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Sony Case Study

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A video game is a game that's played using an electronic device with a visual display. The world of video games has changed drastically since its launch 30 years ago thanks to some classic video games such as Asteroids, Donkey Kong, and Pac-Man. The change from board games to videogame was powerful, it was fundamental; it did more than just change people expectation of what it meant to have fun, it changed societies, it changed many culture and it birthed this gaming industry. Since the early 1980s, this electronic entertainment means has emerged as a cultural trend throughout the world. Advances in technology are making games more realistic and interactive to play with rather than before. As console gaming and PC gamings are being evermore entangled via the internet and electronic technologies in general are starting to captivate gamers across the world. A sense of more realistic and lifelike games has emerged as the trend starting to and will continue to take part into the future.

Sony's PlayStation story started with Nintendo Co. that wanted to incorporate CD-ROM (Sony's technology) into their gaming system. Sony agreed to create the PlayStation, a system that would allow playing games from a CD-ROM drive. However, the two companies couldn't agree with the conditions and the deal was cancelled. In 1993, Sony Computer Entertainment, a division of Sony was created, following the break-up of a joint development team formed by Sony and Nintendo Co. Sony decided to develop its own standalone video game system. Sony's PlayStation, a novice to the gaming industry outstripped two established big names - Nintendo and Sega.


The fact that technology has become a component of every day life and people are becoming more used to it contributes to popularity of the digital entertainment. The Internet as a distribution channel of digital entertainment is an inexpensive way for Sony to target various age groups and penetrate various markets. Continual technological innovations create more realistic entertainment experiences contributing to market demand. Technology trend in game consoles is to give new level of experience and quality, in comparison to personal computer games as competitors. The interest of market in new entertainment technologies and trends is enormous, contributing to the Sony's bottom line as one of the opportunities.

The development and the strategy of Sony’s computer gaming ---- Playstation

Sony’s interest in computer gaming goes a long way back into the year 1988. While Nintendo was developing the Super Famicom, Sony had forwarded the idea to develop a CD-ROM drive on the Super Famicom. It was called a Super-Disc at the time, and eventually became what’s known as the Playstation, a machine that could play both Nintendo cartridges and Sony CDs, where Sony were be the �sole worldwide licenser ’ stated in the contract. As time progress, CD-ROM gradually became the next big thing in home computer entertainment, Nintendo feared the negative impact of this joint venture could potentially side lined the Super Famicom. In 1991, Nintendo decided to break the contract with Sony and join up with Sony’s long-time rival, Philips. Since then, Sony has been working on a system independently - the Playstation. On December 3, 1994, the Playstation was released in Japan with more than 300,000 units sold.


Sony Playstation were officially launched in US in September 1995, priced at $299.99 each, around 350 000 units sold by Christmas 1995. Such success would not be the credit of the consoles alone, but the careful planning of the marketing strategies, one of which was distributing the Playstation through the wide range of retailers. Big Stores were displaying the Sony Playstation on their windows, and posters were seen on the street. Sony also advertised the Playstation in the underground; it was a very unusual place at that time for computer games to be advertised. The idea was fresh and made noticeable, like the TV advertisement with the catch line �Don’t underestimate the power of the Playstation’. The initial idea of Playstation advertisement was to let people know the age group for computer games was no longer limited to kids. It has expanded to people of all ages, hence not bound by age or sex. Therefore the marketing strategy was mainly aiming at an older group of audience rather than the 8-16 year old demographic of the past.

With the tag �U R Not E’ (the �E’ being ready) and a rumored $40 million to spend on Launch marketing, Sony Playstation swiftly positioned themselves as the game console market leader. Perhaps in my perception, the computer games that were once targeted at kids and teenagers in the last generation have also grown up. The audience and users of the last generation have followed their upbringing and continued into the next generation together (existing domain) with the new generation of kids and teenagers (new domain). The Sony Playstation has managed to keep their users from generations to generations, representing the essence of home entertainment where the Playstation provide not only personal entertainment but also fill the gaps between generations of a family of users. Hence the idea in expanding and reaching out to an increased domain of audience would be highly critical. The canvas for advertising Playstation was endless. We have even heard of the Playstation adverts being broadcasted on the radio! The expansion to promote the console continues, giving demo disc with computer magazines to promote new release, and game testing in shops. The easy accessibility of the public media provides infinite number of continuous links for the Playstation to spread out like a web to reach us.

Switching cost

People tend to buy game console with the largest software selection and cheapest prices because consumer are not stupid and want good value for their consumptions with maximum entertainment turnovers. Sony Playstation has always been a price leader, incorporating aggressive strategies. As a new entrant in 1996, Sony recognized that it would have to reduce switching costs for existing consumers while attracting new customers, so the company led a market share entailing low prices.

Minimizing costs for producers and retailers has always been part of the pricing strategies that Sony considers as a key factor for survival. This has been evident since the Playstation’s first model, where it had various slots on the back of the machine, expansion slot for video, network slot, power input,



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