Nintendo Video Game

Sony: Maintaining Dominance with PlayStation 3 u, Xin Guo, Anthony Pullen BEM 106, California Institute of Technology, March 6 Executive summary Part I. Introduction Sony launched the long awaited PS3 in the United States on November 17 2006, two days before the debut of the Wii fr om Nintendo. Both events have witnessed hardcore gamers and eBay entrepreneurs living in tents for days in front of Best Buy and Circuit City stores waiting to buy the next generation consoles. These consoles were soon after sold on eBay for up to five times the retail price. The frenzy lasted for weeks and ot, robbery and gunshots. Moreover, the recent unleashing of th e PS3, the Wii, and Microsoft’s Xbox 360 has Strengths Strong brand name of both Sony and PlayStation (PS) 5 currently available. Showing that the PS3 is a “family purchase” that has benefits for every member of the family makes its relatively high shelf price more palatable. Sony should use promotional offers gear ed toward using the PS3 as a component in a home entertainment system. Sony high definiti on televisions could come with a mail-in offer for a free Blu-Ray movie or a free PS3 game. lf. This should not be too di fficult since the Wiimote is presumably simple enough to reverse engi Generally Nintendo would not be willing to give away its most important advantage to its biggest ri val, even though licen Sony would significantly increase its revenue. Whereas Sony is not in a hur ry to push all the PS2 owne rs to upgrade, it should avoid having PS2 owners buy the Xbox 360. To by Sony Picture. Furthermore, Sony should exploit synergies also drop over time as a result of manuf provements. Analysts also suggest that Sony should raise demand fo r its semiconductors to recoup the billions of dollars invested in the chip factor ies and to reduce the cost of the PS3 . Part IV. Conclusions To maintain dominance in the video game industry with its next PS3, Sony needs to rapidly build a large enough ing to our research and presentation, we propose that Sony should ta ke a core strategy of value maximization Top: Sales of Wii, PS3 and Xbox 360 in the U.S. and Japan during January, 2007 Bottom: Sales of PS2, PS3 and PSP in the U.S. during January, 2007 02000004000006000008000001000000 Units Sold Wii PS3 Xbox 360 Japan 0100000200000300000 Units Sold PS2 PSP Exhibit 2. Comparison of Specifications of PS3, Wii and Xbox 360 Console Wii Xbox 360 Cost $499 with 20GB drive, $599 with 60GB drive $249 (include Wii Sports $299 with no hard disk $399 with 20GB drive Processing Power Eight-core Cell chip running at 3.2 GHz Broadway chip running at 729 MHz (4x slower that the Cell) PowerPC chip with 3 cores running at 3.2 (assuming dual layer) 50 GB BD-ROM 8.5 GB DVD 8.5 GB DVD 30 GB HD-DVD Maximum Resolution Up to 1080p via HDMI Up to 480p via component cable Up to 1080p Compatibility Plays 97 percent of all PS1 and PS2 games Plays all GameCube games Partially compatible with Xbox games Other Features Blu-ray movie playback, DVD playback, Super Audio CD playback, free PlayStation Network access, PSP interoperability Free WiConnect24 connectivity HD-DVD drive is optional for 199$, Xbox Live Silver (free) and Gold (50$/month), CD playback, WMV Number of Games Available by End of 2006 19 (7 exclusive to PS3) 31 (11 exclusive to Wii) Number of games Based on Cartoons 1 7 N/A Average EGM Review Score for Launch Games (out of 10) 6.1 6.4 N/A 2006 Combined Top10 Video Game Titles Sorted By Units Title 1 Madden NFL 07* 360,Wii,PS3,PSP,NDS, XBX,PS2,GCN,GBA Electronic Arts 2 Cars 360,Wii,PSP,NDS, XBX,PS2,GCN,GBA 3 Lego Star Wars II: The Original Trilogy 360,PSP,NDS, XBX,PS2,GCN,GBA 4 NCAA Football 07 360,PSP,XBX,PS2 Electronic Arts 5 New Super Mario NDS Nintendo 6 Need for Speed: Most Wanted 360,PSP,NDS, XBX,PS2,GCN,GBA Electronic Arts 7 Gears of War** 360 Microsoft 8 Call Of Duty 3 360,Wii, PS3, XBX,PS2,GCN,GBA Activision 9 Lego Star Wars XBX, PS2,GCN,GBA Eidos 10 Fight Night Round 3 360,PS3,PSP,XBX,PS2 Electronic Arts *Includes Hall of Fame Edition **Includes Collector's Edition Source: The NPD Group / Retail Tracking Service Appendix -Six Forces Analysis 1. Entry Barrier Video games are a standard-based industr y with important first-mover advantage would go unnoticed by Sony’s customers. Sony has a reputation in the electronics indus try such that suppliers desire to sell to Sony. The ability for Sony’s suppliers to bargain prices with Sony is weak. Console game emulators Game consoles and handhelds by other providers Nintendo’s Wii, DS Microsoft Xbox 360 Other Game consoles and handhelds by the same provider PlayStation 2 (PS2) PlayStation Portable (PSP), wh ich is also a complement Non-video game substitutes Outdoor Activities Study The list of non-video game substitutes is endless 5. Rivalry Game demo downloading, chatting Xbox Live for Xbox 360 features movie and TV program downloading for Nintendo has old Nintendo games to download for a fee Game rental service, a new industry crea ted by the relatively high prices of games Accessories Xbox licensed Logitech to make accessories such as game controller Some games need a special accessory Guitar Hero (PS2) References 1. Shankar, V. and B.L. Bayus,