SONY PLAYSTATION V/S

MICROSOFT X-BOX
NOVEMBER
Assignment by: Group3
Aditya Jain (2014PGP014), Chintalacheruvu Abhinav
(2014PGP093), Kulpreet Singh (IPM2011046), Rahul Suhag
(IPM2011078) and Sachin Maheshwari (2014PGP316)

TABLE OF CONTENTS
Contents
Company overview__________________________________________________________________1
Sony Playstation____________________________________________________________________________1
Microsoft X-box____________________________________________________________________________1
Strategic Launch of Products:_________________________________________________________________2

Industry Dynamics_______________________________________________________________3
Evolution of Gaming Consoles___________________________________________________________3
Current Industry: Playstation 4 vs Xbox One_____________________________________________4

Brand and Relationship: Product__________________________________________________5

Core, Actual and Augmented Product:___________________________________________________5
Core Product____________________________________________________________________________5
Actual Product:__________________________________________________________________________5
Augmented Product:_____________________________________________________________________6
Brand Relationship:______________________________________________________________________6
Suggestions for Improving Product Penetration:__________________________________________7

Competitive Edge: Pricing________________________________________________________8

Brief History_____________________________________________________________________________8
PS4 vs Xbox One Pricing_________________________________________________________________9
Advertisement Campaign________________________________________________________________9
Current Sales and Pricing________________________________________________________________9
Suggestions for Improvement:_________________________________________________________10

Refrences_______________________________________________________________________11

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Company overview
SONY PLAYSTATION
Sony Playstation is the flagship gaming console of Sony Inc. It was the brainchild of Ken Kutaragi, a Sony
executive who is also known as "The Father of the PlayStation. The history of Play Station dates back to 1988,
when Sony entered into a joint project with Nintendo to develop a CD ROM for its future release Super Nintendo,
the attachment was known as Super Disc. But some contractual issues came up between Nintendo and Sony due
to which the contract was called off and Super Disc was never introduced. Sonys management became furious
about this whole incident and decided to go ahead with the launch of its own gaming console named Play Station,
in 1991. The initial timeline for the products can be represented as follows: You have provided content of 11 pages
with font size of 10, if we use 12 font then then page limits will go further.

O rig in a l
p lay s ta tio n :

S u p e rd isk (C D -R O M )
and
o n ly 2 0 0 u n its
p ro d u c e d

PS one:

S m a ll, re d e sig n e d ,
new G UI

P lay s ta tio n
X:

re sp o n siv e g a m in g ,
so le ly C D -R O M

Sony introduced an interactive relationship marketing program, PlayStation Underground to recognize and reward
their loyal gamers. It was like a subculture for intense gamers, where they could experience new game challenges,
get a first hands on experience with the upcoming games, merchandise, and special offers. Sony launched a
portable handheld device, PSP, to enhance usage and time spent.

MICROSOFT X-BOX
Microsoft's DirectX team developed a prototype Microsoft Windows-based video game console (which year??) in
the hope to compete with the Sony's upcoming PlayStation 2, which was luring game developers away from the
Windows platform. The DirectX Box console was based on the popular DirectX graphics technology. During
development, the original DirectXbox name was shortened to Xbox. It pioneered the feature of a built-in hard disk
drive, used for storing game saves and content downloaded from Xbox Live, eliminating the need for memory

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cards. It featured Dolby Interactive Content-Encoding Technology, allowing real-time Dolby Digital encoding. The
user interface for the Xbox is Xbox Dashboard which allows users to manage game saves, music files, and content
from Xbox Live. It allows Xbox Live users to sign in and manage their account. [1]

STRATEGIC LAUNCH OF PRODUCTS:

Microsoft X-box came to be an alternative to Sony PlayStation and it has been ever since. The following are the
competing product lines:

P lay S ta tio n
2:

P lay S ta tio n
4:

sixth g eneration
console
S LIM LIN E : b uilt-in
eth ern et p ort

"sh are" b u tton for

live stream , A M D
x86-64

P lay S ta tio n 3 :

7th gen era tion , m otion

sensin g, B lu -Ra y D isc
player, H D resolu tio n
SLIM : H D M I, 45m m
m an u facturing
SU PER S LIM : red esig n ed
case

Xbox:

Xbox One:

DirectX technology,
built-in hard disk
drive, Dolby
interactive
technology

Internet based
features, integrate
with set-top box,
Kinect voice control,
enhanced GUI

Xbox 360:

Xbox live, stream PC

content, third-party
content services,
Kinect-motion control
system

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Industry Dynamics
EVOLUTION OF GAMING CONSOLES

1967-1974: The first video game console was invented by Ralph H. Baer, also known as "The Father of Video
Games". There were only six games available for it. The Brown Box" led to the licensing of the technology by
Magnavox in 1972, resulting in the release of the first official home video game console Magnavox
Odyssey.

1975-77: a series of consoles were produced by the two rivals (Magnavox & Atari), with each new console
only slightly better in terms of some modification to the graphics, controllers and digital on-screen scoring

1978-80: Nintendo delivered their first series of video game console. The Color TV Game Series were only
for sale in Japan.

1981-85: This was the golden age of video gaming. With progressively advanced gaming technology, the
1980s was a period of genre innovation. It is also this era that we saw the release of all-time classic games
such as Pac-man (1980), Mario Bros (1983), The Legend of Zelda (1986), Final Fantasy (1987), Golden
Axe (1988), etc. There was also a major shift from dedicated consoles (with built-in games) to cartridge-based
video game systems. Both Sega and Nintendo dominated the video gaming scene in that decade.

1986-90: Sega and Nintendo came with new consoles back to back and this was the first major
console war that occurred.

1991-93: There was a notable shift in the medium used for storing games from cartridges to compact discs.
It meant that there was an increased capacity for video gaming, prompting as well a transition of 2D graphics
to that of 3D. The Sony Playstation was launched.

1994-97: In 1994, Sony finally made its entrance with the leading Playstation. Sega went on to expand it
into a series and also developed an entirely new console, Saturn, to rival against the rest of the CD-based
consoles.

1998-04: Sony progressed on with the next Playstation, the Playstation 2. In 2001, Nintendo switched its
cartridge-based Nintendo 64 to a DVD-ROM GameCube. That very same year, we saw Microsoft entered in
the video game console industry in 2001 with its well-received Xbox, which featured online gaming service as
well, the Xbox Live.

2005-13: Finally, the current generation of video game console only has room for three major competitors:
Xbox 360, Sony Playstation 3 and Nintendo Wii. With full 1080p HD graphics for both the Xbox 360 and
Playstation 3, and Wiis innovative remote for sensing 3D movements. In addition to these, all three consoles
had expanded with add-ons such as the MotionPlus for Wii (2009), Kinect (2010) for Xbox 360 and Move

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(2010) for Playstation 3. These three add-ons similarly involved the capability to sense physical motion
accurately, enhancing the interactive experience for players Ok. [2]

CURRENT INDUSTRY: PLAYSTATION 4 VS XBOX ONE

The availability of multi-functional gaming consoles is the latest trend emerging in the Global Gaming Console
market. Multi-functional gaming consoles not
only support GAMES but also enable gamers to
watch videos, listen to music, browse the internet,
and

download

videos.

Hence,

this

console

functions as a gaming and an entertainment console

with its multi-utility features. Both these products
offer multi-utility and have been running in the
market since 2013. Certain social media analysis
indicated that PS4 garnered nearly twice as many

Fig 1: Sales Data for Q3, 2013

mentions as Xbox One, with the same rate for sales

conversion. PS4 has a share of nearly 70% positive mentions, compared to 30% for Xbox One. [3]
The data is also reflected in sales, with Playstation clearly outweighing sales of Xbox One internationally. First
week sales of PS4 grossed over $12m with more than 21,000 units being sold. Comparatively, Xbox One had sales
of around $7.9m with nearly 12,000 units sold. The launch price had a difference of $70, with PS$ cheaper at
$589.16.

Market share in 2014

Sony

14%
27%

Microsoft
Nintendo
60%

One of the main challenges in this market is the

shifting of consumers to alternative gaming platforms such as mobile GAMES and online games. Moreover,

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these games are available at a lower cost than console gaming. As a result, there has been a drastic decline in the
sales of gaming consoles.
The major market share is mostly captured by three players: Sony, Microsoft, and Nintendo; with Sony a clear
leader at nearly 60% share globally. Microsoft captures 27% of the share, with the remaining 14% mostly occupied
by Nintendo, with its launch of Nintendo Wii. [4]

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Brand and Relationship: Product
CORE, ACTUAL AND AUGMENTED PRODUCT:
Both the PlayStation 4(PS4) and the Xbox One are part of the eight generations of video game consoles,
introduced after the end of the product life cycle of their predecessors; the PlayStation 3 and Xbox 360
respectively. Boasting of extensive graphical and processing power within their devices, the products are
direct rivals in the market of video game consoles. The following tables compare the rivals on the three levels of
a product.

CORE PRODUCT
PlayStation 4

Xbox One

The core benefit the PS4 aims to provide consumers is

The Xbox one is positioned as an all in one

the ease of running unique graphic intensive games

entertainment device, making it a competitor to not only

through an external console. At a basic level it provides

the PS4 but also Google TV and Apple TV

entertainment, challenge, and winning spirit to an

individual player.

ACTUAL PRODUCT:
PlayStation 4

Xbox One

With the tagline of This is for the Players, Sony

In contrast, Microsoft looks to expand its consumer base

intends to target the hard core gamers, its core market.

by positioning the Xbox One as a multifunctional

Currently priced at $319 in the US. This reduced price is

entertainment system
Currently priced at $372 (or $473 with the Kinect), the

a significant advantage against its rival.

The console focuses on social gaming, including a share

Xbox One stands at a slight disadvantage.

Multipurpose in use, the Xbox One highlights media

button on the controller and taking the first steps into

interconnectivity, voice control and live streaming and

cloud gaming.
Only standard editions of the product were launched in

upload of gameplay footage.

Apart from the standard editions, higher priced special

the market. However, bundles with certain free games

editions such as Day One, Sunset Overdrive Bundle

such as Destiny, Infamous Second Son were released.

and Call of Duty Advanced Warfare Bundle were

launched.

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AUGMENTED PRODUCT:
PlayStation 4

Xbox One

Allowing resale of games and giving Indie game

Original DRM policies of the Xbox One did have

developers a chance makes the PS4 a consumer and

restrictions on resale requiring users to necessarily

target friendly product.

Through its acquisition of Gaikal in 2012, Sony is closer

purchase games first hand.

The Xbox One is stated to be capable of backward

to leveraging cloud computing to enable backward

compatibility in the near future through cloud computing

compatibility.
Detachable and upgradable hard drive along with

Inaccessible hard drive with wide focus possibly dilutes

acknowledgement to its consumers.

the offering to the gamers
What you mentioned in the table is fine, but you seem to have listed down the points, but if
you also try to relate each point with the factors given in the core, actual, augmented it
would have been better.

BRAND RELATIONSHIP:
Behavioral Independence

Role in life

Personal Commitment

Brand Loyalty

Love and Passion

Irreplaceability

Nostalgia

Memories

Partner Quality

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PlayStation 4

Xbox One

Gamers experience dependence on

the console for gaming. Unique
console
launches,
such
as
Infamous and Destiny create a
unique relationship. Gamers spend
large amount of their leisure time
playing on the console.
Reduction in sales in 2011 shows
that consumers can switch to
alternative consoles if the current
product life cycle runs out
The price of the product and
uniqueness of the games bought
ensures that the product is
irreplaceable. But you were not
sure about the loyalty in the above
row.
A consumer classified as a gamer
would spend a significant amount
of time with the console, and could
define a phase in their lives.
The PlayStation 4 is positioned to

Unique console launches such as

TitanFall and Call of Duty would
create unique relationships with
the consumer. Multiplayer gaming
enables
a
new
level
of
commitment from players.
High brand loyalty in western US.
However, features and price
trumps loyalty.
The price of the product and
uniqueness of the games bought
ensures that the product is
irreplaceable

Comprehensive entertainment for

everybody. Memories of time
spend together.
The Xbox One is position as an all

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Brand appreciation

target the Gamers, and hence

resonates in the mind of the core
consumer as if the company
respects him/her

in one entertainment system and

hence stands to dilute its core
customer base, i.e. the gamers.

SUGGESTIONS FOR IMPROVING PRODUCT PENETRATION:

GAME BUNDLING: Microsoft has secured exclusive games and content for their next generation console
such as Titalfall and content with the Call of Duty Ghosts which is most likely to be timed exclusive. Games
like Titalfall will make actual use of next generation gaming consoles technical power. The game is similar to
Halo and Gear of War series, which are also exclusive to the Xbox consoles. Sony offers God of War
exclusive on the PS, however, it is in no way as popular as the game bundling options available in
Microsoft. PlayStation wins the battle when it comes to price and hardware, but since Games sell Consoles,
Xbox One might emerge as the leading product in future. Sony needs to come up with interesting exclusive
game bundling options and focus on game development.

THIRD-PARTY SUPPORT: Sony may partner with YouTube and Facebook to provide instant sharing
facilities on the social media, and create an entire archive of gaming memories-mails, messages, wall posts,
challenges to friends and community will potentially increase the social penetration of gaming.

CONTROLLER: Xbox one controller is perceived to be better than the PS4 controller. Refinement in the
controller would be a welcome change among hardcore gamers.

SUSPEND/RESUME FUNCTIONALITY: Xbox offers consumer the ease to put the console on standby and
resume the game later, which is not the case with PS4. This functionality puts more power into the gamers
hands and is a desired change, as mentioned on variety of public forums. [5]

DLNA MEDIA SERVER SUPPORT: PS4 has been turned into a more closed system than its predecessors,
allowing access to movies and music through subscription channels. However, DLNA allows the consumers
the ease to access media from their computers. This could potentially be a deal-breaker feature.

CUSTOMISATION OPTIONS: Allowing the customers to customize their home screens and backgrounds
would give them a feeling of higher control and personalization. This would in a way impact product
relationship.

RIDE HIGH ON CONSUMER PERCEPTIONS: Consumer perception map indicates higher preference of
PS4 as a stronger contender between the two. Sony must work on the positives and negatives to address
consumer concerns, and build on its brand equity. [3]

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Competitive Edge: Pricing
BRIEF HISTORY
Microsoft had launched Xbox 360 in Nov 2005, at a competitive price of $400 and was the most advanced gaming
console ever. Sony had launched Play Station 3, little late than planned, owing to delays in unit production, in Feb
2006 at a high price of $600. By the launch of PS3, Xbox 360 had already captured a significant amount of market
by selling about 8 million sets. Sony was behind Microsoft from the launch.

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Sony did pick-up sales in the later part of its product life-cycle, and both products sold almost equal units, outsold
by Nintendo Wii. Geographically, PS3 dominated the Japanese market, while Xbox360 dominated the European
markets, with mixed responses from the US market. The response of customers to price changes indicate high
sensitivity of consumers to price. Is the source for all three tables same??

PS4 VS XBOX ONE PRICING

Determined not to repeat the mistake again Sony manufactured a high-end gaming console and launched Play
station 4 in Nov 2013, just before the Christmas festive season, at a very competitive price on $399.Sony said that
the PlayStation 4 would fully support used games, allow for easy lending and would have absolutely zero
online requirements to play single player games.
Fig 3: Sales Data for Playstation 3 vs Xbox 360[6]

Microsoft launched Xbox One with more

features than PS4, in Nov 2013, at a price of $499. These extra features include, kinect motion control which alone
raised the price of Xbox One by $100. Microsoft launched Xbox One as not just a gaming console but as an
Entertainment

Box.

The specifications of Xbox One were slightly higher than PS4 but unfortunately Microsoft did not announce good
after sale services unlike PS4, Microsoft adopted restrictive and confusing policies about reselling used
games, lending them to friends, and having to have the console check in over the internet once a day.

ADVERTISEMENT CAMPAIGN
Microsoft has spent more than $47 million for Xbox One ads on television this year, according to data
from iSpot.tv. That is around 50 percent more than Sonys $30 million. With that increased marketing budget,
Microsoft has had 5,000 commercials while Sony has settled for closer to 3,000. This shows that Sony is

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happily riding positive buzz and consumer word of mouth, and it also reveals that Microsoft doesnt want to
concede the multibillion-dollar console-gaming market to Sony.
When it comes to spurring online actions, which iSpot.tv defines as searches, sharing the ads virally, or talking
about them on social media, Sony dominates.

CURRENT SALES AND PRICING

As of October, PS4 has posted twice the amount of sales as Xbox One

PlayStation 4: 12 million sets

Xbox : 6 million sets

The cut of $100 without Kinect has brought price parity, but as we head into the crucial holiday season You did
not even edit the content downloaded from Net.Microsoft has gone a step further and lopped another $50 off the
price of its console beginning Nov 2.
This is a daring strategy for Microsoft, but it's one that's likely to work at least well enough to gain some ground
over the holidays and fight its way back into the competition.
The companies employ the following price strategies to gain market share:

Head-on Price War

Loss Leading Strategy
Maximum Market Skimming
Psychological Discounting
Price Bundling

They engage in price wars, skim prices to

make the maximum out of the markets,
give psychological discounting and bundle
product with games to offer price bundles.
Given the sensitivity of the consumers to
price, this strategy seems to be most
appropriate, and also is working out for

Fig 4: Breakup of next generation console prices (Source: E-bay)

both the competitors. Loss leading strategy defined success for Xbox360 and PS3. It is a risky strategy, but is
effective for the volumes of sales required.

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SUGGESTIONS FOR IMPROVEMENT:

UNDERCUTTING: Relying on loss making strategies, Sony must make sure not to

undercut too heavily in order to offer the lowest prices.

MATCH PRICE CUTS IN FESTIVE SEASON: With Microsoft offering heavy discount of
up to $50, Sony must respond to keep the prices competitive.

The financial success for Sony PS4 will depend upon striking the balance between these
two contradictory recommendations.

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Refrences
[1] http://atmega32-avr.com/how-playstation-works-2/,
DOA: 10/11/2014.

ATmega32AVR,

2012.

Web.

[2] http://www.hongkiat.com/blog/evolution-of-home-video-game-consoles-1967-2011/,
Hongkiat, 2014. Web. 10/11/2014.
[3]
Clemmer,
Lee.
Media
Analytics
Lead,
SAP.
http://www.forbes.com/sites/sap/2013/11/14/ps4-vs-xbox-one-winner-emerges-viasocial-media-analysis/, Forbes 2014. Web. 12/11/2014.
[4] http://www.vgchartz.com/article/252097/2014-year-on-year-sales-and-market-shareupdate-to-october-25/, VG Chartz, 2006. Web. 10/11/2014.
[5] www.gamesradar.com/things-sony-needs-improve-ps4/, Future US Inc, CA, USA,
2014. Web. 13/11/2014
[6] Marketline Case Study, Microsoft Xbox One: The Battle against Sony PlayStation 4,
November 2013. Refrence Code: ML00013-039. Web. 10/11/2014.

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