Sony EyeToy – Case Solution

Analysis of the Launching of Sony EyeToy

1. Market: Marketing of video-game consoles comprised of Software (developing video games and programs that users can run on a video game console) and Hardware (Creating accessories and gadgets with the purpose of improving the gaming experience). The video game industry represents a $30 billion-a-year market.
2. Competition: Microsoft and Nintendo have escalated quickly, gaining market share in the last few years and forcing Sony to produce better quality game consoles and innovative games for its users.
3. Customer: The user’s age falls mainly between late teens to mid-twenties. The EyeToy targeted a broader clientele, including young children and adults. This new group of users does not consider gaming the main activity on a daily basis, resulting in not buying Play Station products and not meeting sales expectations of the EyeToy Groove. On the other hand, core customers might not feel attracted to EyeToy since its games did not represent a challenge and were meant for hard-core gaming.
4. Sales: 2.5 million units of the EyeToy Play were shipped to be sold by retailers. It was a total success for Sony because it sold 10 times more units than originally planned. After launching the EyeToy Groove, the product showed disappointing numbers by selling only 100,000 units in Europe. After not meeting sales expectations, SCEE reconsidered launching the product in Japan and the U.S. The reason for the low sales of the EyeToy Groove is explained by its cost of purchase and the unattractive games offered. The lack of interest in this product represented a threat to the company’s profitability, and the product does not show positive signs of future sales growth.
5. Promotion: Sampling-driven marketing campaign that demanded a high amount of resources. SCEE spent $5 million in the marketing campaign for EyeToy Play, which was a large amount of money invested by the company considering other costs incurred in the product, such as research and development and manufacturing expenses. The marketing campaign included but was not limited to, press events, EyeToy Demos, TV advertisements, online marketing, and merchandise giveaways. Promotion of the product took place in shopping centers, bars, restaurants, music festivals, and beaches.
6. Place: The main markets were Europe, Japan, and the United States. Sony sells its manufactured products to retailers that ultimately sell to the consumer. SCEE launched products in Europe before expanding globally, which could be unbeneficial because the EyeToy Groove could have been better appreciated in other markets due to cultural differences. For instance, U.S.A. families normally enjoy playing group games and value activities that bring groups together, as could have been the case with EyeToy Groove.
7. Price: The PS2 consoled was introduced at €480/unit but had to lower the price to €199 in 2003 to remain competitive against Nintendo’s low pricing strategies. The EyeToy Play was available to the public for €60, and the EyeToy Groove had a cost of €40. Pricing for consoles is not customer-sensitive, but the price of accessories is an important point of consideration. To get the EyeToy Groove, a previous purchase of the PS2 and the camera has to be made, adding up to a rejected sum of money by the users. This might have been the turn-down point for the EyeToy Groove.
8. Product: The EyeToy is the latest technology added to the video game experience offered by SCEE, but it does not represent an essential item in the product line. Its launch shows the potential of a new niche for the non-gamers market, but SCEE’s strategic objectives are focused on hardcore gaming.

Conclusions:

The objective of Sony with the EyeToy is to improve the gaming experience of PS2 users and strengthen the position of the brand in the gaming industry, but despite EyeToy’s success, the product does not represent a major source of income for SCEE which gives them the flexibility to decide whether to continue or cut its production.

Innovation was the key component for the successful introduction of the new technology, EyeToy, and its simplicity caught the attention of a broader consumer market than the one normally targeted by SCEE.

Unfortunately for EyeToy Groove, budgets for marketing were limited, and developing new games could take up to 3 years, which is a very long time considering that users demand new games very quickly. Also, The EyeToy currently does not offer complex or exciting movement games, making it not as attractive for most PS2 hard-core gamers who far outnumber non-hardcore gamers.

The video game industry continues to show strong signs of growth and opportunities. Finding a niche in the non-gamers market could sound tempting, but NCEE is better off focusing on its current market.

This is because its direct competitors have been gaining market share in the last couple of years, and NCEE could fight to earn that lost market back now that the software industry has been steadily increasing.

Recommendations of alternatives for EyeToy

After the analysis above, it is recommended that the resources implemented on EyeToy be better used on other projects to improve the PS2 experience. Considering the decline in units sold in the last couple of years, trying to regain popularity for PS2 in the global markets is a priority.

Also, focusing on software development is a great strategy to follow, given that it has been a very lucrative business for SCEE. It is recommended to withdraw and put EyeToy on standby from the market and focus on some of the following alternatives,

• Working on speeding up game development to supply the demand for new games, a problem with EyeToy was users getting bored with the games offered.
• Pushing to enhance performance on video games to obtain higher graphics quality and resolution, reduce errors of codes in an attempt to catch players to play for longer periods of time.
• Add value by making long-lasting consoles with a better design and easy to transport.
• Balancing video games that are all platform compatible and trendy PS2-only games to increase the popularity of the Play Station. The EyeToy could be adapted to operate all platforms and as an attempt to sell off leftover inventories.
• Conduct research on future trends to create games that will have more interest from the users. For example, create games related to highly expected sports events, movies, or characters.