Sony Playstation 4: Aim and Fire

14 Pages Posted: 17 Mar 2017

See all articles by Michael Lenox

Michael Lenox

University of Virginia - Darden School of Business

Jared D. Harris

University of Virginia - Darden School of Business

Rebecca Goldberg

University of Virginia - Darden School of Business

Abstract

Kazuo Hirai, president and group CEO of the Sony division charged with manufacturing the PlayStation, is faced with a strategic crossroads as he decides which functional elements and target demographics to focus on with the PS4. He reviews the history and dynamics of the video gaming industry—including the importance of first-mover advantage when it comes to new technology—in an effort to predict its future. What's next—both for gaming in general and for home game consoles in particular—and what place should Sony be vying for in the minds and pocketbooks of the gaming public?

Excerpt

UVA-S-0203

Rev. Nov. 4, 2014

SONY PLAYSTATION 4: AIM AND FIRE

Kazuo Hirai, president and group CEO of Sony Computer Entertainment Inc. (Sony), makers of the Sony PlayStation (PS), stepped off the Tokyo street into the crowded public arcade. He watched children, with their parents' help, plug in handheld adapters and begin swooping their arms to move characters on large displays—and he berated himself again for not having invested more resources in developing this type of technology before Nintendo had debuted the Wii. Sony had dominated the previous two generations of gaming systems with the PS and PS2, but was late to the game in incorporating comprehensive motion technology into its user experience for the PS3. Wii—with its family-oriented sporting and arcade-style action games—had already grabbed market share Hirai thought should belong to Sony. And Microsoft's Xbox 360 with Kinect had snatched up more of “his” customer base with its groundbreaking, full-body motion-sensor camera that allowed users to animate their own gaming characters using their bodies—sometimes in lieu of any controller at all.

The next battle in the gaming console wars had begun and Hirai was anxious. How could he ensure that Sony was not an also-ran? Nintendo was the first to market with a seventh-generation machine, releasing the Wii U in November 2012. Microsoft debuted the Xbox One a mere week after Sony had released its PS4 in November of 2013. Not only did Hirai have to worry about Nintendo and Microsoft, but he also had the constant feeling that a newcomer could arise in the gaming sector at almost any time. Sony had itself sprung onto the scene as a newcomer in the mid-1990s and had been the clear winner in both the fourth and fifth generations of gaming systems. So why couldn't another player with a winning strategy and some new application of technology pull out ahead next? The first generation had been led by Atari; Nintendo had dominated the second generation; Sega and Nintendo battled for supremacy during the third generation, only to be upstaged by Sony in the next two generations. The last generation, the sixth, had seen Nintendo retake first place.

. . .

Keywords: video game, strategy, market share, marketshare

Suggested Citation

Lenox, Michael and Harris, Jared D. and Goldberg, Rebecca, Sony Playstation 4: Aim and Fire. Darden Case No. UVA-S-0203. Available at SSRN: https://ssrn.com/abstract=2933685

Michael Lenox (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://faculty.darden.virginia.edu/LenoxM/index.htm

Jared D. Harris

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://faculty.darden.virginia.edu/harrisj

Rebecca Goldberg

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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