Free «Sony’s Battle for Video Game Supremacy» Essay
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In the past two decades, Microsoft and Sony have been grappled in a fierce video game console battle. Each of them has been hoping that their video game consoles, Xbox, and PlayStation respectively, would rule the online gaming and the Internet Age entertainment. Growing at an estimated rate of 11 percent of the compounded annual growth rate, the video game industry has perplexed the media and entertainment observers. This paper provides the analysis of the Sony’s conduct on the video game market.
The Background of Sony Corporation
The Sony Corporation, an international company based in Tokyo, Japan, was established on 7th May 1946 by Masaru Ibuka and Akio Morita. It designs, manufactures, and distributes audio and video products, telecommunication devices, electronic components, and video games (Sterman, Jekarl, & Reavis, 2007). Today Sony is known more for its PlayStation video game console than electronics and smartphones lines of production, which have been underperforming within the last decade. Video gaming products are the leading source of revenue and profitability for Sony. Between the financial years 2004 through 2006, the company recorded videogame sales amounting to $6. 668 billion, $6.237 billion, and $8.193 billion respectively. Sony’s operating income stood at $577.8 million, $369.2 million, and $74.4 million for the same period (Sterman, Jekarl, & Reavis, 2007). Such an excellent performance in the video gaming sector can be referenced to the able leadership of Sir Howard Stringer, the Chief Executive Officer of the corporation. Under his supervision, the company has reached significant milestones in the extremely volatile industry. Currently, it has a wide service footprint in approximately 200 countries worldwide. As the video game console battle continues, it is apparent that Sony Corporation holds a leading position. This is in contrast to market analysts’ forecast that had predicted that the introduction of Microsoft’s Xbox in 2001, as well as Nintendo’s consoles in the late 1990s market would mark the end of the supremacy of Sony’s PlayStation. However, the battle has continued to intensify because of the constant innovation and technological advancements. Sony maintains its vision of remaining grounded in an uncompromising commitment to gamers.
Sony Corporation SWOT Analysis
In this section, the SWOT matrix is applied to identify Sony’s strengths, weaknesses, opportunities, and threats based on the case Sony’s Battle for Video Game Supremacy.
Sony Corporation has various strengths. They include:
- Superior brand name: Sony PlayStation is one of the consumers’ favorite and most preferred video game consoles. This advantage allows PlayStation to defeat its rivals such as Microsoft’s Xbox and Nintendo’s Wii (Sterman, Jekarl, & Reavis, 2007).
- Technological expertise: Sony Corporation is identified with technological excellence, which is evident from its superior and innovative PlayStation.
- Uniquely strong position in emerging markets: Sony is steadfastly rooted in various emerging economies, which contribute close to 60 percent to its revenue.
- Wide customer base: Sony Corporation’s customers are spread geographically all over the world, which means that the company is prone to fewer business risks.
Sony Corporation is associated with various internal weaknesses. They are:
- The poor proximity of production facilities to customers: The production facilities of Sony Corporation are situated in specific regions far away from the end-users. As a result, the company can face limitations in meeting consumer needs adequately (Sterman, Jekarl, & Reavis, 2007).
- A weak financial system: Sony has a weak financial system characterized by the downward trending revenue streams coupled with increased expenses and liabilities, which can result in lower profit margins.
Sony Corporation can have such opportunities:
- Joint ventures, mergers, and acquisitions: Sony can significantly benefit from the flexibility of entering into joint ventures, as well as key corporate acquisitions. These would allow better diversification and expansion of operations (Sterman, Jekarl, & Reavis, 2007).
- Diversified technology: Sony Corporation can take advantage of the present technological age to revolutionize its video game consoles, as well as reposition itself in the video gaming industry.
Sony Corporation is faced with certain threats that include:
- Continued economic slumps: The economic crisis around the major world economies have consequently affected the operations of Sony Corporation.
- Effects of the black market: Smuggled and counterfeit video game consoles continue to plague the industry. As a result, Sony suffers of diverted potential sales and revenues.
- Volatile compliance regulations: The operations of Sony Corporation are under a continuous scrutiny by various regulations on the environment, health, and safety. These have had adverse impacts on Sony’s profits and sales margins.
- Stiff competition: Sony Corporation is faced with fierce competition from Microsoft and Nintendo in the computer gaming sectors.
Sony Corporation’s bid to accelerate its decision-making, competitiveness, and performance can employ set and strive to accomplish various short-term objectives. First, diversifying and strengthening its video games consoles lines is of utmost importance. Undoubtedly, Sony’s PlayStation is highly demanded all over the world. More concentration on this area would lead to more efficiency in meeting trending market needs, as well as greater profitability for the company. Second, it is to expand business in the emerging markets. In such a way, Sony Corporation would easily tap a huge potential and unexploited market bases. The results would be more revenues and profits. Finally, the company needs to realize its business portfolio. The outcome would be a better allocation of resources and labor, and thus higher efficiency and performance.
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Sony Corporation can rely on various long-term objectives in fulfilling its strategic goals. First, the company should seek more mergers and acquisitions with various video game developers around the world. The strategy would influence its productivity and profitability. Second, Sony needs to consider providing video game products available for the low-income and rural populations. Unquestionably, most of Sony’s PlayStation is highly priced as they are intended for middle and high-income earners. Considering the needs of the poor would mean more sales and a wider market for its PlayStation video game console.