What are the main reasons for Sony PlayStation’s profitability?

I decided to do my research on Sony due to the advancement in technology and the competition between companies such as Microsoft, Apple, and Sony. I have been around long enough to know about Sony’s products but the real reason that attracted me to them for this essay is because I actually believe that they are having a negative trend. I am starting to see less Sony items in stores and I haven’t really heard much about them. Whereas companies such as Apple are constantly being talked about and you often see people walking around with some type of apple product in their hands. Today we are going to research Sony through a horizontal analysis and through different ratio analyses. Let’s see what we find!

For the industry analysis, we are certain of sales since the PS4 is a consumer product particularly. For that reason, the buyer has a high bargaining power on the product. The market for casual gamers has increased seriously and sales increased after decreasing price of the PS3. Due to the uniqueness of every video game console and the games buyers have bargaining power. A small difference might be significance an extra hundred dollars for an intense gamer. People have more aware to the price difference because they play video games more casually and as a result they have more bargaining power. Buyers have a reasonable amount of power in the video game industry in particular with Nintendo. Although Microsoft and Sony have other sources of revenues, the major source of income comes from the sales of games and game consoles.

Promoting and deals – Sony's advertising system is to position itself as a trailblazer and a creator of fantastic items, which empower it to offer its items at a premium higher than its competitors. To accomplish these objectives, the organization's developments are normally sponsored by huge and ardent showcasing endeavors which have had served to make a few effective sub-brands, for example, Trintron, Walkman and WEGA. These achievements thusly further fortify the brand

To regain some of its market share in its “growth driven” and “stable profit generators” sectors, Sony can reposition its competition in the minds of consumers. For instance, Sony can use comparative advertising to demonstrate that its brands are superior to its competitors. In this situation, Sony can attempt to alter the portrayed image of its competitor, Nintendo, and position its PlayStation game console as the better-quality product (Positioning(marketing), n.d).

The release of the next-generation gaming consoles has left the gaming industry is in frenzy. With so much demand for the consoles it feels as though people are ready to give away their legs to get either the PlayStation 4 or the X-Box One. With two of these monstrous gaming devices available, the decision to just choose just one console seems to be, for some, a life and death decision. Many people, as a result of not conducting the proper research, fail to realize how easy of a decision this is. In this much anticipated console race, the PlayStation 4 has a clear advantage over the X-box One and as a result, it is the console that consumers should look to buy.

With all these elements concerning the gaming industry. PlayStation 4 continue to outsell its competition. Which is the Xbox One as well is the Xbox 360 and the Nintendo. In turn makes it the number one gaming console worldwide. Sony has committed to cultivating it's gaming system for the next generation to enjoy the product. Sony PlayStation 4 has no pressure with it status in the gaming industry with it significant prices, and design. With gives reasoning to buy the console.

When buying a gaming consoles, be prepared to spend a lump sum of cash. The PS4 used to cost 400 dollars since being first released back on November 14, 2013, but recently it has dropped down to 350 dollars. The Xbox One price has fluctuated since first being released on November 22, 2013. When it first launched in the United States, the original price was 100 dollars more than that of the PS4’s original price of 400 dollars. In todays society, people or perhaps only me, tend to buy the cheaper options of things. So of course, people brought the PS4 over the Xbox One. Microsoft must have thought their gaming console was far superior than Sony’s gaming console so they made it cost more. This action by Microsoft weakened the Xbox One sales. In

Sony, Microsoft and Nintendo have been competing for a decade with Sony dominating the market throughout most of the years because of their superior technological products. The video games industry faces an entirely new rivalry situation. In 2008, Sony lost its strong position on the market, because of Nintendo’s success with their dynamic Wii over Sony’s high-tech PlayStation 3 and Windows’ Xbox 360. Although the Wii was technologically much less advanced than PS3 and Xbox 360, the Wii's cheaper price, ease of use, innovative motion-sensitive controller, and simple but fun games, made the console a hit all demographics from 9 to 65 years old, male and female. All these factors resulted in Nintendo’s Wii dominating sales and surpassing Sony’s by an impressive ratio of 2:1.

In 1988 one company sat firmly on top of the home video gaming market: Nintendo. No one expected it to be toppled especially not from it partner, Sony. Since the PlayStation was announced at the Consumer Electronics Show in 1991, it has been making its mark on history. Sony announced the Play Station which was the Super Disc, but so much more: it could also read Super NES cartridges and play music. Being the behemoth it is, Sony had a whole music division and movie studio (Columbia Pictures) to work with.

This report focuses on the way in which Xbox, as a product, should, and does manage its marketing mix in order to meet the needs of its markets segmentations. The marketing mix is classically seen as the four P’s of marketing: product, price, place and promotion (Brassington and Pettitt, 2006). Each P must be looked at individually before being brought together, so

“To become a leading global provider of networked consumer electronics, entertainment and services.” That’s the mission of Sony, producer of the Sony Playstation. Sony, information and

Nintendo appears to have implemented a market-penetration pricing strategy. The Wii at a cost of $250 is 50% less than the 20-gigabyte PS3 (smaller hard drive machine). At this lower price, it is easier for the product to penetrate the market due to affordability in most segments. This aligns with the assumed company’s aim of maximising market share in the current and new segments. To achieve this, Nintendo ensured that the Wii was less costly to manufacture. Moreover, a higher sales volume may lead to lower unit costs and higher long run profits. Conversely, Sony is believed to have a market-skimming pricing strategy. The company invested $2 billion in technology, so this strategy aims at recovering the maximum amount of revenue to cover the high costs incurred in the early stages of the product life cycle. Additionally, Sony has a strong brand due to the success of their previous machines (PS2 and playstation) and the high price assists in communicating the image of a superior product with quality.

However, when Microsoft started the development of its next generation console- the Xbox 360- it recognized the deficits and problems related to its initial strategy: the company was operating under too high costs in order to assure high product availability which was not the critical factor in this business. The nature of the console business is about providing the customer with a cheap hardware and a variety of games, in order to generate profits from games sales. Additionally, the first Xbox was released one year behind Sony’s PS2, Microsoft’s biggest competitor in the market. This delay resulted in a substantial loss of sales and consequently reduced game sales. Therefore, Microsoft learned that the Xbox 360 had to be launched ahead of Sony’s PS3. Accordingly, one relevant part of Microsoft’s new strategy was the “first-to-market” approach. Another essential change in Microsoft’s business strategy concerned its cost structure in the Xbox supply chain. Whereas the initial strategy focused heavily on reliability, Microsoft changed its strategy to achieving reduced costs and increased profitability. Additionally, the company insisted on owning the design of critical components, such as the microprocessor and the graphics chip, in order to “control its own destiny”. Therefore, the supply chain network needed to be redesigned in order to support Microsoft’s strategic shift. So as to reach the desired cost

Way back then, Sony entered the market originally as a supplier of components for Nintendo Entertainment System (NES) home console. However, when Nintendo failed to introduce new technologies that would improve the gaming experience, Sony grabbed the chance to seize the opportunity. Sony

Therefore in this case if Sony were to increase the price of the PS3 they would expect to make lower total revenue. This is because the predicted demand for PS3s would be expected to drop more than the percentage increase in price could cover.