SONY EYETOY

Jianxiong Guo
Ashley Hegland
Matthew Joffre
Preetham Pillarisetty
September 28,
2005
SONY EYETOY: CASE ANALYSIS
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SONY EYETOY

Background

Sony Computer Entertainment Inc.

Playstation 2
Video Game Industry: Hardware Vs. Software
EyeToy History To-Date

SONY EYETOY: CASE ANALYSIS

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SONY EYETOY

Problem Statement
Central Problem

What is the optimal marketing strategy that Sony

Computer Entertainment Europe (SCEE) should pursu
enhance the competitiveness of the Sony PlayStation
grow the Sony brand?
Symptoms
Inadequate initial marketing strategy for the Sony EyeToy
Lack of brand synergy between the Sony Eye Toy and the Sony PlayStation
Groove sales cause concern that product may be a fad and that Sony will
not be able to sustain the initial success of the technology
Uncertain adoption by the complementary network of 3rd party game
developers
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SONY EYETOY

Situational Analysis
Internal Analysis

Product

Price

Weaknesses

Place

Expertise in technical
development

Can be sold
profitably at a price
consistent with other
gaming offerings

Experience marketing
to hard-core gamers

Internal funding
methodology designed
for software

Margin constraints on
bundling camera with
software

Weak groove sales hurt

future efforts with retailers

Target customer not

well defined

Product needs to be seen

/ tried / buzzed

No experience
positioning to broader
market

First to market

Strengths

Promotion

Reliant on success of
PlayStation console

Sony & PlayStations

brand & $$

External Analysis
Social
Opportuniti
es
Threats

Technologic
Potential
al
to leverage

resources and know-how

from other Sony divisions
Camera technologies
are rapidly improving
Technology will likely
be imitated by
competitors if
successful

Economic
May appeal to broader
market than other offerings
Royalties from 3rd party
developers
3rd party developers
not 100% sold on
development

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Political

SONY EYETOY

Situational Analysis Cont.

Internal Analysis

A Competitive But Profitable Market:

Power of buyers - High

Threat of Substitutes High

Power of suppliers - Low

Rivalry Among Competitors - High

Barriers to entry - High

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Strategic Orientation Modes

Product Ecosystem Perspective

1. User Network gamers

2. Complementary Network 3rd party

3. Producer Network - Sony

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Alternative 1

Cost-leadership mass market penetration strategy, using pipeline products.

Strengths

Weaknesses

EyeToy technology in a
most effectively way

Heavy

Extend

product life cycle

Extend

technology platform

Risks, lack of experience of

marketing to the mass market

Protect

costs of product-linedevelopments

Substitute new technology

emerging
Jeopardize Sony brand
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Alternative 2

Abandon all Sony Pipeline offerings except EyeToy Play 2 and focus on mass
market with third party software.

Strengths
Greater

Weaknesses

mass market appeal in the

short-run
Could create more solid
complementary network

Over time may lead to less

competent game designing team
and game market sensitivity.
Could decrease synergy
between between EyeToy and
PlayStation in the mid to long
term.

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Alternative 3

Initially focus on integrated high-profile game leadership & alliance strategies in

the hard core gamer segment and use selected publishers, such as Electronic
Arts, to market to both the mass market and hard core gamers.

Strengths

Weaknesses

Targets

Does

not have the potential that

alternative 1 does to enhance the life
cycle of the technology

Pricing and bundling issues can be

resolved in partnership with 3rd party
developers.

Less mass market penetration

potential than alternative 2

most sophisticated players

and biggest spenders first.

Leverages core competence in R&D

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Alternative Analysis
Alternative A

Criteria

Weight

Alternative B

Alternative C

Rating (13)

Score

Rating (13)

Score

Rating (13)

Score

Profit

Brand Equity (Eye Toy +

Playstation)

Synergy within Sony

Market Penetration

Cost Minimization

Risk Minimization

TOTALS

11

17

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20

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Recommendation

Alternative 3:
Focus on integrated high-profile game leadership & alliance
strategies in the hard-core gamer segment and use selected
publishers, such as Electronic Arts, to market to both the
mass market and hard core gamers

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Implementation

Re-design marketing strategy to initially target the hard core gamer market (mass
market to broad and costly to target now)
Larger than average budget must be allotted to initial campaign (manage the internal
funding issue)
When hard core-focused games are in the pipeline, invest the majority of allocated
marketing budget toward marketing communications in gaming magazines, high-profile
sports events, gaming conferences, internet marketing, and television commercials
Year1: Essentially a massive one-time effort to create the critical mass required to tip
the demand for the EyeToy.
Year 2+: Spending on communications and promotions can be reduced significantly:
Natural word-of-mouth among customers initiates (buzz) and;
3rd party games developers advertising and joint advertising.

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