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Thursday, October 8, 2009

Marketing 101: It only does everything...

The original brand of Playstation has applied exclusively to video game consoles, throughout the life of its brand. However, when Sony Computer Entertainment President Ken Kutaragi in June of 2006 publicly stated "we never said we will release a game console", in regards to the upcoming PS3, this message confused both consumers and developers alike (Edge Staff). Those who were familiar with Playstation felt that despite the campaign of with PS3 being “a computer, [which] can interact with anything”; video game software will ultimately drive hardware sales (Edge Staff). With this as their initial marketing goal, the Playstation 3 would have a difficult launch, rolling out 8 different iterations over the next 3 years, dropping console prices and continuing to adjust its firmware. Now, we will examine the launch of the PS3 and the strategies behind pricing, advertising and executive structure. Then, look into the future of the console, with the most recent re-launch of the PS3 brand.






Knowledge came about of the PS3 early in 2005, it only made sense from Sony’s previous success with the PS2, that they would develop another generation of console to stay competitive in the market. Like anything a consumer can purchase, price is an important factor in the decision making process. Consumer fear would be sparked in a controversial statement made by Ken Kutaragi to Japanese reporters in 2005, saying consumers should feel they “will work more hours to buy one. We want people to feel that they want it, irrespective of anything else,” leading many consumers to wonder how much the PS3 would cost (Johnb). Then, a month later on a French radio station, the President of Sony France would leak pricing information for Europe “around €500 [$613], in the range of €499 to 599 [$612 to 734]” (Jenkins). Later in the year, this pricing would be confirmed at E3 and entertainment exposition in the U.S. The US dollars would appear the same as Euros, at 499 and 599. This would obviously be an issue in some consumer’s eyes as the European and Japanese versions were more expensive than the American version. Sony’s UK managing director tried to explain this variability and wanted to stress that the decision was made “dealing with Euros and Yen - it's about the relationship between those currencies", not having to do with US currency. Combine this with the fact that the PS3 is launching in both America and Japan in November of 2006, while Europe won’t get a PS3 until March of 2007 and you have a few very explosive markets being affected negatively in this launch.

Now we already understand from the initial launch of the PS3 Kutaragi was trying to sell us a computer, but Sony needed to convince consumers that this idea was more fact than fallacy. Looking back at one of the initial selling points, may have been more problematic than progressive in terms of thinking and that was pitching the Cell Processor. The Cell is a design where the processor can divide itself 8 times and distribute its power equally to 8 different components within the PS3. But Sony felt that this much processing power could achieve more and developed the cell (with IBM) to work harmoniously with other cells. There intent is “to use the Cell processor across a wide variety of home applications”, so your toaster could sync with your TV, which would sync with your PS3 to improve your gaming experience, but appliance-makers would be a hurdle. It seems highly unlikely that any sort of kitchen appliance is going to require the power of the cell process to facilitate its daily function. Sony Computer Entertainment chief executive Ken Kutaragi told Japan’s PC Impress Watch earlier this year, “...People making those everyday-life electronic devices are still not thinking their product will one day turn into computers. I believe this is some kind of pride that electronic makers hold against the computer world” (Edge Staff). Whether or not the consumer electronics industry is holding a grudge against the computer industry; its 3 years later and there is no future in sight for the cell processor to be used in such a way.



There was trouble at the top during the launch of the PS3, executives were squabbling and making decisions without consulting their peers. “In September, Mr. Kutaragi announced Sony was halving shipments of the new PlayStation to the U.S. and Japan and was pushing back its European launch. At a news conference, Mr. Kutaragi blamed Sony's electronics group for failing to produce enough of a critical component, exposing his tense relationship with the division. ‘If we're asked whether Sony's quality of manufacturing has declined, I would have to say 'yes,' Mr. Kutaragi told reporters” (Kane). There are times and places for people to share these emotions, this was not either of those. By publicly announcing his displeasure with the electronics division, Kutaragi was isolating himself within the business, simultaneously loosing corporate confidence. Eventually, the father of Playstation would become too much of a liability for Sony and “After completing the launch of PLAYSTATION 3 worldwide, Mr. Kutaragi has decided to pursue his dreams beyond PlayStation and to accelerate his network vision” (SCEI Press Release). The President of Sony Corporate, Howard Stringer “persuaded Mr. Kutaragi to give up day-to-day control of the division in December…Mr. Stringer replaced him with the U.S. head of the videogame unit,” Kazuo Hirai (Kane). With this change, Jack Tretton would assume the role of the President of the North American division.




As Sony moves into its new future, Kazuo and SCE have decided to launch the 7th and 8th iterations of the PS3 under new branding. The New Playstation 3 is much slimmer than its 6 predecessor’s and sports one of the largest hard drives, at a $300 price point. The 8th version has also been confirmed recently, and will double the Hard Drive size of the 7th generation, for $350. The newest models are also painted a flat black and have an etched PS3 symbol on the face, as opposed to previous models (being gloss black with chrome “Playstation 3” written on the face). Their marketing campaign has come full circle with; “Playstation 3, it only does everything,” being a more media centered, video game console and offering a competitive bang for your buck, over the Xbox360 or Wii. The commercial side of the campaign has also been met with positive results, and the box art on games have also received the new logo. After one month of the new brand being available on the market, NPD reports show that PS3 sold twice as many units over September 2008 and Microsoft (who also had a price drop), only increased 2% from last year. I personally am excited about the recent re-branding and can’t wait to see what Sony’s future holds for the Playstation 3.



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