titles currently range from 500 to 1200 Wii Points.

B. Category Analysis
1. Aggregate market factors
Brand awareness Place 29 in world-wide brand value ranking Place 3, behind Nokia and Samsung, in the segment Consumer Electronics Well-known products VAIO notebooks PlayStation and PlayStation Portable DVD/blu ray players, HiFi systems Sony Playstation, Vita Former Sony slogans and statements Exclusive. Stylish. VAIO Mobile Excellence Revenue, headcount and number of sales $78.8 million of revenue in 2009, which is $2.3 million less than in 2008 Number of sales decreased in 2009 due to slowdown of the global economy Plans for 2010: Decrease losses by undertaking further internal restructuring Headcount: 171.300 as of March 31, 2009 Plans for 2012 Restructuring Consolidating of TV design and production divisions Consolidating of LCD TV and battery division Headcount reduction of 30% in TV division Pay cut for managers and directors The goal is to decrease costs by 250 billion Yen in 2012. Media The media has had their eyes on Sony long before they began in the gaming industry. The media can help promote Sonys games and hardware; however, it can also be the reason sales decrease. It all depends on what the media happens to be focused on that week. Either way, the media is one big reason why people know about the work Sony is doing in the gaming industry. Suppliers Sony relies heavily on its suppliers to get their raw materials and some pre-constructed parts so they can develop and produce their gaming hardware and software. Some of these suppliers include Nvidia (graphics cards), IBM (processor), and Terra Soft Solutions (operating system). Sony has had a long relationship with most of its suppliers and has understood the importance of those relationships. Distributors Sony does sell some of its own hardware and software from online. However, the largest amount of their sales come from distributers such as Wal-Mart, GameStop, Amazon, and more. Sony has hence resorted to distribute exclusive Downloadable content (DLC) codes for its products sold through these stores.

2. SWOT Analysis

Internal Factors Management Offerings

Strengths Legendary leaders in the field. Revolutionary console aimed at defining a new form of entertainment. Unique, versatile, low priced. Easily creates new markets Self promoting, job rotating system creates satisfaction Monetarily well-established Well-established Four research facilities to make continuous efforts in innovation

Weaknesses Succession problem. Outdated mission statement. A few higher-quality, lower priced competitors. Lowering margin for technology advancement. Lacks long-term direction Poor communication with management Decreasing return on investment. High capital investment figures. Lacks long-term direction Lack of communication to management. Lack of general direction.

Marketing Personnel Finance Manufacturing Research and Development

External Factors Consumer/Social Competitive Technological Economic Legal/Regulatory

Opportunities Every household and markets in developing countries Lowering of prices Leader in technology High consumer income; obtain wants

Threats Declining market/alternative forms of entertainment Competitors can duplicate product. Other competitors prior advancement Exhausted market for product. you only need one

3. PESTEL Analysis and Environmental factors

Governed by internet policies in the country Must not intrude the privacy of users Censorship regulation Health related concerns

Currency inflation Cheaper markets should have cheaper services Local tax and other rules must be implemented

Political

Economic

Technological

Social

Constant upgradation is required New distribution channels

Should not entertain games which affects religous sentiments

The analysis of the macro environment Economic factors Before launching PS3, it is imperative to analyze macroeconomic and micro economic audit to analyze key strategic issues, problem areas, and opportunities. The economic factors determine the nature of the competition within local and global markets.

Macroeconomic stability - Macroeconomic stability is the major factor that affects the potential of console sales and console game sales. Low interest rate creates a strong stimulus for consumer spending, whereas high interest rate creates a strong stimulus for saving. The case of UK consumer trends shows that long term macroeconomic stability created a strong consumer confidence and was one of the major sales drivers (Mintel, 2004). The gaming industry depends on economic state as it affects inflation rate, interest rate and disposable income of the consumer. In terms of marketing strategy the economic factors determine the future market value and might influence the budget allocation for promotion activities and new product development. According to Mintel (2005) in recent years, the UK economy has been among the strongest in Europe. Socio- Cultural Environment Price sensitivity - Mintel (2004) believes that at the moment the price has become the key determinant of purchase choice. Various consumer groups are used to various offers and always look for the best price opportunities. MMO games - The recent vast development of Massive Multiplayer Online games shows that games become the new communication media. At the same time, both game publishers, PC and console hardware companies might use various opportunities to maximise sales and increase the customer loyalty. Fashion according to Mintel (2004) research the large number of UK consumers are fashion conscious. Their choice of product strongly depends on the appeal of product mix and its congruence with their self-concept. Political/ Legal Environment Industry regulation - the UK, despite being Europe's business leader, has the least restricted business environment within the EU (British High Commission, 2005). Censorship regulation- the recent serious problems of Rockstar with regards to Hot Coffee mod of GTA San Andreas showed the importance of adherence to video game parental control standards. Since Playstation 3 consoles are usually sold with the free chart game included in the product box, the company shall be very serious about its game selection. Piracy regulation the strong tendency of importing pirated products from China shall be traced by Sony Europe. Though, various PR initiatives were undertaken by government to persuade people into buying genuine products, the anti-piracy legislation is not yet very effective. Technological factors Next generation consoles - The introduction of new generation consoles will change the preferences of different customer segments. At the same time, Mintel (2005) is certain that it will require certain time till the proper market adoption of new generation consoles will take place. Not only will it have to do with the process of market adoption of new product, but with mere availability of sufficient range of games for new consoles. New distribution channels - The continuous technological development, especially in the area of digital and communication technologies create new operating opportunities such as new marketing mix channels, new service encounter environment (online sales) and new market research tools. According to Mintel (2004) more and more retailers switch to new cost-saving distribution channels.

Internet usage The current penetration of Internet creates the stimulus for the increase use of Internet as information and transaction zone. The major issue is the current tendencies towards Internet consumption which vary respective of a country of operations. For instance Internet transactions in EU countries account for 10%, while in US it is 30%. It means that with the further increase of Internet as transaction area distributors with well-developed e-capabilities will have increased sales and market coverage. New information requirements The introduction of new technologies have changed the nature of customer's expectations, creating new zones of tolerance. Today, customers expect more flexibility, speed and dependability from retailers, than before the introduction of web-based technologies. Ecological Environment Two environmental concerns are commonly associated with console games: Health related concerns - First is a general perception of the impact of frequent gaming on young people's health. Players have complained of eyestrain, headaches, chest pain, fatigue and mood swings (Tazawa et al. 1997). However this perception may subject to change as research shows contrasting outcomes that there is the view that considers such side-effects to be 'relatively minor or temporary' (Griffiths 2002) and that finds playing computer games is comparable to a mild intensity exercise: with normal use, playing may neither improve nor harm physical fitness (Emes 1997). The compliance with safety requirements- Sony Europe shall resolve the issue regarding the possible threat of fire hazards and overheating of Playstation 3 Adapters. Sony plans to counter this ecological factor by not only ensuring heat resistant technology but also continuous recalling of complained adapters all from everywhere possible to assess the potential effects and respond to this problem effectively by renewing adapter technology. Key macro success factors On the basis of the macro environmental analysis the following key macro success factors can be defined: The importance of price as the important determinant of the positive sales decision, The importance of fashion trends for Product Mix,

The impact of Internet in terms of MMO games as Product and Promotion Mix, and the importance of new distribution channels for Place Mix, The compliance with censorship regulations especially when doing co-marketing activities with leading game publishers, The consideration of ecological issues when developing both Product and Promotion Mix. Sony needs to make sure that it products comply with the health and safety standards and that consumers are aware about that.

Micro environment analysis

Market development The market of console games is growing with PS3 accounting for the major share of the overall sales, reaching 12 million units target in 2009. Mintel analysts believe that the major sales drivers of the video games were the rise of the disposable income of the consumers due to the change of gamers' socio-economic status. The other important factor was the introduction of the network capabilities and the development of the online gaming solutions. New technical capabilities increase the impact of Product Mix both for hardcore and casual gamers. Distribution The UK video games distributors can be divided into three groups: specialist chains, non-specialist retailers and online retailers. Among the specialist retailers the dominant role is played by the Game Group and Gamestation ltd. GAME operates 360 sites in the UK. Alongside its standalone outlets, GAME operates concessions in Debenhams, House of Fraser and Fenwick department stores. Being the brand of BlockBusters, Gamestation Ltd works through 150 stores. Mintel claims that Gamestation Ltd is the only real challenger to GAME in the specialist sector. Among the non-specialist retailers there are such distributors as Dixons Stores Group, PC World, Curry's, HMV, Virgin Megastores, Comet, MVC. Online retailers group is represented by Amazon.co.uk, Simply Games, Kays and GameSeek. The distinguishing feature of online distributors is that they created strong pressure on other distributor groups. The use of various discounting offers and price cutting techniques created intense rivalry between distributors with the use of bundling offers to drive sales.

C. Company and competitor analysis

Marketing Mix
The PlayStation Store was launched on the PlayStation 3 on November 11, 2006 and is accessible via an icon under the PlayStation Network category of the XMB. There are four different versions of the PlayStation Store: Asia, Europe (including Oceania and the Middle East), Japan, and North America. Content may vary per country. There are no PlayStation Stores in China and Latin America. Content: Available content includes, Picture: Free or for sale HD/SD XMB themes, wallpapers and avatars. Music: Free (WAV/MP3) audio tracks based on PS3 games original soundtrack. (North America and Europe only) Video: SD/HD movies for sale or rental (North America, Japan, France, Germany, Spain, the United Kingdom,[9] Australia and Italy) SD/HD TV shows for sale or rental (North America, United Kingdom, Australia and Japan only.) Free HD/SD trailers for upcoming theatrical releases and movie or musical Blu-ray Disc. Free HD/SD game videos (trailers, behind the scenes, interviews, commercials or promotional videos). Free HD/SD music videos from Sony Music affiliates artists (Australia and Hong Kong only). Game: Free PlayStation 3 game demos. Free or for sale PlayStation 3 (PlayStation Network) full games. Free or for sale PlayStation 3 games add-on and system patches. Free PlayStation 3 (PSN) public beta software. Free PSP game demos. For sale PSP games. Free PlayStation emulated game demos (Japan and Hong Kong only). For sale PlayStation emulated games. For sale Playstation 2 emulated games. For sale Arcade emulated game demos (Australia only). For sale Arcade emulated games. For sale Turbo-Grafx 16 emulated games For sale Neo Geo games For sale Dreamcast games Miscellaneous: Free PlayStation 3 software. Free Pulse episodes. Free Dew Tour episodes.

Product Line: The Sony Playstation 3 is a Digital Video and Gaming system for home entertainment. Sony PS3s entertainment capabilities include the ability to watch DVD movies and have an enormous library of video games for the PlayStation console. Having the largest third party gaming developers for the Playstation 3 is a huge advantage over the competition. Unique Service Quality: The Playstation 3 has an extensive after market product line with numerous developers of products that enhance the gaming console. The Playstation 3 also has online gaming capabilities to engage other human players across the world through a cable adapter that attaches to the rear of the PS3 that adds an Ethernet port for the console to connect to the Online Community that each software game can access.

Profits
Although Sony had a rough time in its most recent fiscal year, the situation is apparently looking up for this year. In the 12 months that will end March 31, 2012, Sony expects to generate revenue of 7.5 trillion yen ($90 billion, based on Sony's exchange forecast) and a profit of 80 billion yen ($963 million). Sony's expectations of its performance stand in stark contrast to its most recent fiscal year, which ended March 31. The Japan-based company said today it lost nearly $3.2 billion in FY 2011 on revenue of nearly $88 billion.

Expected future strategies

As the amount and depth of digital content available through the PlayStation Network (PSN) continues to increase, plans to provide those who go beyond just saving games and DLC on their HDD with options to accommodate their growing digital content library are in place. Digital content will undoubtedly continue to be on the rise and a larger hard drive fits the view of the future. PSNs goal is to provide options to users so that whatever their entertainment choices are next year or the year after, theyll have the storage space to accommodate the way they want to use their system by making use of the PSN features.

III. Objectives
Marketing Objectives
The initial years of the PS3 has been a little less than expected. The high price of the hardware is partly to blame for this. To approach this issue, Sony has lowered the price of the hardware in recent years in hopes of increasing hardware and software sales. With demands for the Nintendo Wii not being met, this lowered price will hopefully steal away some of the market share from Nintendo. Also with the video format being over, Blu-ray sales should increase and more film companies should jump onboard with Sonys Blu-ray format; this should in turn increase PS3 sales since its price is lower than many or comparable to stand-alone Blu-ray players. This will help expand the PS3s customer reach.

IV. Product/Brand Strategy

Customer Analysis

These tables show how our customer base looks like, how they use our products and how their gaming behaviour might be. Groups of people we target are marked by a cross. The main target groups are marked by a shaded background color.

Our main target group are people of an age from 18 to 30. We will take a closer look on them concerning gaming in the following table. Customers focus on different things when considering a purchase Quality and performance Design Backward compatibility to their old games PlayStation 4 PlayStation 3 PS2 PSOne Wii GameCube, but not to N64 and older consoles Xbox360 Xbox (partly) Price Exclusive games, e.g. Super Mario on Nintendo consoles

When do customers buy consoles? All over the year For themselves As a present (e.g. parents for their children) Especially during Christmas time When do customers use their consoles? All-day life, e.g. for playing music enjoy free time (gaming) In the evening, watching movies At parties (gaming, playing music) Why do customers buy a new console? Technical trends (HD, BluRay, 3D etc.) There are no new games produced for the old one They are unsatisfied with the old on

V. Supporting Market programs

Price: - The PS3 costs $199.99 for a complete new system including: -The PSN services are offered free of cost A Pre-owned Playstation 3 console may vary in price depending on location and whether or not the distributor has any specials on refurbished or pre-owned systems, including all the same products a new system comes with. Competitors in the gaming console system market produce a closely similar price range for new and used systems and will stay consistent to a price decrease when other companies decide to reduce the price of their product. Promotion Key promotional programs for the Playstation 3 will include in-store displays featuring hands on testing by consumers plus magazine and television advertisements. Place The Sony Playstation 3 will be distributed at various electronic entertainment stores throughout the country and online distributors. Competition The major competitors in the video gaming console industry lie mainly between two companies: Microsoft, with their Xbox gaming system, and Nintendo, with the GAMECUBE gaming system. Microsofts Xbox gaming system is the closest gaming console that has equal product features (ex: DVD movies, exclusive software, online gaming community, etc.). Nintendo produces the Nintendo GAMECUBE which is focused mainly towards the gaming market with no emphasis towards the video entertainment industry. This is demonstrated by the absence of DVD movie processing components in its system design. Consumers may feel that the quality of the GAMECUBE is less sufficient than that of the Sony and Microsoft produced computer systems. Global Market Outlook The global market outlook for Playstation 3 is very broad. Playstation 3 is being sold in more that 120 countries worldwide, including North America, Europe, Africa, Middle East, Oceania, Southeast Asia, South Korea, and Central and South Americas. Playstation 3 has been leading the gaming market since its launch in Japan, March of 2007. It had record breaking sales, selling 980,000 consoles in two days. More that 70 million shipments for Playstation 3 hardware and 572 million shipments of software have been made worldwide. We were able to break these numbers down by countries; more than 40 million copies in Japan and 70 million in North America. These numbers alone show the popularity of Playstation 3 world wide. Japan has predicted Sony to sell about one million Playstation 3 consoles by the end of March 31, 2005. Playstation 3 has dominated the gaming market world wide. It controls about 80 percent of the market in Japan and Europe, and about 40 percent of the market in the United States.

Future Trends Sony Computer Entertainment, maker of Playstation 3, will unveil a new book size version of Playstation 3 in late 2004, which has only 25 percent of the internal volume of that of the original Playstation 3. The new version weighs half as much and it is only 2.8cm thick, down from 7.8cm. This version will also be cheaper than the current Playstation 3. This new version comes with a built in Ethernet port for online gaming. It will also come with an analog modem port for users still without broadband. The Future of the console gaming market is going to grow even bigger over the next five years. Newer consoles and an ever increasing gaming library for all systems are going to have a direct impact on the gaming industry. Newer technology just around the corner, and the development of easier methods to produce components for these gaming consoles, is only going to make it simpler for these companies to expand the gaming market. A future trend that is going to be seen by the public in the up coming months and through the holiday season will be the release of two new hand held gaming systems. One produced by Sony and the other by Nintendo. The Sony PlayStation Portable (PSP) is going to be a portable entertainment package that can fit into a persons pocket. The main features of this system are to have a clear crystal LCD screen, a computer processor capable of having PS3 quality games in your hand. Digital movies will also be a main feature for this console by Sony.

VI. Conclusion
In conclusion, the Sony Playstation 3 has seen much success in the United States markets and on the international board alike. Research and development worked incredibly hard in the planning and preparation of the Playstation 3 gaming console. Sony will indeed continue to set market trends by staying on top of the technological revolution. Strongly supported by software developers and publishers, Playstation 3 is indisputably the most popular computer entertainment system in the world and the new design will position it for even greater success over the next half of its life.