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Playstation 4 Vs. Xbox One the Battle for Market Superiority

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Playstation 4 vs. Xbox One The Battle for Market Superiority Introduction skip to analysis The $27 billion console gaming category has undergone significant disruption and evolution in the last decade, particularly resulting from new entrants and an increased focus on online gaming. With the Nintendo Wii U’s abysmal sales, Microsoft and Sony now persist as the two primary competitors for the market leader position in the next generation of console gaming. Recognizing a traditional product life-cycle of five to seven years and little chance of increasing adoption rates after year one, the company that is able to establish dominance within the first six to twelve months will likely retain the position until the next generation of console hardware is released. As a result, Sony and Microsoft have boldly developed two different marketing strategies that stand in stark contrast to one another. The ‘One’ moniker attached to the Xbox is the embodiment of Microsoft’s vision of the future of the industry as not simply focused on gaming but as providing all-encompassing entertainment solutions. The Xbox One is being marketed as the one device to rule all facets of living room entertainment. Sony, on the other hand, stands in firm belief that gaming consoles should primarily focus on delivering a great gaming experiences above all else. This doesn’t mean that video playback and media applications are not available on the PS4, they are. However, Sony’s messaging is intended to define the PS4 as the quintessential gaming console rather than a holistic entertainment solution. www.infegy.com +1 816-494-1650 [email protected] 4151 N Mulberry Dr., Suite 240, Kansas City, Missouri 64116 Console Gaming Background Background skip to analysis The battle for market dominance in the console gaming category has always existed, but over time the key players have continually shifted. In the early 1990s, the market was comprised mainly of offerings from Nintendo and Sega. When Sony entered the market in 1994 with the original Playstation, the company quickly supplanted Sega to become the new competitor for Nintendo’s massive market share. By the start of the new millennium, Sony Playstation sales had eclipsed Nintendo console sales. Sony’s lead in the market was even further increased after the introduction of the Playstation 2 (PS2), an impressive new system that included massive upgrades in performance. Nintendo’s answer, the GameCube, failed to win over gamers, and as a result, Nintendo fell even further behind in market share. Nearly two years after the launch of the incredibly successful Sony PS2, Microsoft entered the category with its first offering, the Xbox. By this point in time, Sony had shipped a daunting 19.57 million units.[1] To establish its new console as a competitor against Sony’s PS2, Microsoft used the two year deficit to incorporate more powerful hardware and develop exclusive titles designed to be played on its proprietary online gaming network. The release of the highly anticipated first person shooter, Halo, quickly escalated Xbox sales, but nowhere near the pace needed to appreciably chip away at sales of the PS2. In an effort to get a head start on the next generation of [2][3][4] gaming, Microsoft released the Xbox 360 in November 2005, nearly a year before the Playstation 3 and Nintendo’s next offering, the Wii, were set to launch. The Xbox 360 set new expectations with the device’s cutting edge graphics, more ergonomic controllers with wireless connectivity, continuation of the successful Halo franchise, and robust broadband gaming network, Xbox Live. These points of extreme superiority over previous generations of consoles enabled Microsoft to establish an early lead. www.infegy.com +1 816-494-1650 [email protected] 4151 N Mulberry Dr., Suite 240, Kansas City, Missouri 64116 Console Gaming Background Background Continued skip to analysis Resolved not to experience the same defeats, Nintendo redefined its market space by focusing on what they believed to be a broader market, family-friendly gaming experiences. Their new console, the Wii, shifted away from competing over performance, online gaming, and titles that appealed to gaming enthusiasts. Instead, Nintendo introduced innovative motion controlled functionality, games designed to make gaming a more active experience, less violent titles, and a lower price point than offerings from Sony and Microsoft. Previously the champion of technical prowess, Sony focused on exceeding the Xbox 360’s specifications, matching the console’s most popular features, and introducing a major differentiator. Like the Xbox 360, the Playstation 3 intensely focused on increasing online gaming through its Playstation Network, introduced wireless controllers and highlighted gaming titles exclusive to the platform. On paper, the marginally more performant specifications of the PS3 likely excited only the most intense gaming enthusiasts. The real differentiator was the Blu-ray media drive. High-definition Blu-ray movies had just begun to increase in adoption and individual Blu- ray devices were street priced starting above $500. Sony’s move to include a Blu-ray disc drive had two major implications. The first being that gaming media could contain more content due to the higher capacity of Blu-ray discs. More importantly, it meant that at the price point of $499, consumers would be getting Blu-ray playback and the highest performance gaming console for less than the price of a standard Blu-ray player. By November2013, Sony and Microsoft had each sold around 80 million units.[5][6] Impressively, Nintendo’s repositioning strategy ended up trumping technical prowess, elevating the manufacturer back to the position as the market leader with nearly 101 million units sold.[7] www.infegy.com +1 816-494-1650 [email protected] 4151 N Mulberry Dr., Suite 240, Kansas City, Missouri 64116 The New Era of Console Gaming Shifts in Strategy skip to analysis Previously, Sony, Microsoft, and Nintendo had each employed different and very succinct strategies. Microsoft focused on being a first mover. Sony focused on addressing multiple consumer needs with one device. Nintendo developed its own market space. With the current generation of gaming consoles something interesting has happened and each company has shifted its core strategy. For this eighth generation of gaming consoles, it was Nintendo that established itself as the first mover by releasing their newest console, the Wii U, nearly a year before its competitors. The company remained true to the family-friendly gaming experience, but replaced the small and simple motion controllers with a bulky controller that includes a built in screen. Nintendo also significantly increased the price point from $249 to $349. These changes have not been well received and have led to sluggish sales. One analyst has projected that lifetime sales will reach a paltry 25 million units.[8] More optimistic estimates put total lifetime sales closer to 50 million units, which is still half of what its previous generation console achieved. As a result, the Wii U has currently been all but written off as a key contender in the current battle for market dominance. Although Sony fully embraced the strategy of positioning the PS3 as a multi-purpose entertainment system, the company has distinctly moved away from this strategy for the PS4. Instead the PS4 is being positioned as the ultimate gaming machine designed for hardcore gamers. Conversely, Microsoft has adopted the all-in-one entertainment platform strategy previously employed by Sony. The Xbox One name is in itself a full embrace of this mentality with its often used tagline, “games and entertainment are no longer separated”. However, what worked for the Playstation 3 has led to very vocal dissent for the Xbox One, which Sony has been quick to capitalize on. What has resulted is a very interesting sequence of posturing and varying public opinions over time. It is these opinions surrounding the two new consoles that will be further explored in this report. www.infegy.com +1 816-494-1650 [email protected] 4151 N Mulberry Dr., Suite 240, Kansas City, Missouri 64116 PS4 Announcement Perceptions Post Volume from Announcement Sentiment Distribution 7,834,000 23% Gender Distribution 77% Positive Negative Setting the Stage skip to announcement analysis The Playstation 4 was announced at an event on February 20, 2013, nearly three months before Microsoft would unveil its next generation console. The announcement was a techno-driven visual masterpiece of laser lights and stunning game demos played across a panoramic screen that wrapped around the top of the auditorium. The message revolved around the PS4 as a gaming machine with little mention of media or entertainment. Andrew House, President and Group CEO, Sony Computer Entertainment Inc, confidently expounded their vision as being, “consumer-centric, developer-inspired, and characterized by an unwavering commitment to phenomenal play experiences.” Following-up on the message of being developer-inspired, Sony announced the PS4 would utilize the x86 processing architecture, a move that would make it easier to develop games for the platform. This revelation was a big deal and was received with ample applause inside the auditorium. Online, however, the main focus for consumers and pundits were the games. www.infegy.com +1 816-494-1650 [email protected] 4151 N Mulberry Dr., Suite 240, Kansas City, Missouri 64116 PS4 Announcement Perceptions The three most commonly discussed themes directly proceeding the announcement were the games, the controller, and the new system architecture. Games, by far, accounted for the majority of the conversation and were discussed with 78% positivity overall. Watch Dogs, Killzone, and Infamous were the most widely discussed titles. Although receiving lower volume, conversations about the titles Deep Down and Driveclub were discussed with the highest positivity and levels of anticipation. Going strictly by the numbers it would appear that one of the traditionally most popular gaming franchises, FIFA by EA Sports, was neither highly anticipated nor viewed favorably.
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