The electronic game business is the economic segment concerned with the growth, advertising and sale of video games. It includes numerous trade regulations and recruits thousands of people globally. It involves video game consoles, game software, smart tabs, cellular games and online games. Console is the biggest sector in the business, but online, cell phones and broadband are a few of the highest rising sectors. Recently, the video gaming business has been on the rapid rise and is projected to continue to develop further. The firms in electronic game business seek to offer hi-tech and ground-breaking products. This involves online game, mobile game, video game console and portable tabs and devices. Besides, in order to draw current and potential customers and build consumer dependability, these firms increase their endeavors to improve the equipment of the products. Furthermore, video game industry sector modernizes like a streak of lightning; the novel creation swapped places with the old one in quite a short time. For the time being, the firms initiated their latest production swiftly. Though, an explicit problem is that the end market is restricted, where young men being the major focus and target. In this paper, we will look at the video game console business and throughout the first section, relate Porter’s Five Force model to Sony PlayStation, while highlighting the US market, and subsequently attempt to identify and discuss a couple of external uncertainties for Sony PlayStation.
Brief Description of the Company
Sony is a prevalent media multinational with productions in the gaming, music, movies/entertainment and electronics sectors. It comprises a reputable brand prestige, a broad product assortment and recorded over $75 billion as revenues in 2012. For the aims of conducting this scrutiny, we will focus on Sony’s presentation in the video game industry, recognize its present position regarding its competitors and propose some strategies that it should implement in the short-term future. The interactive entertainment industry is the financial sector related to the expansion, promotion and sale of electronic games. Implementing the Five Force model to Sony PlayStation discloses the following:
Company Breakdown Based on Porter’s Five Forces
Buyer Power for the customers in the video game industry is rather low. As just a small number of firms make video games and game platforms, there are little selections to choose from. Customers are only required to pay the specified price and do not complain about the high price. Supplier Power is quite the contrary of buyer power which sets the supplier power of the business on the high part. Sony and its PlayStation have this influence because there quite a small number of options to choose from in the trade. They are free to put a price for their goods and the public will merely have to purchase if they desire a PlayStation. The Sony PlayStation features typically two relatively regularly reasonable rivals – Microsoft’s XBOX and Nintendo’s Wii. The Research and Development cost rates are extremely far above the ground here as a result of the broad amount of technological expertise and brand character required to build up these electronics. The switching cost rates are high as the games are not transportable from one display place to another. There exist continuous demands to invent, create and stir up our quicker and more prevailing consoles every 5 or 6 years, otherwise the rivalry will outshine or even urge you to shut down the sector in some cases. The profit margins associated with the real game consoles vended are fairly low and at times even absent. This is due to the business replica of these firms, where they depend mainly on the payments received on the real games (discs) traded. In other words, this is a two-faceted industry – from one side, the 3 firms in this business produce gaming consoles and another independent group of game expansion firms which manufacture the games that operate on their consoles. All these traits point out that the current business competition is relatively high. The threat of substitute goods for the PlayStation is rather low as there are only three major gaming structures on the market currently. There also resides a switching cost in making a new system, for the games you acquire merely function for one specific structure. In addition, the regulators and other accessories you pay for only operate for that one system. As for the threat of new entrants for the video game industry, it is reasonably low. It typically takes a huge firm and adequate funding to be effective, the thing that might represent an entry blockade. If a small-sized firm tried to penetrate the industry, it would find itself broken down by the three large firms that are currently dominating the market. A further hold up is that it is complex to obtain software developers and third party firms to create the software needed for the games themselves. Most software developers will refuse to use a particular system if they do not believe that their software will be put on the market for that certain system. A powerful competition occurs among Sony’s PlayStation, Nintendo’s Wii, and Microsoft’s Xbox. These major firms ought to produce and create their products in a way that makes it prominent over its rivalry. All three have been in the business for quite some period and manifest no signs of departure. Price reductions are one approach these firms are presently attempting in order to stretch out their customer base. Every structure comprises its own product differentiation to achieve uniqueness.
Suggested Strategies for Alleviating the Impact
Sony PlayStation employs four different business strategies in order to lessen the impact of the forces above. These strategies are Supply Chain Management, Customer Relationship Management, E-Collaboration, and Enterprise Resource Planning. Sony Play Station exploits a blend of E–Collaboration and Enterprise Resource Planning structure. The firm employs know-how to advocate work dynamics with incorporated group effort surroundings with virtual groups who are situated globally. It employs a platform with a selection of software for business management, bookkeeping, finance, human resources organization, project management, stock management, facility and repairs, transportation, e business and Supply Chain Management and Customer Relationship Management simultaneously. Sony Play Station utilizes quality program because their tactic is to boost proceedings, and distinct means they are applying to boost earnings are effectively getting to new buyers, proffering new products, cross selling products such as accessories and supplying corresponding goods. Simultaneously, it uses some upshot initiatives in order to minimize the costs. Sony is deemed to be one of the global prevalent producers of audio-visual electronics and IT products. This achievement is accredited to the kind of IT management and philosophical approach that Sony employs. The philosophical method that is implemented by Sony is distributed, also recognized as the early IT philosophical method implementers. This method has been applied ever since the establishment of this conglomerate in the 1940’s. Implementing this strategy can be unsafe, yet can as well bring about considerable competitive gain and a high revenue if it hits success. This reality can be demonstrated by the accomplishment of PSP 3, which employs highly developed technology like a High-Performance Processor and a Semiconductor Laser that sets them ahead of their rivals and earn them the fondness of their buyers. This sensation is attained by the totally incorporated strategy within SCEA.
Strategic External Uncertainties
The first external uncertainty I would like to discuss in the section of the paper is the probable disappointment of the anticipated success of the new Sony PlayStation Vita and PlayStation 4. PlayStation Vita hasn’t had faced a tough and difficult process in its debut year on the market. For as hopeful as the portable seemed to be before it was made public, it has fallen short to ignite the sales charts with record numbers both in its national hometown, Japan and in the west, and specifically the USA. As a consequence, inquiries about Vita’s prospects have by far seriously emerged as Sony maintain its support of its machine, apparently oblivious, or merely reluctant to disclose, that something has gone off beam. Maybe most prominently, Vita was in position to forcefully beat its main rivalry in the shape of Nintendo 3DS. Its double analog sticks and ultra-modern innards appeared to provide it substantial influence, letting it run games the 3DS cannot, without difficulty, technically outsourcing it. The problem and the query now is ‘what has’ gone wrong? How did an extremely and apparently hopeful machine disintegrated? How did Vita not succeed in attracting the requisite customer base? And conceivably most notably, would Sony be able to recover Vita’s out of the expected trip, declare it a false initiation, and launch PSP’s descendant on an encouraging sales course that will provide it some of the chief accomplishment of its predecessor? The response to these queries is intricate and versatile, and it’s not easy to positively conclude Vita’s outlook as anything but failing and uncertain. Sony has also stubbornly refused to drop the price of Vita in the face of prevailing winds from the iOS and Android markets, as well as from Nintendo. The latter company artfully vanquished Vita right out of the gate with a well-aimed price drop partnered with the release of huge games. The biggest two misses, however, were Nihilistic Software’s two forays on the PlayStation Vita in the form of Resistance: Burning Skies and Call of Duty: Black Ops Declassified.
The problem now is that Sony did not mention anything about the future of Vita, but only few publishers working to develop some major games in the near future, but still not relieving as it should be. Perhaps Sony hides some unexpected releases to the Vita, and which might bring glory to the device, and perhaps Vita is witnessing its last breath. This remains an uncertainty with no actions disclosed to comfort the public. I suggest Sony lowers its prices of Vita further and rescue Vita from perishing, and most importantly, dying out without any earlier era of success or glory days as its PSP predecessor.
Another uncertainty that comes to my mind and which relates to a highly anticipated success is the upcoming release of PlayStation 4 near Christmas time. It seems that Sony has listened to the suggestions of gamers and developers and thus provided them with a platform that will facilitate the creation of some magnificent and user-friendly games. This is clearly the reaction to the debatable 8GB of slower GDDR3 RAM that the novel Xbox is said to set. It seems like the DualShock 4 has been considerably enhanced, with the innovative triggers and thumb sticks undergoing substantial modifications, and the insertion of a touchpad must be adequate to achieve mouse like accuracy throughout specific missions. But despite this entire positive and prestigious outlook that Sony PlayStation embarks on instigating, one cannot forget the massive and influential portrait that the Sony Vita has also drawn before, and eventually not hitting the projected success. I believe Sony should not charge any money for online play, and moreover, persuading gamers around the US to upgrade from PS3 or X-box 360s, the PS4 price must be fair and reasonable to swallow, or else it would be a sheer disappointment. I suggest a quite reasonable and low purchase price for the PS4 if it really needs to hit the records, regardless of all the innovative and superb alterations that the console and the device have underwent.
The second uncertainty that I came about is the intimidating future insecurity of Sony’s PlayStation Network that was massively breached back in April of 2011. The customer electronics giant was obligated to pull the plug on its PlayStation games network and its PC-based online gaming entertainment network after realizing that hackers had illegally entered and invaded delicate information on more than 100 million consumer accounts. The firm has been slowly bringing back admission, commencing with its PlayStation network in the USA, after it was attacked by one of the largest computer-generated assaults ever. Ever since the 2011 breach, Sony has remained under attack for quite a while as a result of for negligent security and furthermore not publically revealing the infringement more rapidly. In the lights of that massive breach, Sony Corp. has anticipated an annual loss of $3.2Bn, overturning its previous forecast of a return to profit, as the consumer giant fought manufacture interruptions from Japan’s tsunami and a cyber attack on its network.
Even though Sony recovered from the breach, uncertainty about future breaches will not fade away completely. The breach has invaded the space of thousands of consumers around the US and privacy was disrespected, thus causing the company to lose millions of dollars as a result of such an action. Although experts highlighted the significance of assigning unique passwords to each PlayStation account, yet further security initiatives should be reflected on as soon as possible.
President and Group CEO of Sony Computer Entertainment Inc., Jack Tretton has been at the very facade of Sony’s PlayStation brand name for reasonably some period and has never stopped to go beyond anticipations. Although PlayStation has hit upon rigid rivalry such as X-box and Wii which have brought about some problems for the yet promising CEO, but he stays certain PS4 will continue to exist and thrive. PlayStation’s capacity to let customers experience the multi-dimensional potential of being equipped to go online with, play video games with, and practically perform anything else a device can do, has stunned and satisfied million of users around the globe. This aptitude into constant struggle and pursuit of excellence and nonstop improvement and being at the top of the technological blockade, has significantly pleased PlayStation users and reinforced their brand loyalty. The future seems brilliant and promising for a firm comprising vast amount of intelligent and ground-breaking business leaders. Hence paying utter attention to possible security breaches and responding to the demands of experts, developers, and faithful gamers, Sony PlayStation’s prospects will be nothing but successful and prosperous.