Gap and Current Strategy Analysis * Macro Environment: The major trend in the macro-environment which affects Sony’s future strategy is socio/cultural/demographic. Since the Nintendo Wii emerged, it attracted many of non-traditional gamers came into the videogame console market, especially females and elderly people. Traditionally, non-traditional gamers think PlayStation is not ease of use for them. For instance, the joystick is difficult controlled or the instruction of the games are not easily understood for them how to play.
Due to the non-traditional gamers want simpler products, high level of technical and graphical complexity are not concerned by them, so Nintendo Wii seems more suitable for them as it is ease of use, simple but fun games.
Moreover, as the obesity epidemic is an important social factor within countries such as America and Australia, unlike PlayStation, the Wii Fit as a platform for the people to do exercise with its innovative motion-sensitive controller. Therefore, the current business strategy of Sony is not matching the non-traditional gamer’s needs.
However, as we mention before in macro environment analysis, society is becoming more intelligent and technology savvy, the gamers are increasing their demand for more challenging and stimulating game story lines and features, so the high technology feature of PlayStation matches this factor, the gamers can be played over the internet. Therefore, Sony PlayStation still maintains competitiveness by keeping up with technological advancements. * Industry Environment: The major trend of industry environment comes from the power of competitor.
As we know, Microsoft Xbox 360 and Nintendo Wii are the main competitors of Sony PlayStation.
There is a threat of Sony PlayStation while Nintendo Wii emerged. As Nintendo knew that it had competitive disadvantage of competing with Sony and Microsoft in the traditional gamer market, so when Sony and Microsoft was competing each other in the traditional gamer market with technological advanced console, Nintendo used a business strategy called ‘blue ocean strategy’, which is where they went after uncontested markets (non-traditional gamers) and created a new market based on “value” and innovation”. Unlike PS3 and Xbox360, Wii is focusing on non-traditional gamers whose want simpler products. Although Wii is technologically far less advanced than them, but it’s ease of use, innovative motion-sensitive controller and simple but fun games had made the console a hit with all demographics which 9-year-olds to 65-years-olds, males and females. As a result, Wii had created an opportunity of new generation of videogame console market; and it had stolen a march on its two larger rivals by appealing to people who were traditionally not play videogame.
Obviously, it seems Sony need to change its business strategy in the future in order to improve its market position, even though Sony remains target at the traditional core gamers whose are 18 to 34 years old males. However, Sony does not seem to think they need to create these products as they continue to create more high quality graphic and technologically advanced consoles, for instance, PS3 with BlueRay player.
Although the sales of Wii is overlapped than PlayStation, the leaders of Sony do not think they need to keep up with Nintendo and have a degree of arrogance within the company that they believe they are leaders of the industry. However, this may change in the future if they do not decide to close the gaps. Because the market of PlayStation is limited, the people who did buy PlayStation were the core early adopters (traditional gamers), but once they got it, they would not buy another one PlayStation.
Therefore, Sony will require to creating simpler and ease of use devices for PlayStation to eliminate learning curves for people interested in playing on consoles and bridge the gap between core and casual gamers in the future, otherwise its market share of console market will become shrunk by Wii or need to exit the market as well as Sega. * Internal environment: Appendix : Gap Analysis of Sony Macro Environment Business Strategy Gaps Trend| Date of Impact| Business strategy match or mismatch? Non-traditional gamers increasing | Next 5-10 years| Mismatch- the console is too complexity for non-traditional gamers| People create more disposable money| Next 1-3 years| Match- people can spend on entertainment| Society is becoming more intelligent and technology savvy| Next 5-10 years| Match- keeping up with technological advancements | | | | Industry Environment Business Strategy Gaps Industry environment element| Opportunity or threat| Effect on industry profitability| Business strategy consistency or inconsistency| Suppliers| -| High| Consistency |
Buyers| Opportunity | Average | Consistency | Substitutes| Threat | Varying | Consistency | Threats of new entrants| Threat | High | Consistency| Industry rivalry| Opportunity | Average | Consistency | Competitor Environment Business Strategy Gaps Competitor| Financial performance| Market position| Technological performance| Service performance| Microsoft Xbox360| Excellent| Good| Excellent| Excellent| Nintendo Wii| Excellent| Excellent| Good| Excellent| Reference: W. Chan and Mauborgne, R (2004), Blue ocean strategy, Harvard business review, vol. 82, no. 10, pp. 76-84