Marketing Plan – Sony PlayStation 4

PlayStation 4 Marketing Plan

Author: Toni Hoang, Tim von Oldenburg

Version: 1.0

Date: 26.01.2010

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Marketing Plan – Sony PlayStation 4

Table of Contents

Page

1. About the company 3

2. Internal analysis 4
2.1. General analysis 4
2.2. SWOT analysis 5
2.3. Predecessor analysis 6

3. External analysis 7
3.1. PEST analysis 7
3.2. Porter's 5 forces 8
3.3. Competitors 10
3.3.1. Nintendo 11
3.3.2. Microsoft 12
3.3.3. PC 13
3.4. Customer analysis 14

4. Marketing Mix 17
4.1. Product details 17
4.2. Price 18
4.3. Distribution 19
4.4. Promotion 20
4.4.1 Marketing slogans and logo
4.5. Marketing Objectives 21

5. Evaluation and Control 22

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Marketing Plan – Sony PlayStation 4

1. About the company

Sony Computer Entertainment, Inc.

Branch: Video Entertainment

• 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."

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Marketing Plan – Sony PlayStation 4

2. Internal analysis

We will start with a further review on our company to build a knowledge base
by providing several information and analyses in order to understand the
following content better.

At first, a general overview about the Sony Corporation will be given. It is

followed by the SWOT analysis and a short review on the predecessor, the
PlayStation 3.

2.1 General

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 players, HiFi, TV

Former Sony slogans and statements

• “Exclusive. Stylish. VAIO”
• “Mobile Excellence”
• “eco …”
◦ Product
◦ Process
◦ Planet
• “Turn ideas into reality”

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Marketing Plan – Sony PlayStation 4

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 2010 – Restructuring

• Consolidating of TV design and production divisions
• Consolidating of LCD TV and battery division
• Headcount reduction of 30% in TV division
◦ no changes in SCEI
• Paycut for managers and directors
The goal is to decrease costs by 250 billion Yen in 2010.

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Marketing Plan – Sony PlayStation 4

2.2 SWOT analysis

SWOT analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. It involves specifying the objective of the business venture or project
and identifying the internal and external factors that are favorable and
unfavorable to achieving that objective. Since the SWOT analysis has internal
factors and the external factors also require internal adjustments, we decided
to include the SWOT analysis into the internal analysis.

Strengths
– high quality products: the predecessors of the PlayStation 4 always got
the best test results for hardware performance
– “on the edge” - support of new technologies (BluRay)
– free online gaming
– PlayStation Network Store for downloadable contents (gameplay videos,
game demo versions)

Weaknesses
– high price in comparison to our competitors
– difficulties concerning game development (complicated hardware
architecture)

Opportunities
– unique, PlayStation 4-only exclusive games
– motion control to target casual gamers (especially women)
– growing countries with improving living standards

Threats
– Cloud Computing as a new kind of gaming experience
– Could also be considered as an opportunity!

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Marketing Plan – Sony PlayStation 4

2.3 Predecessor analysis

This part will provide main information on the predecessor referring to sales. A

more detailed analysis of the market share will be given later in the 3rd chapter.

The PlayStation 3 and PlayStation 3 Slim

Launch date
- PlayStation 3 November 11, 2006
- PlayStation 3 Slim September 1, 2009

Units sold 32 million (as of, Januar 30 2009)

Break-even point not yet reached

Price
- at launch $599
- now $299

Market share (7th generation consoles) 26%

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Marketing Plan – Sony PlayStation 4

3. External analysis

In the following part you will be presented several external anayses referring to
the video game console market. They play an important role in our marketing
plan since the game console market is highly competitive. After a short view
into the PESTL analysis and Porter's 5 forces, there will be a deeper insight into
our main competitors, namely Nintendo, Microsoft and the PC. At the end the
customer analysis will end this chapter that is needed to understand how and
why the goals are set.

3.1. PESTL analysis

PEST analysis stands for "Political, Economic, Social, and Technological

analysis" and describes a framework of macro-environmental factors used in
the environmental scanning component of strategic management. We added
an L for legal issues, because in the gaming industry there are additional
restrictionts especially referring to the content.

Political:
• different taxes and currencies → have impact on revenue
• USK, PEGI (age restrictions)
• provide easier software development kits (it was hard to program for the
PlayStation 3)

Economical:
• growing market in industrial countries
• small market in lower developed countries

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Marketing Plan – Sony PlayStation 4

Social:
• TV set as requirement to use PlayStation 4
• growing group of “Digital Natives“ → more acceptance regarding video
games
• GreenIT → using environmental friendly raw materials, less power
consumption
• new innovations in video games, more interactive gameplay regarding
game controlling

Technological:
• new upcoming disk formats (BluRay3D), computing units (CPU, GPU)
• adapt to several video standards (e.g. NTSC/PAL)

Legal:
• different regulations referring to content and age restrictions:
USK (Germany) ↔ PEGI (Rest of Europe + North America)

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Marketing Plan – Sony PlayStation 4

3.2. Porter's 5 Forces

Porter's five forces is a framework for the industry analysis and business
strategy. It uses concepts developing, Industrial Organization economics to
derive five forces that determine the competitive intensity and therefore
attractiveness of a market. Attractiveness in this context refers to the overall
industry profitability. An "unattractive" industry is one where the combination
of forces acts to drive down overall profitability.

Customer New entrants

high power low risk

Competition
Nintendo WiiHD
XBOX 720

Suppliers
Hardware Substitutes
Game Publisher Cloud Gaming
Game Developer

Consumer:
Since the PlayStation 4 is a consumer product, we highly depend on sales.
Therefore the consumer has a high bargaining power on our product. The
market for casual gamers has increased heavily due to Nintendo's sport and
fun games. Also, sales increased after reducing the price of the PlayStation 3.

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Marketing Plan – Sony PlayStation 4

New entrants:
The risk of new entrants is very low due to the development phase that has to
be done to release a new gaming console → A lot of money is needed to enter
the market. Market saturation is already reached with only 3 consoles.
Furthermore, the main problem are the game developers, who wouldn't create
games for a new, unkown and unexperienced platform if they are not sure how
this platform will sale.

Suppliers:
There is a high power of suppliers regarding hardware.
We have to calculate our prices regarding the prices of the hardware units we
use. Prices for the PlayStation 3 used to be high, since the output of IBMs Cell
Processors was lower than expected. There was also a shortage of blue LEDs
needed for the BluRay Drives.

Game developers and publishers provide the games for our console, therefore
we have to listen to their needs and demands. Thus we want to have more
games developed for the PlayStation 4 than for the PlayStation 3 (due to the
complicated architecture).

Subtitutes:
The only substitute is the upcoming Cloud Gaming Service (OnLive.com). There
is a huge potential that is not measurable yet, since it is still in beta status.

Competition will be described in detail in the next chapter.

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Marketing Plan – Sony PlayStation 4

3.3. Competitors

Our direct competitors are the consoles from Total units sold (Dez. 2009)
Nintendo and Microsoft. Furthermore, it is
possible to use the PC as a gaming device. 32 Mio. Units
26%
The Nintendo Wii was dominating the console 56 Mio. Units
47%
sales from the very beginning due to its lower
starting price and innovative controlling
33 Mio. Units
technique. Nevertheless we are on second 27%
Playstation 3
place in Japan. On the other hand, the XBOX Xbox 360
Wii
360 is very popular in the USA. Thus we are
still on 3rd position, but very close to
Microsoft's XBOX 360. We expect to become
2nd place in the 3rd quarter of 2010 after our
latest price discount.

Console Market Share (7th Generation)

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Marketing Plan – Sony PlayStation 4

3.3.1. Nintendo

Nintendo Co., Ltd. is a Japanese multinational corporation located in Kyoto,

Japan. Founded on September 23, 1889 by Fusajiro Yamauchi, it produced
handmade hanafuda cards.

Nintendo soon developed into a video game company, becoming one of the
most influential in the industry and Japan's third most valuable listed company,
with a market value of over US$85 billion. Nintendo is the fifth largest software
company in the world.

Current video game console: Wii

Working title of new project: Wii HD

Strengths:
• innovative ideas (e.g. "Wiimote")
• longstanding experience in the video game industry
• Nintendo characters are well-known (e.g. "Mario")
• also develops handhelds

Weaknesses:
• no multimedia-support implemented yet
• gained the image of focussing on youth
• policy of strict content guidelines for video games
• no HighDefinition gaming due to lower performance

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Marketing Plan – Sony PlayStation 4

3.3.2. Microsoft

Microsoft Corporation is a multinational computer technology corporation that

develops, manufactures, licenses, and supports a wide range of software
products for computing devices. Headquartered in Redmond, Washington, USA,
its most profitable products are the Microsoft Windows operating system and
the Microsoft Office suite of productivity software.

Current video game console: Xbox 360

Working title of new project: Xbox 720

Strengths:
• combination of multimedia and gaming
• huge range of third-party developers
• “Halo“-series is well-known
• large turn-out in the US market

Weaknesses:
• “new“ to the game console industry
• security and copy protection of the Xbox has always been incomplete
• no development of handhelds
• lower performance and image quality compared to PlayStation 3

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Marketing Plan – Sony PlayStation 4

3.3.3. PC

The personal computer can also be used to play games in several ways.

Strengths:
• open platform
• open in technology and performance
• more possibilities (at the moment)

Weaknesses:
• Games are not adjusted to certain systems
• more expensive than consoles
• You first have to set up your PC and install a game in order to play it

Great potential in Cloud Computing (OnLive.com) → Gaming on Demand

OnLive is currently in beta status.

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Marketing Plan – Sony PlayStation 4

3.4. 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 yellow
background color.

Purpose / Age 6 – 12 12 – 18 18 – 30 30 and above

Games X X X X

Movies X X X X

Music X X X

Internet X

As you can see, 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.

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Marketing Plan – Sony PlayStation 4

Games 18 – 30
We have a small customer base that may
Male be labeled as “male casual gamers”. There
are still possibilities to increase this
Casual gaming customer base, e.g. with party games.
This will be our main target group for the
PlayStation 4. As the Nintendo Wii showed,
Female there still is great potential in the feminin
sector, especially for sports, logic, fun and
multiplayer games.
This is our current main target group. They
frequently play games that are mainly
Male released for the PlayStation, e.g. action,
role-playing, sports and racing games.
Frequent (“hardcore”) Those people are mostly loyal customers
gaming and are aware of our technical advantages.
There are not many female hardcore
Female gamers, they do not play an important role.

Customers focus on different things when considering a purchase

• quality and performance
• design
• backward compability 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

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Marketing Plan – Sony PlayStation 4

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 one

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Marketing Plan – Sony PlayStation 4

4. Marketing Mix

The Marketing Mix sets up all activities that are directly related to our product.
Everything that is planned to get the PlayStation 4 on the market is decided
here. The classical Marketing Mix, that we will use in our marketing plan,
contains four elements describing product policy as well as pricing, distribution
and promotion strategy.

4.1. Product Details

• full home entertainment system
• video playback, incl. BluRay, DVD, DivX, H264 etc.
• music, CDs, MP3, AC3, FLAC etc.
• 2 TeraByte HardDiskDrive
• fully customizable Linux operating system support

This is a design concept made for the PlayStation 4.

It can bee seen that there are additional information visible on the console
itself and the newly developed controller.

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Marketing Plan – Sony PlayStation 4

The additional screen on the console can be used to control the console without
turning on the TV, e.g. to listen to music with help of the console.

We are clearly pursuing a differentiation strategy. The PlayStation 4 supports

the most common audio and video codecs as well as some exotic ones. We give
our customers the space and freedom they need, as they may install own
software on our system and also develop software themselves. This is unique in
the console market. Microsoft as well as Nintendo have a close system and do
their best to prevent their consoles from being hacked.

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Marketing Plan – Sony PlayStation 4

4.2. Pricing

Our differentiation strategy justifies the high price in comparison to competitive

products.
The starting price will be about 80 % of production costs, in order to reach
break-even point in time. As usual, the costs are covered by the sold games,
not the console itself.

The targeted end consumer price is about 400 USD.

The standard bundle will consist of:

• a PlayStation 4 console
• one controller
• a HDMI cable (or any up to date cable)
• power supply

We will again start at a relatively high price and will lower it after 2 years to
300 USD when production costs have fallen.

There will be Christmas bundles with a second controller and one mainstream
PlayStation exclusive game, still for about 400 USD, to increase sales during
Christmas time. The game to be bundled is not chosen yet.

5% price elasticity is planned depending on Nintendo's and Microsoft‘s products

and prices. Furthermore, we will release a limited edition in chrome for
prestigue customers at launch date (limited to 1000 units).

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Marketing Plan – Sony PlayStation 4

4.3. Distribution

As usual we will distribute the console through resellers in several local stores
(e.g. GameStop) and online stores (e.g. Amazon) with a common lauch date.
Thus production for our launch-stock has to be done until September 2012.

The total starting stock will be 800.000 consoles for the first month
• 200.000 for the Japanese market
• 300.000 for the North American market
• 150.000 for Europe
• 50.000 for other countries

30 % will be provided to online stores like Amazon. The rest will be distributed
selective to the local stores, depending on their accomodation regarding
discounts.

For warranty issues, a „Pickup & Return“ service will be provided for 2 years.

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Marketing Plan – Sony PlayStation 4

4.4 Promotion

There are two instances that are responsible for promotion of the Sony
PlayStation 4. At first, this is Sony itself, of course. At second, it is the
distributor, who also is interested in the successful sale of our product.

Sony:
• place advertisements of the console on TV, in the afternoon as well as in
the evening
• place advertisements of PlayStation 4 Games on TV, according to their
target group
• place advertisements in video game magazines
• be present on video game trade fairs
• be present on technology and computer trade fairs
• advertisements on the internet

Distributor:
• place advertisements on TV
• place advertisements in their own booklets
• place advertisements in their stores

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Marketing Plan – Sony PlayStation 4

4.4.1 Marketing slogans and logo

The PlayStation 3 had a lot of very catchy (memorizable) slogans. Most of them
substituted the letter “e“ or “E“ with the number “3“, which looks like a
horizontal mirrored “E“. This is of common use in the internet speech of
younger generations, but it also refers to the “3“ in “PlayStation 3“.
We want to have slogans for the PlayStation 4 similar to those. The “4“ can
substitute the letter “A“, but can also substitute the word “for“.

The following slogans will be used for marketing purposes:

→ “RE4LITY IS JUST A G4ME“
→ „4 VIDEOS, 4 MUSIC, 4 GAMES, 4 YOU.“

This will be the logo of the PlayStation 4:

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Marketing Plan – Sony PlayStation 4

4.5. Marketing objectives

All these objectives are based on numbers and facts of the predecessor, the
PlayStation 3.

Profitability
The break-even point of the PlayStation 4 is expected to be reached 3 years
after launch.
This will be an improvement of half a year in comparison to the PlayStation 3.

Revenue
Costs

0 10 20 30 40
Mio. units sold

Market share and volume

It is realistic to expect a total of 30 million sales of PlayStation 4 units 3 years
after launch.
The market share will be about 35% of 8th generation video consoles.
As the PlayStation 3, Xbox360 and Wii will still be sold the next few years, also
the total console market share has to be taken in consideration. We expect the
total console market share to be about 15%.
The offline console market will lose volume in favour of the upcoming cloud
gaming market (“Gaming on Demand”). We will take this as a chance and
develop an upgrade for the PlayStation 4 for our upcoming cloud gaming
service.

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Marketing Plan – Sony PlayStation 4

Launch
The launch date of the PlayStation 4 is set to be in October 2012. You will find
further information in “Price and distribution”.

5. Evaluation and Control

There are three values that can be considered when evaluating the success of
the PlayStation 4.
• market share
• sales volume (and therefore takeover)
• customer satisfaction

The first and second one, market share and sales volume, are both measurable,
objective values. The Sony Market Research Team will, at the middle of every
quarter, task an independent market research company with the providing of
these numbers.

Also, the Sony Market Research Team will quarterly do a survey to find out the
users' satisfaction with the product.

Additionally, we will set up a feedback channel for our customers, containing

• support telephone and email
• easy return and repait service

The results of these tasks are used to check whether we reached our goals or
not. We want to be permanently informed about
• market share and market trends
• weaknesses and strength of our marketing plan
• weaknesses and strength of the PlayStation 4 itself

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