Wii VS PS3 A presentation on the most updated TV game players

Agenda Introduction of the Products Pricing strategies used by both producers Strengths and weaknesses of 2 products Recommendation and Conclusion

Comparison between Wii and PS3 WiiPS3 ProducerNintendoSony Size55.4 mm (W) x 44 mm (H) x mm (D) (size of 3 standard DVD cases) 325 mm (W) x 98 mm (H) x 274 mm (D) RemoteWiimote + (Nunchuk / classical controller) Wireless Controller Backward compatibility Nintendo GameCube Most of the PlayStation and PlayStation 2 games

Comparison between Wii and PS3 (Con’t) WiiPS3 Disc Driver-Slot-loading disc drive (for Wii Optical Discs & GameCube Optical Discs) -Blu-ray disc drive** (for Blu-ray discs, DVDs, CDs and SACDs) Built-in Memory512 MB20GB or 60GB Other storageSD Card (Up to 2GB) Memory Stick / SD / Compact Flash (60GB version only) ConnectivityWIFI** Bluetooth WIFI Bluetooth

Comparison between Wii and PS3 (Con’t) WiiPS3 OutputUp to 480p(NTSC) or 576p (PAL/SECAM), will work with any TV or projector Up to 1080p ->HDMI Output Number of Product Versions 1 (But Planning to develop another version with DVD-player) 2 (Basic-20GB Premium-60GB) Target CustomersFamilies (Including girls and elderlies) Hard-core (less than 10% of the market) 1 st selling Date and Price November 19, 2006 USD $ November 11, 2006 Basic-US$499 Premium-US$599

Video Watching

Pricing Strategies of PS3 & Wii

Price

Price below cost(PS3) Sony loses: 20GB model : $ GB model : $ (According to Electronics supply chain researcher iSuppli) Pricing significantly below cost Is it cheap enough to establish a critical mass of installed base?

Public’s reaction(PS3) High launch price ->much criticism from analysts and developers Ubisoft’s president has warned “Sony must be prepared to drop the price point of the PS3 in 2007.” Highest price among the three less expensive -> Significantly more expensive than Microsoft's Xbox 360 -> less expensive than PS3 EVEN bought alongside external HD-DVD drive

Price strategy Sony Computer Entertainment head Ken Kutaragi said “We don't say it's a game console, the PS3 is clearly a computer unlike PlayStations so far." (According to Japanese computer magazine PC Watch) PS3 as a computer platform - with new features and capabilities on a constant basis Problem with computer strategy: - prices do not come down

Pricing strategy General practice - not upgrading to the latest technology - prices fall significantly over time Sony’s strategy: - continuous upgrading in processing power and capability - no great fall in price

Sony is pushing “the envelope of innovation” - Newness of the technology -> console expensive to assemble -> components in short supply Problem: Do consumers see it as a computer? Are they willing to pay the price of a computer for PS3? Ans: customer’s value on processing power, capability and graphic

Two-sided market for PS3 Expensive Hardware & software A small base of consoles Software houses not willing to write games for the system High Manufacturing costs

Price (Wii)

Wii’s pricing strategy Cheapest among the three High hope to a much larger installed base -> new game players -> current game players Cheaper game price

Two-sided market for Wii Cheap Hardware & Hit games A larger base of consoles More software houses More games Better games Drive down Manufacturing costs

PS3 is coming!!! Why PS3? –Expensive –Limited games What are PS3’s strengths? Is it very attractive to you?

Strength of PS3 PS3 is in possession of advanced technology: -> amazing Graphic and Processing power -> so-called “Engineering masterpiece”

Strength of PS3 Price below Cost! Price below Cost! PROMOTION!!! Sony is aimed to create a profitable cycle in long-run: More PS3 sales = More games sales = More profit IF it is true. HD-DVD (Blu-Ray too) is pricing at about $1000. PS3 is pricing at $599. Like PS2, you use play station to watch DVD.

Strength of PS3 Who is going to purchase PS3? Hardcore Customers The answer is: Hardcore Customers! PS3 is highly focusing on their Hardcore: Sony could be familiar with customers’ taste Game can be very very interesting and real with no need to worry about complicated controls, because customers are experts!

Strength of PS3 Could create a high profitable cycle from games sales High technology supports for their games Graphic and processing advancement Professional games and players

Will PS3 be successful in the future? Not Sure! PS3 has its obvious drawbacks.

Weakness of PS3 High market price: “The high version price of PS3 is $599!!!” prices of PS and PS2 :$350 Xbox 360: $399 (high version) The cost of PS3 is extremely high. So, why is PS3 so expensive?

Weakness of PS3 According to iSuppli most costly components: Misc. Com&Manu: $148 Reallty synthesizer: $129 Blu-Ray drive: $125 CELL CPU: $89 The cost of Xbox360 = $715 The cost of PS3 = $840 Difference between Xbox360 and PS3: Blu-Ray drive

Weakness of PS3 QUESTION: –Is Blu-Ray REALLY REALLY worthy producing? –Do customers really need Blu-Ray? –Do customers really want Blu-Ray?

Weakness of PS3 Need or Want Need or Want? What kind of benefits can Blu-Ray drive bring to us? 1, High-quality of the picture 2, Huge storage space 3, Fast processing speed What kind of games benefit most from the Blu- Ray drive? 1, RPG/ARPG game (Role-playing Game) 2, First-personal visual angle game

Final Fantasy XIII RPG

Devil May Cry 4 First personal

Weakness of PS3 Do a higher-quality of picture mean a better game? Do you feel uncomfortable while using several CDs for FF10? Do you want to buy an expensive PS3 for playing expensive games?

Weakness of PS3 There is a very important thing to mention: Human’s eyes are not as sensitive as ears! To achieve a obvious advanced graphic quality: You have to buy a HDTV!!! Anyway, the cost related to purchase of PS3 is really too high. Don’t forget, Microsoft is selling Xbox360 for $399.

Weakness of PS3 Even the price is high, Sony is losing money from every product it sells. –PS3 mainly focuses on Hardcore customer, which is only equal to 10% of the total market Because PS3 is for Hardcore, its control will be very complicated and hard to master. Then it will be not approachable for new players.

Resistance: Fall of Man™

Weakness of PS3 According to a survey made by Yahoo Japan: –only 7.74% Japanese customers are willing to buy PS3, –however more than 70% of them claim that they won’t buy it or buy it later when PS3 is making a discount. Can Sony succeed in selling PS3 for around 4 million? CEO feels a little sad, so he changed the numbers into 2.3 million.

Weakness of PS3 more than 200 games for PS2 is not compatible with PS3, how do the hardcore customers deal with their PS2’s games? Sony is not afraid of that they will throw PS2’s game away, but they get fear of that they won’t buy PS3 finally! Now, games for PS3 is very limited, and developing new games need more money and long time.

Weakness of PS3 Even existed games, are there anything else attractive for players besides high graphic quality? ->Still, the essential question is: Is Blu-Ray really wanted by consumers? -> PS2 : the sale of PS2 with DVD function (double media pattern) ->pretty successful and marketable. ->because DVD was already popular at that time -> PS3: Blu-Ray (single medium pattern) -> was not widely accepted by consumers -> still a new concept PS3’s revolution is RISKY.PS3’s revolution is RISKY.

Weakness of PS3 High cost, high price Limited market share Venturesome single media pattern strategy Graphic problem Games’ compatibility and variety

Who is Sony’s competitor? Microsoft/ Nintendo PS/Xbox: target consumers are same “Two dogs fight for a hone, and a third runs away with it.” -----A smart strategy made by Nintendo

Strength of Wii Wii : $249.99!!! Nintendo makes a profit when every Wii it sells CompUSA lists its cost for the Wii at $ While Nintendo’s actual cost is likely closed to $200.

Strength of Wii PS3 & Xbox360: fighting for hardcore’s market shares Wii: focus on different target consumers: Senior citizens, girls, kids, people over 25 years old Hardcore: less than 10% of the market!!! Also, Hardcore can play Wii for fun!!! MS Peter Moore, the vice-president of MS, says: people will buy two consoles, one is Xbox360, the other one is Wii. SCE Phil Harrison, the president of SCE, also says: people will buy two consoles, one is PS3, the other one is Wii.

Strength of Wii Because of its own target consumers, Wii’s characteristics are: –Cheap consoles and games! –Easy to play! –Funny games! not complicated and no need for high graphic quality –A brand new experience of playing game!

Strength of Wii Low cost Simple to control Large demand New experience of playing games

Suggestions to PS3 Backward compatibility should be enhancedBackward compatibility should be enhanced -> only few PS2’s games are compatible to PS3 -> problems had been found when using PS3 to play famous games like Final Fantasy, Tekken 5 of PS2 -> Special controllers like the guitar controller of Guitar Hero of PS2 is not compatible for PS3 If PS2’s games are compatible to PS3, then there will be more choices of games. -> this may boost the sale of PS3

Focus on Players’ experiences than just quality of visualFocus on Players’ experiences than just quality of visual -> HDTV is not yet popular -> player nowadays concern the amusements of the games than the visual excitement If Sony can develop games for leisure players (like girls or families), it can have higher market shares.

Product differentiationProduct differentiation -> There are only 2 versions of PS3 now -> 20GB Basic & 60GB Premium If SONY can develop more versions like different color / slimmer console which are limited versions (just like PS2), then more customers can be attracted by these special product.

Conclusion Profit Margin -> PS3: High price Price below cost Market share < Wii High licensing price for game developers -> less game will be developed -> less network effect -> Wii: Low price as low cost Higher market share lower licensing price for game developers

Prediction of Winner:

References

Q&A