Tese - João Pereira PDF

BRAND REPUTATION AND CRISIS MANAGEMENT:
PLAYSTATION NETWORK CASE STUDY
João Pedro Lebre Pereira
Case Study
Master in Marketing
Supervisor:
Prof. Assistente Convidado Luís Martins
Abril 2012
Acknowledgements
I would like to thank Prof. Luís Martins for accepting to supervise this work
and for doing it with competence and always with a good mood. His suggestions,
feedback and availability to help were all very valuable.
I would also like to thank my family and friends for all the support and
encouragement they gave me during the development of this work.
Playstation Network Case Study
Table of Contents
Glossary ........................................................................................................................ I
Tables Index .............................................................................................................. IV
Charts Index ................................................................................................................ V
Figures Index ............................................................................................................. VI
Annexes Index .......................................................................................................... VII
!
1.#Sumário#............................................................................................................................#1!
Abstract#.........................................................................................................................................#2!
2.#Case#Study#........................................................................................................................#3!
2.1#Problem#Presentation#.......................................................................................................#3!
2.2#Context#....................................................................................................................................#4!
2.2.1!Video!Games!Market!...................................................................................................................!4!
2.2.2!Consumers!......................................................................................................................................!8!
2.2.2.1!Consumers!Reactions!to!the!Playstation!Network!Crisis!.................................................!12!
2.2.3!Sony!..................................................................................................................................................!13!
2.2.4!Competitors!..................................................................................................................................!17!
2.2.4.1!Microsoft!................................................................................................................................................!17!
2.2.4.2!Nintendo!................................................................................................................................................!19!
2.2.5!Playstation!Network!Breach!.................................................................................................!22!
2.3#Questions#.............................................................................................................................#31!
2.4#Annexes#................................................................................................................................#33!
3.#Pedagogical#Note#........................................................................................................#51!
3.1#Case#Study#Target#Audience#..........................................................................................#51!
3.2#Pedagogical#Objectives#....................................................................................................#51!
3.3#Literature#Review#.............................................................................................................#52!
3.3.1!Marketing!Communications!..................................................................................................!52!
3.3.2!Public!Relations!..........................................................................................................................!54!
3.3.3!Brand!Management!...................................................................................................................!56!
3.3.4!Corporate!and!Brand!Reputation!........................................................................................!59!
3.3.5!Crisis!Management!....................................................................................................................!62!
3.3.6!Online!Privacy!and!Security!..................................................................................................!65!
3.4#Analysis#Tools#....................................................................................................................#69!
3.5#Animation#Plan#..................................................................................................................#71!
3.6#Animation#Questions#.......................................................................................................#72!
3.7#Case#Study#Resolution#.....................................................................................................#73!
3.8#Resolution#Slides#...............................................................................................................#90!
4.#Case#Study#TakeMAway#for#Management#............................................................#94!
5.#Bibliography#................................................................................................................#96!
Glossary
Augmented Reality – Live, direct or indirect, view of a physical, real-world

environment whose elements are augmented by computer-generated sensory input
such as sound, video, graphics or GPS data. In video games, it is generally used to
play games that interact with the surrounding environment.
Brick-and-mortar – Physical location for a business or organization, such as a store.
Cloud gaming – Type of online gaming that allows direct and on-demand streaming
of games onto a computer, similar to video on demand, through the use of a thin client,
in which the actual game is stored on the operator's or game company's server and is
streamed directly to computers accessing the server through the client.
Denial-of-service attack – An attack to attempt to make a computer resource

unavailable to its intended users. For example, taking down a website.
Digital Distribution – Delivery of media content, such as audio, video, software and
video games over online delivery mediums.
DLC – Downloadable content. It includes all extra content that users can download in
order to enhance their gaming experience. It can be free or paid.
E3 – Electronic Entertainment Expo. It is the most important annual event for the
video games industry, organized by the ESA and commonly held at the Los Angeles
Convention Center.
EEDAR – Electronic Entertainment Design and Research. It is a private video game

industry specific market research company.
ESA – Entertainment Software Association. It is is the trade association of the video

game industry in the US.
ESPN – Entertainment and Sports Programming Network. It is and American global

cable television network focusing on sports-related programming including live and
pre-taped event telecasts, sports talk shows, and other original programming.
I
ESRB Rating – Video games rating by the Entertainment Software Rating Board for
US, Canada, and Mexico. The existing ratings are: Early Childhood (3 and over),
Everyone (6 and over), Everyone 10+ (10 and over), Teen (13 and over), Mature (17
and over) and Adults Only (18 and over).
First-party Developer – A developer that is part of a company that manufactures a

video game console and develops exclusively for it. Some first-party developers are
created within the company, while others are acquired.
First-party Software – Software developed by a first-part developer.
Free-to-play – Free-to-play games are games in which the consumer doesn’t have to
pay in order to play the game. These games rely on charging for in-game items and
premium features as well as in-game advertising for their revenue.
GDC – Game Developers Conference. It is an international event focused on video

game developers.
Hardware – General term for an equipment that can be touch or held. In the video
game industry, it refers to the different game consoles available on the market.
Independent Development – Development of video games without the financial

support of a video game publisher, usually by a small team or an individual.
Jailbreaking – Refers to the act of opening up a certain hardware, so that it can run
unauthorized code.
Modding – Slang expression that is derived from the verb “modify”. In the video
game industry, it refers to the act of users modifying video game content. It is
especially popular on video games for PCs.
Motion Gaming – Playing video games using body movements, instead of just
holding a controller and pressing buttons.
Netflix – American provider of on-demand Internet streaming media, such as movies

or TV shows, in the United States, Canada, Latin America, the Caribbean, United
Kingdom and Ireland. It also provides flat rate DVD-by-mail in the United States.
II
PayPal – Global e-commerce business allowing payments and money transfers to be

made through the Internet.
PC – Personal Computer.
PS – Playstation.
PSN – Playstation Network.
PSP – Playstation Portable.
RSP – Retail Selling Price.
Software – Computer programs and applications. In the video games industry, it

refers to the video games to be used on the consoles (hardware).
Software Tie-ratio – It expresses how many games were sold for every console
purchased. In other words, it shows how many games a console owner buys on
average.
Third-party Developer - A third-party developer is a developer that is not part of a

company that manufactures a video game console. Some third-parties publish the
games they develop, while others only develop games to be published under other
companies.
Third-party Software – Software developed by a third-party developer.
Tokyo Games Show – Event held annually in September in Chiba, Japan. It is mainly
focused on the Japanese market.
Twitter – Online social networking and mocroblogging service that enables its users
to send and read text-based posts of up to 140 characters, known as "tweets".
Vudu – Content delivery and media technology company responsible for Vudu-
branded interactive media services and devices. Vudu distributes full-length movies
over the Internet to television in the United States of America.
III
Tables Index
Table 1 – Sony Hardware Overview ............................................................................ 15
Table 2 – Video Game Console Launches ................................................................... 17
Table 3 – Microsoft Hardware Overview .................................................................... 19
Table 4 – Nintendo Hardware Overview ..................................................................... 21
Table 5 – Worldwide Hardware Sales by Year (in Volume) ....................................... 33
Table 6 – US Hardware Sales by Year (in Volume) .................................................... 33
Table 7 – Synthesis Table of Corporate Reputation Related Concepts ....................... 61
IV
Charts Index
Chart 1 – Worldwide Hardware Market Share in Volume (Home Consoles) ............. 34
Chart 2 – US Hardware Market Share in Volume (Home Consoles) .......................... 34
Chart 3 – Worldwide Hardware Market Share in Volume (Handhelds) ..................... 34
Chart 4 – US Hardware Market Share in Volume (Handhelds) .................................. 34
Chart 5 – Worldwide Hardware Market Sales Evolution (Volume)............................ 35
Chart 6 – Worldwide Hardware Market Sales Evolution by Supplier (Volume) ........ 35
Chart 7 – US Hardware Market Sales Evolution (Volume) ........................................ 36
Chart 8 – US Hardware Market Sales Evolution by Supplier ..................................... 36
Chart 9 – Worldwide Software Market Share in Volume (Home Consoles) .............. 37
Chart 10 – US Software Market Share in Volume (Home Consoles) ......................... 37
Chart 11 – Worldwide Software Market Share in Volume (Handhelds) ..................... 37
Chart 12 – US Software Market Share in Volume (Handhelds) .................................. 37
Chart 13 – Worldwide and US Software Tie-Ratio (in Units)..................................... 38
Chart 14 – US Software Sales by Rating (2010) ......................................................... 38
Chart 15 – US Software Sales by Genre (2010) .......................................................... 39
Chart 16 – DLC Purchasers (2009, 2010, 2011) and Reasons For Not Purchasing .... 39
Chart 17 – Sony’s Business Representation ................................................................ 40
V
Figures Index
Figure 1 – Playstation Network Breach Timeline (Part 1) .......................................... 28
Figure 4 – Illustration of Different Types of Gamers .................................................. 40
Figure 5 – Playstation Store Home Page ..................................................................... 44
Figure 6 – Playstation Store Reality Show “The Tester” Page .................................... 44
Figure 7 – Playstation Plus Page .................................................................................. 45
Figure 8 – Specific Game Page .................................................................................... 45
Figure 9 – Playstation 3 Price reduction Ad ................................................................ 46
Figure 10 – Playstation 3 “Make.Believe” Uncharted 2 Ad ........................................ 46
Figure 11 – Playstation 3 “Mushroom Cloud” Ad....................................................... 47
Figure 12 – Playstation 3 Ad with Kevin Buttler ........................................................ 47
Figure 13 – Xbox 360 Price Reduction Ad .................................................................. 48
Figure 14 – Xbox 360 “Evolution” Ad ........................................................................ 48
Figure 15 – Xbox 360 Kinect “Contortionist” Ad ....................................................... 49
Figure 16 – Nintendo 3DS “Less Virtual, More reality” Ad ....................................... 49
Figure 17 – Nintendo Wii “Everybody’s Game” Ad ................................................... 49
Figure 18 – Nintendo Wii “Wii’ll Not Forget” Campaign .......................................... 50
Figure 19 – Synthesis Figure of Literature Review ..................................................... 68
VI
Annexes Index
Annex 1 – Market Data ................................................................................................ 33
Annex 2 – Different Types of Gamers ......................................................................... 40
Annex 3 – Sony’s Business Representation................................................................. 40
Annex 4 – Consumer Survey Regarding Playstation Network Attack ........................ 41
Annex 5 – Playstation Network “Welcome Back” Offer ............................................ 42
Annex 6 – Identity Theft Protection Program Offer .................................................... 43
Annex 7 – Playstation Store Environment ................................................................... 44
Annex 8 – Playstation Communication Examples....................................................... 46
Annex 9 – Xbox Communication Examples ............................................................... 48
Annex 10 – Nintendo Communication Examples ....................................................... 49
VII
1. Sumário
Este trabalho irá ser desenvolvido no contexto de uma tese de mestrado e será
um estudo de caso acerca da Playstation Network, um serviço de jogos multijogadores
online e de entrega de media digital da Sony Computer Entertainment, inc. destinado
a ser usado na consola Playstation 3 e também na Playstation Portable.
Este trabalho irá focar-se nos Estados Unidos da América, pois este é o país
melhor representado na Playstation Network com mais de 30 milhões de utilizadores
(Sony, 2010) e é também o país com mais estudos e informação acerca do mercado
dos videojogos.
A Playstation Network foi lançada no dia 10 de Novembro de 2006, ao mesmo
tempo que a Playstation 3 no Japão. Desde então tem tido sucesso e hoje a rede tem
aproximadamente 130 servidores, 50 programas de software e 77 milhões de
utilizadores registados (Sony, 2011).
Este estudo de caso irá centrar-se no encerramento deste serviço por 26 dias,
desde o dia 20 de Abril de 2011até ao dia 15 de Maio de 2011, devido a um ataque
externo à rede que resultou no comprometimento da informação pessoal dos
utilizadores guardada nos servidores.
Este ataque teve impacto não só nas marcas Sony e Playstation, especialmente
na sua reputação entre os consumidores, mas também na indústria online, já que este
ataque expôs os problemas que podem existir na segurança relativamente à
informação pessoal.
Neste trabalho iremos explicar o problema e o que aconteceu à Playstation
Network. Iremos também olhar para as marcas envolvidas e fazer uma revisão de
literatura sobre relações públicas, gestão de marcas, reputação de marcas, gestão de
crises e privacidade online. Iremos também analisar as ações da Sony em reação a
este evento e como poderia ter gerido esta situação de crise melhor.
Palavras-Chave: relações públicas, reputação, gestão de crise, privacidade online
JEL: M31 – Marketing

JEL: O33 - Technological Change: Choices and Consequences; Diffusion Processes
1
Abstract
This work will be developed in the context of a marketing master thesis and it
will be a Case Study concerning the Playstation Network, an online multiplayer
gaming and digital media delivery service provided by Sony Computer Entertainment,
inc. for use with Sony’s home console, the Playstation 3 and its handheld, the
Playstation Portable.
The scope of this work will be in the United States as it is the best represented
country on the Playstation Network with more than 30 million users (Sony, 2011) and
it is also the country with more studies and information regarding the video games
market.
Playstation Network was launched in November 10, 2006, along with the
Playstation 3 launch in Japan. Since then it has had a great success and today it
consists of approximately 130 servers, 50 software programs and 77 million registered
accounts (Sony, 2011).
This Case Study regards the shutdown of this service for 26 days, from April
20 to May 15 (2011), due to an external attack to the network that resulted in the
compromise of the personal information of the users stored on the servers.
This attack had an impact not only on the Sony and Playstation brands,
particularly in their reputation among consumers, but also on the online business
industry, since this attack brought to light the problem of personal information
security.
In this work, we will explain the problem and what happened to the
Playstation Network. We will also look into all the brands involved and do a literature
review on public relations, brand management, brand reputation, crisis management
and online privacy. We will also analyze what Sony did in reaction to this event and
how it could have better managed this crisis situation.
Keywords: public relations, corporate reputation, crisis management, online privacy
JEL: M31 – Marketing

JEL: O33 - Technological Change: Choices and Consequences; Diffusion Processes
2
2. Case Study
2.1 Problem Presentation
The Playstation Network, Sony’s platform on Playstation 3 for online gaming

and communications, has always been the pride of Playstation 3 gamers and
enthusiasts alike. The reason was that, unlike its main competitors, this network
offered a very complete service for free. Its users can play online games, access a
variety of contents and communicate with friends.
However, on April 20, 2011, the network was shutdown by Sony, citing
technical issues. Later on it was revealed that the network had been hacked and
information of more than 70 million users had been obtained. This meant that
unauthorized people had now the name, address (city, state, zip), country, e-mail
address, birthdate, Playstation Network login and password and possibly purchase
history, billing address and credit card information of more than 77 million users
across 59 countries.
This obviously created a great challenge for Sony and Playstation, not only
regarding the security of the platform but also in managing the brand reputation of
Sony and Playstation in a crisis situation.
Sony’s actions before and after the network shutdown were, clearly, not
enough for consumers. Sony acted like a very big corporation trying to protect their
business and its first error was removing a feature from the videogame console and
then suing and attacking hackers that were considered heroes to some, as they were
responsible for opening up the platform. Before the crisis, Sony acted only thinking
about its business but not about its consumers, possibly damaging their reputation and
losing the consumers’ trust in the process.
This network attack is estimated to have cost Sony $171.1 million (Sony,
2011). This along with the Japanese earthquake with an estimated cost of $1.83
billion (Sony, 2011) and the decrease in sales of televisions and other products has
made 2011 a very difficult year for Sony.
3
2.2 Context
2.2.1 Video Games Market
Sony Corporation is present on the market of manufacturing and selling of

electronics for the consumer and professionals, being one of the top players in this
market. This market is a very competitive one, constituted by large corporations but
also by small companies that bring innovation to the market. This market requires a
very high investment in R&D and products have a short life cycle. New consoles are
introduced in about every 5 years to 6 years.
The Playstation brand, specifically, is in the video game hardware and
software business. It operates on the videogame industry, which is involved with the
development, marketing and sales of video games. The global game market revenue is
expected to be $65 billion on 2011, with the retail software revenue being $29,5
billion and the online revenue being $18 billion (DFC Intelligence, 2011).
In the US consumers spent $25,1 billion on the games industry in 2010.
Consumers spent 63% of the $25,1 billion on hardware, 25% on content and 11,71%
on accessories (NPD Group, 2011).
Digital distribution is becoming more important in this market, as showed by
its growth from 2009 to 2010. In 2009, physical sales represented 80% of the total
software sales, while digital sales represented 20%. In 2010, digital sales represent
24% and physical sales 76%. This number is expected to grow in the future (NPD
Group, 2011).
According to Ben Sawyer (2005), the game industry value chain is constituted
by 6 layers:
1. Capital and publishing layer: Pays for the development of new titles
and seeks return through licensing fees.
2. Product and talent layer: Developers, designers and artists who
develop the video games independently or part of developing teams.
3. Production and tools layer: Production tools, middleware and game
engines used in the production of video games.
4. Distribution layer: Generates and markets game catalogs for retail
and online distribution.
4
5. Hardware or software platform layer: Constituted by the providers

of the platforms in which the games are played. These platforms can be
console-based, accessed through online media or accessed through
mobile phones.
6. End-users layer: Gamers who buy and play the games.
Although the videogame industry includes personal computers game

development and also online gaming through platforms such as flash or java, the most
significant part of this industry is the console market. There are 3 main players on this
market: Sony (Playstation), Microsoft (Xbox) and Nintendo (Wii), making it a very
competitive market as these players are always fighting for market share, usually,
through price reductions (Figure 9, Annex 8 and Figure 13, Annex 9) and mass
marketing communications.
In the video game market, one of the most relevant indicators of performance
is the installed user base. This means that the hardware will attract more developers
and thus, more and better software and the company will be able to push its services
to more users, while also benefiting from licensing fees. Keeping the consumer using
the same hardware is therefore crucial for the success and profitability of the business.
As we can see by Chart 1 (Annex 1), the Nintendo Wii is the worldwide
market leader, with 43% market share, while the Xbox 360 and Playstation 3 are very
close with nearly a third of the market. This is understandable as the Xbox 360 and
Playstation 3 have very similar target markets, while the Wii has a broader one, since
it offers experiences for everyone, even if they never have played on a game console.
In the US market (Chart 2, Annex 1), the Wii maintains the lead over its
competitors with a very similar market share. However, the Playstation 3 has now less
than a quarter of the market (21,7%), while the Xbox 360 has 36,1%. This means that
the Playstation 3 is stronger in Europe and Japan, and weaker in the US. The Xbox
360 is very strong in the US, weaker in Europe and very week in Japan, where it
could never establish itself.
Although sales do not, necessarily, represent the user base, these numbers
mean that Sony has a weaker user base in the US than its most direct competitor,
Microsoft’s Xbox 360, even though the US is the most represented country in the
Playstation Network.
5
In the handheld market Nintendo maintains the market leadership, both

globally (Chart 3, Annex 1) and in the US (Chart 4, Annex 1), with its Nintendo DS
console. As with the home consoles, Sony’s handheld is also weaker in the US than it
is globally.
As for the sales evolution in the US market (Chart 7, Annex 1), we can see a
steady decline in sales for the Nintendo Wii (market leader), from 2008 to 2011. This
may be because the user base is reaching its peak or because the software catalog has
been getting thinner each year. Also, Nintendo has already announced a new home
console for 2012, so some potential consumers may be waiting for its release. The
Xbox 360 showed a slight decline from 2008 to 2009, and a big increase to 2010, the
year when a smaller version of the console was released along with the motion
gaming accessory Kinect. It continued its momentum in 2011, with a slight increase.
As for the Playstation 3, its sales have been somewhat stable throughout the years,
showing slight increases as the price went down. In 2011 there was a very slight
decrease in sales when compared to 2010.
Both handhelds show reductions in sales in the considered time period, with
the PSP being the most stable one, but also with a significant decrease in sales. The
big drop in sales in 2011 for the Nintendo DS could be due to the launch of the
Nintendo 3DS in March of the same year.
Chart 5 (Annex 1) shows that the worldwide evolution of hardware sales was
similar to the US sales evolution, with the exception that the Playstation 3 and Xbox
360 show less growth in sales volume during the period of time considered.
As we can see on Chart 6 (Annex 1), the sales volume of the total market
worldwide is decreasing, as are the total sales of the US market (Chart 8, Annex 1).
This is understandable because when the installed user base reaches a certain point,
sales, usually, decrease. In the US, Nintendo is the supplier that shows the biggest
drop from 2009 to 2011. Sony had stable sales during this 4-year period, with a very
slight decrease. Microsoft shows a slight increase in 2010 and 2011, showing higher
sales than Sony in these two years (Chart 8, Annex 1). This does not happen
worldwide where Sony shows higher sales from 2008 to 2011 (Chart 6, Annex 1).
As for software sales, Charts 9 and 10 (Annex 1), show that Nintendo Wii is
the market leader worldwide and in the US with about 41%. After the Wii, comes the
Xbox 360 with 32% of software market share worldwide and 36,9% in the US. Sony’s
console, Playstation 3 is in third place with 27,2% worldwide and 22,5% in the US.
6
Nintendo dominates the handheld market with a market share of 73,6%

worldwide and 76,9% in the US (Chart 11 and 12, Annex 1).
We can, therefore, conclude that higher hardware sales will lead to higher
software sales, as the hardware market share and software market share (in volume) of
the players are similar.
Analyzing the software tie-ratio (Chart 13, Annex 1), we can verify that US
consumers buy on average more software for their consoles than the worldwide ones.
In the US, the Playstation 3 has the highest tie-ratio with 10,53 units, followed
by the Xbox 360 with 10,41 and then by the Nintendo Wii with 9,83. Worldwide, the
Xbox 360 has the highest with 9,39, followed by the Playstation 3 with 8,40.
Nintendo’s home console has the lowest with 8,14.
The handheld consoles show a significantly lower tie-ratio than the home
consoles, meaning that consumers buy less software for portable consoles than they
do for home consoles. Nintendo’s handheld, the Nintendo DS shows the highest
software tie-ratio in both the US market and worldwide.
The video game industry has been experiencing some trends such as:
• Motion gaming – In an effort to broaden the target market and make

gaming a healthier hobby, every player in the market has introduced
motion gaming to their consoles. Nintendo was the first with the Wii
console, followed by Playstation with the Move controller and then
Xbox with Kinect.
• User creation – Developers are giving more importance to user’s
creativity in games. While PCs are the most significant platform when
it comes to modding, several games have been introduced in consoles
that allow some level of creation from the player, such as
LittleBigPlannet or Modnation Racers. Some users even like to
develop their own games and application for consoles. This is called
homebrew and it is one of the reasons hackers try to open game
consoles to be able to execute unauthorized code.
• Digital distribution – Digital distribution platforms such as Steam for
the PC have opened the way for other digital stores. The number of
7
gamers buying digital is increasing each year and should become the
primary method of buying games in the future.
• Cloud gaming – There have recently been launched services like
Onlive that allow players to play and purchase video games without
the need to download them. This means that there is no delay between
the purchase and playing. Also, the games can then be played on a
variety of devices. The consumer can choose to play the game on a TV,
on its computer, on its tablet or on its phone.
• Independent development – There has also been a rise of independent
developers. These developers are constituted by small teams without
financial support of a video game publisher, who, usually, develop
innovative games destined for digital distribution.
• Free-to-play – Free-to-play games are games in which the consumer
doesn’t have to pay in order to play the game. This means that these
games rely on charging for in-game items and premium features as
well as in-game advertising for their revenue. These types of games
have been growing in popularity because of social networks, such as
Facebook, distribution platforms like the App Store. Steam also has a
wide variety of free-to-play games, while Playstation Network only has
one game: DC Universe Online, which has found success in this
business model.
2.2.2 Consumers
Consumers tend to choose the hardware based on price, functionality, platform

services and the available software library.
According to ESA, in 2011, 72% of American households played videogames
and the average game player age was 37 years old. It is estimated that 18% of gamers
are under 18 years old, 53% are between 18 and 49 years, while 29% have more than
50 years. As for gender, 58% are male and 42% female in the US.
It is also important to note the average age of the most frequent video game
purchaser is 41. Statistics show that of the most frequent game purchasers, 52% are
male and 48% female. When the consumer is bellow the age of 18, 93% of the time a
8
parent is present at the time of purchase of a video game and 86% of children ask for
their parents’ permission before buying a game. About 64% of fathers believe that
games are a positive part of their children’s lives. The majority of fathers (59%) also
believe that video games provide more physical activity now than 5 years ago. A third
(33%) of gamers say that playing video games is their favorite entertainment activity
and 55% play their games on phones or other handheld devices (ESA, 2011).
Video game playing is also becoming increasingly a social experience, be it
online or offline. The number of gamers that play video games with others in person
has increased from 59% in 2008 to 65% in 2011. Also, 62% of gamers play online
and 17% pay for it (ESA, 2011).
It is also reported that 51% of console owners bought DLC (Downloadable
Content) in 2011. This has represented a big increase from 2009 (34%) and 2010
(40%). The most evoked reasons for not buying DLC are privacy concerns, no return
police and expensive price (Chart 16, Annex 1).
Consumers in US buy more games rated Everyone (44%), followed by Mature
(24%), then Teen (20%). Games with the Everyone 10+ have the lowest sales (12%)
(Chart 14, Annex 1).
As for game genres, action games, sports games and shooters seem to be those
favored by consumers (Chart 15, Annex 1).
Regarding the consumers in this market, we can also consider two big distinct
groups of consumers, the hardcore gamers and the casual gamers (Annex 2).
• Hardcore gamers prefer long and intricate games with great single
player content and more replay value, feel the need to complete
everything and are always fighting for the best scores. They value the
hardware capabilities, the technology behind the software and online
play so that they can prove their worth. These type of gamers are more
likely to have more than one system and buy more games, as they like
to try varied types of games and the more there is to complete the
better. They are also more likely to fall for the hype created by the
marketing campaigns of the games before they are launched. In fact,
“hardcore” games tend to sell much more units on their first month but
then drop sharply. Hardcore gamers are willing to spend more money
on gaming content, be it higher priced games, paid additional
9
downloadable content or collector editions. On the other hand they

tend to not like as much big innovations in the industry, such as the
motion controls. In order to be successful in targeting hardcore gamers,
video game companies have to ensure a steady release of first and third
party high quality titles, have variety in their game catalog, create
additional content for the games to extend their lyfe cycle and create
buzz through marketing communications.
• Casual Gamers, on the other hand, looks for games that are easy to
pick up play and provide instant fun for a few moments. They like
simple game controls, storylines and multiplayer experiences in person
or online. Most likely they own only one system and do not buy as
much games as the hardcore gamer. Casual gamer value much more
the functional innovation that makes the games easier to play and
understand. Casual gamers are also more likely to be loyal to a certain
console’s brand if they are having a positive experience with the
product. To satisfy these gamers, it is important to have a big variety of
games that are easy to play and have shorter single player experiences,
along with a strong multiplayer component.
Since game consoles are relatively expensive products the consumers’ buying
process will be more complex, similar to other costly electronic products, such as TVs
or computers. The buying process has, therefore, 5 stages (OpenLearningWorld):
1. Need Arousal – In this stage the consumer acknowledges a need. In

this case, the consumer will acknowledge that he wants to have a
console or experience a new form of entertainment. This can be due to
advertising, playing in a friend’s house or trying the console at a
retailer’s kiosk.
2. Information Search – The consumer will then gather information
about the products that could satisfy its need. This information may
include the different products’ attributes, qualities of the various
brands, price or information about retailers. When considering the
purchase of a console the information sources for the consumer will
usually be: family and friends who have game consoles,
10
advertisements, retailers’ salesman, video game magazines and sites,

message boards, and also through experimentation.
3. Evaluation Behavior – The consumer will then evaluate the game
console alternatives and choose the one that matches his needs the best,
according to the information gathered in the previous stage.
4. Purchase Decision – After evaluation, the consumer will form a
ranked set of preferences and make a purchase decision that will
include the game console and the retailer, online or brick-and-mortar.
In the case of game console, the purchaser will not always be
consumer. It may be his parents or family, especially if the consumer is
minor of age.
5. Post-purchase feelings – After buying and using the game console the
consumer will either feel satisfied with the purchase or not, depending
if the product exceeded the expectations prior the purchase.
Consumers also look forward to certain industry events, where video game
companies make announcements regarding new hardware and software releases to
both the press and consumers. The most important are:
• E3 (Electronic Entertainment Expo): Annual trade fair for the video

games industry organized by the ESA (Entertainment Software
Association) and commonly held in June at the Los Angeles
Convention Center. It is regarded as the most important event in the
industry. Even though consumers can not attend it, the wide coverage
by the press makes this event the most awaited by video game
enthusiasts. It is where hardware companies and developers make the
big announcements, such as new consoles or big software releases.
• Tokyo Games Show: This event held annually in September in Chiba,
Japan is mainly focused on the Japanese market. However, it used by
developers around the world to showcase software and game-related
hardware. The general public is allowed to attend the last 2 days. This
event is also covered by the press internationally and it is a good event
for consumers to view how the announcements made at E3 have
developed.
11
• GDC (Game Developers Conference): This international event is

focused on video game developers. It is constituted by an expo,
networking events, award shows, tutorials, lectures and roundtables
covering programming, design, production, management and visual
arts.
2.2.2.1 Consumers Reactions to the Playstation Network Crisis
When enquired about the Playstation Network outage (Annex 4), 14% of
consumers said that they no longer trusted Sony or the Playstation Network, while
35% said that their trust was not affected. Almost a quarter (23%) think that they will
be able to trust Sony more in the future as the breach will force them to improve the
security and 28% state they will change the amount of information they share with
Sony. Most consumers (71%) won’t stop using online services because of this event
and 22% think that the attack will have a positive impact on other online services.
Only 7% no longer trust any online service. As for Sony’s response to the security
breach, 57% think it was handled appropriately. Regarding Playstation Network use,
67% say they are very likely to continue using Playstation Network and 64% say it’s
very unlikely that they will change to the Xbox Live service. Only 9% have already
changed to Xbox Live.
We can conclude that the practical impact of the Playstation Network breach is
not as significant as the scale of the crisis would indicate. In fact, almost a quarter of
the inquired think that it will have a positive impact in online services in general. It is
understandable that users will not stop using the Playstation Network because of the
breach since it is a free service and not subscribing it would means that they would
not be able to fully enjoy the software they buy, since it would not be possible to
access any online functionality, be it additional content or online play. Sony’s offers
to Playstation Network users after the breach, such as the “Welcome Back” pack
would also make the termination of the service more difficult for users. Also, to
change to Xbox Live, consumers would need to buy another hardware and more
software, which is too expensive for the average consumer.
12
2.2.3 Sony
Sony is one of the global leaders in the production of electronics. It is also one
of the most valuable brands in the world. It is placed on 35 in the Interbrand best
th
global brands, with a value of $9,9 billion (Interbrand, 2011). This value, however,
has decreased from the previous year by 5% (was placed in 34 in 2010). Apart from
th
consumer products and services, Sony’s business consists of professional, device and
solutions; pictures; music; financial services; and others. Sony’s video game business
is part of consumer products and services, which accounted for about 50% of Sony’s
total business in 2010. The video game business represents about 21% of the total
sales of consumer products and services (Chart 17, Annex 3).
The Playstation brand is one of the few big brands in the video game hardware
industry. It was born when Sony introduced the Playstation console on December 3,
1994. Since then, the Playstation brand has launched three consoles (PS1, PS2 and
PS3), a portable console (PSP), a media center, an online service (Playstation
Network) and several magazines.
It is very strong in the video games market but it has been losing value for its
competitors. The current Playstation console, the Playstation 3 is regarded as the most
technically advanced of the three hardware consoles and is also viewed as the system
with better first-party software development and with the most third-party exclusives.
On the Playstation 3, users can play video games, watch movies on Blu-Ray or
DVD and have access to an online service where they can browse the internet, chat
with friends, play online or access the Netflix movie library among others.
The Playstation 3 had a rough start in the US because of its high RSP of $599,
a set above its competitors’ offerings: $399 for Xbox 360 (Microsoft) and $250 for
the Nintendo Wii. However, with the increase of game development for the platform
and price cuts as well as a relaunch of the system (PS3 Slim), the Playstation 3 is
quickly catching up in sales to its closer competitor, the Xbox 360.
Sony also introduced motion gaming to the Playstation 3 with the Move
controller. Unlike the Xbox 306 Kinect, which uses innovative camera technology to
track movements, the move controller is very similar to the one on the Wii.
Playstation Network is the free online service of the Playstation 3. This service
started simply as a way for gamers to play online, download demos and buy
13
additional content and games (for Playstation 3 and PSP), through the Playstation
Store. Nowadays, in some regions, such as the US, the service has expanded to
include movie purchases and rentals, as well as original content, such as a reality
show (“The Tester”) (Figure 6, Annex 7) and an online magazine (“Qore”).
According to Sony, the Playstation Network was still not bringing any profit
in 2010. Being a free service, the network relies on sales through the Playstation Store
and advertising on its original content to get revenue. In order to increase the
profitability of this service, Sony launched on June, 2010, the service Playstation Plus
(Figure 7, Annex 7). It is a paid service ($49,99/year or $17,99/3 months) that gives
subscribers access to full game trials (1 hour), free selected games from the
Playstation Store, special content, such as avatars and premium themes, discounts on
the Playstation Store, early access to game betas and demos, a subscription to Qore,
automatic updates and cloud storage for games save files.
The Playstation Store navigation is very simple and intuitive. When entering
the store users can see all the available sections of the store as well as featured items
(Figure 5, Annex 7). After clicking the section users will then see all the available
content for that section organized in sub-sections, which makes it easier for
consumers to find the content they want. The store also offers a search function.
Content pages show a description of the content, its price, ESRB rating (only for US)
and user rating. From this page users can rate the content, buy it, preview it or
recommend it to others (Figure 8, Annex 7).
Users can purchase content through the Playstation Store using credit cards or
alternatively, they can use $20 or $50 prepaid cards available on retailers. There is no
other method. The Xbox 360 online service, for example, allows adding funds via
PayPal. According to FADE (Forecasting & Analyzing Digital Entertainment), in
2010, sales of multiplatform titles were lower on the Playstation Store than they are
on Xbox Live (45%/55%). However, during the second half of 2010, the Playstation
Store sales showed a 40% growth as opposed to a 18% growth of Xbox Live sales.
In order to have more exclusive titles available at the Playstation Store, Sony
announced the Pub Fund initiative in 2009. It is a program in which Sony vomits
resources to help independent developers market their games. In the next 3 years,
Sony is expecting to commit $20 million to this initiative. Sony believes that this will
bring to the Playstation Store innovative, different and unique gameplay.
14
The first Playstation 3 communication campaigns were very abstract and

artistic and were mainly trying to cause a big impact on the viewers (Figure 11,
Annex 8). However, the latest communication campaign for the Playstation 3 is based
on its features and its multi-functionality. In the end of the advertisements the tagline
“It only does everything” appears. The campaign has a humorous tone of voice and
the ads mainly detail the features of the console, the video games and they show
people having fun with it. In this campaign, Sony has also created a fictional character
named Kevin Butler (actor Jarry Lambert) (Figure 12, Annex 8). This character
appears has the Director or Vice President of several fictitious departments like the
Director of The Cold Hard Truth or the Director of Rumor Confirmation. It has been
getting a very positive reception from the consumers. Sony has also been using the
tagline “make.believe” when communicating new technological products (Figure 10,
Annex 8).
In February 2012, Sony will launch its new portable console, the Playstation
Vita in the American and European markets. It promises a graphical quality on the
level of the Playstation 3 and it includes a multi-touch touch screen, a touch panel on
the back, a gyroscope, a front camera and a rear camera. It will be available in two
models: Wi-Fi Only and Wi-Fi and 3G (also includes GPS).
15
Table 1
Sony Hardware Overview
Positioning
Console Target
Marketing Objectives Differentiation
Teens or younger. • Extend life cycle of • Extensive game
First-time console the Playstation 2 catalog.
buyers, who aren’t beyond 10 years, • Lightweight.
Playstation willing to spend a big even though it is • Inexpensive.
2 amount of money. technologically
inferior.
Mainly from 15 to 35 • Continue the • Blu-ray reader.

years old. Playstation 2 success. • High graphical
People who look for • Make Blu-Ray the power.
more sophisticated default format for HD • Support for HD and
gaming experiences movies. 3D games and
Playstation and want to use • Push sales of HD movies.
3 different types of compatible • Playstation Network
media. televisions and free service.
content.
• Effort to widen the
target market with the
Move controller.
Initially from 18 to 35 • Get a piece of the • Graphical quality as
year old and handheld market, good as home
consumers who which was only consoles available at
wanted a high quality served by Nintendo. the time.
and versatile portable • Ability to experience
PSP
experience. high quality movies
Now it is mainly and games on the go.
targeted at teens. • Music player.
• Web-browser.
Source: The Author (2012)
16
2.2.4 Competitors
Table 2
Video Game Console Launches
Year Nintendo Sony Microsoft

1994 Playstation 1
1996 Nintendo 64
1998 Gameboy Color
2000 Playstation 2
2001 GameCube Xbox
Gameboy Advance
2004 Nintendo DS
2005 PSP Xbox 360
2006 Nintendo Wii Playstation 3
2011 Nintendo 3DS
2012 Playstation Vita
2.2.4.1 Microsoft
Microsoft is one of the most valuable brands in the world, being in 3rd place on
the Interbrand ranking with a value of almost $60 billion (Interbrand, 2011).
Microsoft entered in the video game market with the Xbox brand in 2001, making it
the last one, as Sony and Nintendo had already launched their consoles. The first
Xbox didn’t have much success, selling only about 24 million units worldwide, as
opposed to, for example, the 150 million units the Playstation 2 sold worldwide until
now (VGChartz, 2011). Because of this the successor to the Xbox, the Xbox 360 was
the first current generation console to be launched (in 2005).
When the Xbox 360 was launched, it was very superior to the consoles
available on the market, as both the Playstation 2 and Nintendo GameCube had been
available for several years and couldn’t compete technologically with the Xbox 360.
17
This, along with a good price assured a good reception of the console from consumers,
especially in North America. In Europe, it also had success, although the brand is
clearly not as strong as Playstation. In Japan, the console is considered a failure, with
only 7,2% of hardware market share (in volume) (VGChartz, 2011), in spite of the
effort made by Microsoft to have exclusive software developed by Japanese
developers.
The Xbox 360 is the most direct competitor to the Playstation 3, since the two
consoles are very close in terms of power and functionality. Also, most of the video
games are released simultaneously to these two platforms. Playstation 3 has a
competitive advantage because of its higher number of exclusive games and superior
technology as it was launched after.
The big aim of Microsoft with its console, it is not only the video game market
itself but also to push content through its device. Through several partnerships,
namely ESPN, Netflix, Vudu or Twitter, the Xbox 360 offers a wide variety of
content. It aims to be the center-stage of the living room.
Regarding the Xbox Live service (Xbox online service), it is viewed by many
gamers as the best one available, especially because of the integration it offers (for
example, users can chat via audio while playing different games). It is, however, the
only one that doesn’t allow online gameplay for free. Prices are $9.99/1 month,
$24.99/3 months and $59.99/12 months. About 50% of all Xbox Live users pay for
the Gold account (Microsoft, 2010), which allows for online gameplay, early access
to game demos, among other things. Even though many users regard it as a good
service, many feel that the Playstation Network offers a similar service for free and
those who do not pay cannot fully enjoy all the features of the video games they buy.
The first Xbox ads, like the “Evolution” ad (Figure 14, Annex 9) were focused
on how the console was a large improvement over the existing consoles on the market.
Lately Xbox communication has been focused on the content the user can access
through Xbox and the Kinect accessory for motion gaming (Figure 15, Annex 9). Ads
usually show a family using Xbox to search and watch movies, and also playing
games without the use of a controller, through Kinect. Xbox also favors product
placement appearing in several movies, such as Transformers and TV Shows, such as
Scrubbs in US.
18
Table 3
Microsoft Hardware Overview
Positioning
Console Target
Mainly from 15 to 35 • Enter the game market • First console to have
years old. People who successfully. HD games and
look for more • Push HD content content.
Xbox
sophisticated gaming through partnerships. • Xbox Live service
360
experiences and want to • Effort to widen the
consume different types target market with
of media. Kinect.
2.2.4.2 Nintendo
Nintendo was founded as a card company in 1889. Since then it has developed
to become Japan’s third most valuable company with a market value of over $85
billion (Reuters, 2007). The brand itself is valued at $7,7 billion, being the 48th most
valuable brand in the world (Interbrand, 2011). Of the three companies, Nintendo is
the only one in which its business consists entirely of video game related products. It
was also one of the first companies to enter the market in 1974.
It is regarded as the most innovative company in the Industry. Nintendo’s
current console, the Nintendo Wii, was the first one to use motion as the primary
means to play games. Since then, both Sony and Microsoft have tried to implement
similar technology in their gaming consoles with limited success. The Nintendo 3DS,
launched on March 2011 (Nintendo’s portable console) was the first video game
device to have a 3D enabled screen that did not require glasses to use.
Nintendo is the current worldwide market leader in both home consoles and
handhelds, having sold almost 90 million units of the Nintendo Wii and 150 million
units of the Nintendo DS worldwide (VGChartz, 2011). It is also important to note
that while Sony and Microsoft rely on royalties and licenses to make profit, Nintendo
is able to sell its console above the cost to produce it (Forbes, 2008).
19
Nintendo’s target is different from its competitors. Playstation and Xbox are
more directed to hardcore gamers and people who seek more functionality. Nintendo,
especially since the Wii, has targeted mainly the casual market and not only casual
gamers but also people who had no experience in video games.
Nintendo is able to also attract hardcore gamers to its products because of the
nostalgic value that it has to older players who remember playing Nintendo classics
like Super Mario or Zelda when they were younger. Even though these games have
more childish looks than games on other platforms, its characters remain as the most
successful in the video game industry,
Where Nintendo is lacking the most is the online gameplay service (Nintendo
Wi-Fi Connection). It is a free system on Nintendo consoles and it is much more basic
than its competitors’ services. Players can play online and not much else. Nintendo
Wi-Fi Connection is also heavily criticized for its system to add friends. Unlike the
other online services, each game has its own list of friends. To add a friend, users
have to enter a complicated 12-digit code (the friend code) and the code differs from
game to game. Nintendo does this to assure that users can only add people they really
know but, still, it is a very limiting and user-unfriendly functionality. However, in the
future, Nintendo is preparing to launch Nintendo Network along with its new home
console, which promises to be closer to its competitors’ online offers.
Nintendo’s communication is very focused on the social aspects of their
consoles. Television ads usually show people interacting with the hardware and also
with each other, often playing games together or sharing content. Campaigns like
“Everybody’s Game” were used to show viewers that anyone could play Nintendo
Wii (Figure 17, Annex 10). Nintendo’s ads for their latest handheld, the Nintendo
3DS were more about technology because of the need to communicate that consumers
could experience 3D without glasses (Figure 16, Annex 10). Apart from all of this,
Nintendo also makes campaigns focused on the nostalgia power of their characters
and video game franchises (Figure 18, Annex 10).
20
Table 4
Nintendo Hardware Overview
Positioning
Console Target
Everyone, but with a • Create a broader • Introduced motion
focus on casual target market for the controls.
gamers, who look for video game industry. • Easy to use.
simpler and easier to • Lightweight.
pick up gaming • Cheaper than
Wii experiences. competitors.
• Exclusive video game
franchises, such as
Mario or Zelda.
• Social gaming with
friends and family
When it was launched • Maintain Nintendo • Extensive game
it was targeted at teens domination in the catalog.
and anyone who handheld market. • First handheld to have
Nintendo wanted an innovative 2 screens and a touch
DS portable experience. screen, offering a new
Today it’s targeted to way to play games.
younger and more
casual gamers.
Targeted at more • Maintain Nintendo • Higher graphical
hardcore Nintendo domination in the power.
gamers, who look for handheld market. • 3D without glasses.
good single player • Market 3D content to • 3D software.
Nintendo experiences and like to a broader target. • 3D photos and
3DS play Nintendo recording.
franchises. Recently • Interactions with
Nintendo has been nearby people using
trying to widen the the console.
target market. • Augmented reality.
21
2.2.5 Playstation Network Breach
The shutdown of the network happened in April 20, 2011. However, there was
a series of events before, which ultimately lead to the attack on the network.
 On March 2010, when Sony removed, through an update, the ability to
install other operating systems, such as the open-source Linux, on the Playstation 3,
which could make it a computer where users could run all kinds of applications.
Sony’s explanation was that by removing the feature “will help ensure that PS3
owners will continue to have access to the broad range of gaming and entertainment
content from SCE and its content partners on a more secure system” (PCWorld, 2010).
This feature was not considered critical for the majority of users and was not even
available on newer models of the console. Yet, removing this option made the console
a more closed system, making it a target for hackers.
 On December 2010, almost one year after the removal of the “OtherOS”
function, a group of hackers calling themselves “fail0verflow” claimed that they were
able to crack the Playstation 3 security by getting access to the private root keys that
secured the system. According to the group this would allow pirated games to be run
on the system along with any type of unauthorized code.
 On January 2, 2011, George Hotz, known also for Jailbreaking the iPhone,
successfully jailbreaks the Playstation 3 and publishes the necessary files and tutorial
on his website and YouTube channel. George Hotz said that he did this because the
consumers should have the right to what they want with the products they buy, and he
was enabling this on the Playstation 3 by jailbreaking it. It wasn’t his intension that
people would use it to play pirated software, so he didn’t provide tools for that.
However, after George Hotz published the tools, other hackers worked on them so
that illegal copies of game software could be played on the Playstation 3.
 On January 11, 2011, Sony sues members of “fail0verflow”, George Hotz
and other hackers, claiming that they were promoting piracy and were violating the
Digital Millennium Copyright Act, the Computer Fraud and Abuse Act, among other
copyright infringements. Sony wanted to protect its business by restraining hackers so
that they could no longer manufacture and distribute tools to hack the Playstation 3.
 On April 2, 2011, another group of hackers, by the name of “Anonymous”,
threatens Sony with a message. Because of the legal actions taken against the hackers,
22
which they considered an offence against freedom of speech and internet freedom,
they would start attack Sony websites with “denial of service” attacks, witch
happened shortly after.
 On April 11, 2011, Sony settles with George Hotz. In this settlement Hotz
agrees to close its website where he distributed the tools to jailbreak the playstation 3
and agreed to not distribute any more tools through other means.
 On April 13, 2011, the group “Anonymous” releases a video protesting
against Sony and warning them to get ready for another wave of attacks.
 April 16, 2011 is reportedly the day when hackers successfully break into
Playstation Network and Sony Online Entertainment. With this action they were able
to steal personal data form more than 77 million users and possibility credit card and
billing information. Old credit card information was confirmed to be stolen form the
Europe division of Sony Online Entertainment.
 On April 19, 2011, about three days later, Sony detects a breach on the
Playstation Network but doesn’t release any kind of information to the public.
 On April 20, 2011, the Playstation Network was shutdown by Sony due to
technical issues. At this time, Sony said that they were investigating the cause of the
outages and the service would be back in a couple of days. Many people on the
Internet suspected that the outages were related to the attacks of the group
“Anonymous”. At this point, the public was still not aware that their personal
information could be compromised.
 On April 22, 2011, the general public realizes that something is wrong, after
Sony issued a statement saying that the Playstation Network outage was due to an
external intrusion. No further information was provided. Later, Sony released another
update were they stated that the outage would continue for more time as they were
rebuilding the system and strengthening the network infrastructure. The group
“Anonymous” also denied any involvement on the attack. They stated that Sony was
taking advantage of the messages form “Anonymous” to cover internal problems.
 On April 26, 2011, ten full days after the intrusion on the system, Sony
confirms that personal information stored on the Playstation Network servers was
compromised. Namely, the Name, Address (City, State, Zip), Country, E-mail
Address, Birthdate, Login and Password. At the time there was no evidence that credit
card information had been obtained. Many consumers showed discontentment
because of the time delay and their trust was compromised because unauthorized
23
people had now obtained their personal information. Sony responded that there was a
difference in timing between the identification of the intrusion and when they learned
that personal data was compromised. According to Sony, several days of forensic
analysis were necessary to understand the full scope of the breach. This was also,
reportedly, the day when Sony requested help from the Federal Bureau of
Investigation (FBI).
 On May 1, 2011, Sony apologizes for the Playstation Network data breach
and outage. Sony considered that the attack had a significant effect not only on their
consumers, but also on the entire industry, since it highlighted the widespread
problem of cyber-security. The company also announced that it would launch a
“Welcome Back” program, which consisted of free content to download, and 30 days
of Playstation Plus (paid service of Playstation Network) for free (Annex 5). They
also stated that the Playstation Network would be going live until next week with the
restoration of online gameplay, movie rentals, Playstation Home, friends list and chat
functionality. The rest of the services would be expected to return until the end of
May. On the same day Sony and private investigators discover another data breach on
the Sony Online Entertainment servers and shut them down.
 On May 2, 2011, the public is alerted and informed of the Sony Online
Entertainment data breach. Personal information similar to the ones of Personal
Network had been obtained. Also 10,700 direct debit records from accounts in Austria,
Germany, Netherlands and Spain, with the bank account number, customer name,
account name and customer address were obtained. About 12,700 non-American
credit card numbers and expiration dates were also obtained by third parties. Sony
highlighted that this wasn’t a second attack. Even though the Playstation Network and
Sony Online Entertainment are distinct, there is some degree of architecture that
overlaps.
 On May 4, 2011, the Subcommittee on Commerce, Manufacturing and
Trade of the U.S. Congress released an inquiry into the breach of Sony’s servers to
find out how something like it could have happened and what Sony would make to
compensate the victimized consumers. Sony responded with an eight page letter
stating the process that they used to find out what had happened and that they were
dealing with the situation with care and caution, they would provide information to
the public after it had been verified, they would take responsibility for their
obligations to the customers and would work with law enforcement authorities. Sony
24
was also in the process of improving the security of their servers. Investigators found
a file on the servers with the motto of the group “Anonymous”, thus tying the attack
to that group. The company claimed that the earlier attacks by Anonymous had
weaken the network and could possibly have made the data breach possible. On the
same day, Sony announces free ‘AllClear ID Plus’ Identity Theft Protection in the US
(Annex 6). Other similar programs would also be offered for those interested in other
countries.
 On May 5, 2011, the group “Anonymous” denies again any involvement
with the attacks and the credit card theft. The group says it is only after governments
and large and corrupt organizations and does not aim to arm consumers. In the same
day, Sony says that the Playstation Network is on the final stages of testing and the
service would be restored in the coming days. The company also offered a
complimentary enrolment in an identity theft protection program for American users,
with plans to offer similar programs to other territories affected by the attack.
 On May 15, 2011, the Playstation Network goes online again in Europe and
America. Kazuo Hirai, CEO of Sony Corporation, states in a video that the network
has gone live with security enhancements, such as, advanced security technology,
increased levels of encryption, additional firewalls and early warning systems to
detect breaches. The Japanese government, however, refused Sony’s request to
relaunch Playstation Network, saying “Sony was incomplete in exercising measures
that they said they would do on the May 1 press conference”. Online play, friends
functionality, account management and Playstation Home are available. The
Playstation Store used by many Sony partners to conduct business is still not online.
The Playstation Network came back online with a system update that required users to
change their passwords to be able to log on. The password could be changed through
the console itself or through the Playstation site. However, the Playstation site went
down and rumors started circulating saying that the site had been hacked. Sony
replied by saying that the site had not been hacked, but an exploit had been discovered,
where third parties could reset other users’ password just by knowing the account
name and birthdate. This was fixed a few days later.
 On June 2, 2011, the Playstation Network is fully restored on in every
region but Japan, Hong Kong and South Korean. The store and all services are online.
 Developers offered mixed reactions when inquired about the cost of the
outage to them. Some developers stated that, with the Playstation Network online,
25
their bottom line is affected, while others where worried about the fact the a lot of
people wouldn’t want to spend money on the Playstation Store and were expecting a
5-10% drop in sales. An anonymous UK developer stated that they were hoping to get
something back from Sony, such as a reduction on Sony’s royalties to make up for the
losses. Other developers were optimistic and not worried about the situation,
considering bad news for digital marketplaces that wouldn’t have a serious affect on
the user base. Industry analyst, Michael Pacther, was also optimistic, stating that,
while it was hard to gauge how many users will defect because of the attack, the
number would not be too big.
 On June 7, 2011, Jack Tretton, President and CEO of Sony Computer
Entertainment of America, leads the E3 Sony’s press conference with an unscripted
apology for the Playstation Network breach directed at the users: “You are the
lifeblood of the company. Without you, there is no PlayStation. And I want to
apologize both personally and on behalf of the company for any anxiety that we’ve
caused you. I know we took you away from doing what you enjoy most, connecting
and gaming with friends all over the world and enjoying the many entertainment
options on PlayStation Network. And it is you that causes us to be both humble and
amazed at the amount of dedication and support you continue to give to the
PlayStation brand. Network activity is currently at over 90% of the original levels
before the network outage. And that is something we absolutely do not take lightly.
We are committed more than ever to making sure that the PlayStation Network
experience is both entertaining and secure for everybody.” Most people thought that
Sony would not approach the subject. So, starting the press conference of the most
important event of the industry by addressing the press, the consumers and the
partners regarding the breach without any script was viewed as good move by
everyone.
 On July 4, 2011, the Playstation Network is now fully online in every region
with Japan being the last one.
 On August 31, 2011, Sony unveils the Sony Entertainment Network at the
IFA in Berlin. It is an effort to unify all of Sony’s online services for music, video and
games, given the broad portfolio of Sony products. The Sony Entertainment Network
will accelerate the integration of hardware, content and network.
 On September 2, 2011, Sony CEO, Howard Stringer, said at the IFA press
conference that the Playstation Network was more secure and better then ever with 3
26
million new users since the service was restored and sales exceeding the numbers
before the attack.
 On September 6, 2011, Sony names former US Homeland Security official
Philip Teitinger as Chief Information Security Officer, as a result of the Playstation
Network breach. Sony stated that it was aiming too bolster the security of the network
even further.
 The Playstation Network outage inevitably led to a class action lawsuit.
Because of this, on September 16, 2011, Sony decided to change its TOS (Terms of
Service) to prevent class action lawsuits: “Any dispute resolution proceedings,
whether in arbitration or court, will be conducted only on an individual basis and not
in a class or representative action or as a named or unnamed member in a class,
consolidated, representative or private attorney general legal action, unless both you
and the sony entity with which you have a dispute specifically agree to do so in
writing following initiation of the arbitration. This provision does not preclude your
participation as a member in a class action filed on or before august 20, 2011”. Some
users showed their discontentment on message boards for this change, as it makes it
harder for groups of consumers with similar disputes to win a case against Sony. Also,
most users feel that they have the right to take legal action in whatever form is legally
available. Sony does offer a way to opt-out via a written letter, which consumers
found inadequate. Sony responded by saying that the TOS language was common and
similar to the ones found on similar services. In Sony’s words: “It was design to
benefit both the consumer and the company by ensuring that there is adequate time
and procedures to resolve disputes”.
27
Figure 1
Playstation Network Breach Timeline (Part 1)
Source: The Author via Dipity (2012)
28
Figure 2
29
Figure 3
30
2.3 Questions
1. Please do a SWOT analysis of the 3 main players in the video games market,
identifying the strengths and weaknesses of each player, as well as the
opportunities and threats of the market. How does the Playstation brand stand
against its competitors, considering the US market?
2. Considering the SCCT (Situational Crisis Communication Theory) (Coombs,

2007), identify the type of crisis cluster the Playstation Network breach
belongs to. Please justify.
3. A crisis consists of five phases:

1. Signal detection
2. Prevention and preparation
3. Containment and damages
4. Business recovery;
5. Learning and reflection
Considering the first 4 stages, what happened in each stage on the Playstation
Network crisis? What actions did Sony take in each stage? Please make a table
with two columns, one with the events and the other with Sony’s actions.
4. What alternative actions would you propose in each stage, in order for Sony to
have managed the crisis more effectively? In the Learning and Reflection
stage, please state what do you think Sony and its managers should take back
from the crisis.
5. How would you increase the Playstation Network profitability? Think about
actions that will bring more users, more usage and more benefits. Include in
your answer the actions you would do and their specific objectives.
31
6. Since the Playstation Network breach, Sony has been making an effort to
make the network more secure. Develop a communication campaign for the
Playstation Network to communicate this message to the consumers. State the
actions, their objectives and the targets. Use at least one public relations action.
7. Apart from the communication campaign, what actions would you propose to
decrease privacy concerns and increase consumers’ trust on the Playstation
Network? Think about the privacy concerns that consumers might have when
shopping on the Playstation Store and how would you change it, so that those
concerns decrease.
32
2.4 Annexes
Annex 1 – Market Data
Table 5
Worldwide Hardware Sales by Year (in Volume)
Console 2008 2009 2010 2011

Xbox 360 6 245 117 6 542 542 8 182 866 8 025 387
Wii 15 819 960 12 015 389 10 270 240 7 326 150
Playstation 3 6 758 412 7 889 724 9 581 198 9 519 074
Nintendo DS 18 967 757 18 635 164 13 357 341 6 829 251
PSP 9 524 962 7 276 155 6 314 083 5 501 636
Microsoft 6 245 117 6 542 542 8 182 866 8 025 387
Sony 16 283 374 15 165 879 15 895 281 15 020 710
Nintendo 34 787 717 30 650 553 23 627 581 14 155 401
Market Total 57 316 208 52 358 974 47 705 728 37 201 498
Source: VGChartz (2011)
Table 6
US Hardware Sales by Year (in Volume)
Console 2008 2009 2010 2011

Xbox 360 4 881 772 4 787 281 7 132 622 7 476 541
Wii 9 826 502 8 989 309 7 378 500 5 048 112
Playstation 3 3 477 812 4 172 494 4 644 545 4 468 855
Nintendo DS 10 156 740 10 369 446 8 394 877 3 624 275
PSP 3 815 680 2 452 361 1 816 105 1 248 511
Microsoft 4 881 772 4 787 281 7 132 622 7 476 541
Sony 7 293 492 6 624 855 6 460 650 5 717 366
Nintendo 19 983 242 19 358 755 15 773 377 8 672 387
Market Total 32 158 506 30 770 891 29 366 649 21 866 294
33
Chart 1 Chart 2
Worldwide Hardware Market Share in US Hardware Market Share in Volume
Volume (Home Consoles) (Home Consoles)
Source: VGChartz (2011) Source: VGChartz (2011)
Chart 3 Chart 4
Worldwide Hardware Market Share in US Hardware Market Share in Volume
Volume (Handhelds) (Handhelds)
34
Chart 5
Worldwide Hardware Market Sales Evolution (Volume)
Source: VGChartz
(2011)
Chart 6
Worldwide Hardware Market Sales Evolution by Supplier (Volume)
35
Chart 7
US Hardware Market Sales Evolution (Volume)
Chart 8
US Hardware Market Sales Evolution by Supplier (Volume)
36
Chart 9 Chart 10
Worldwide Software Market Share in US Software Market Share in Volume
Volume (Home Consoles) (Home Consoles)
Chart 11 Chart 12
Worldwide Software Market Share in Volume US Software Market Share in Volume
(Handhelds) (Handhelds)
37
Chart 13
Worldwide and US Software Tie-Ratio (in Units)
Chart 14
US Software Sales By Rating (2010)
Chart 15
Percentage of DLC Purchasers and Reasons For Not

Purchasing
Source: The NPD Group (2011)
38
Chart 15
US Software Sales By Genre (2010)
Source: The NPD Group (2011)
Chart 16
DLC Purchasers (2009, 2010, 2011) and Reasons For Not Purchasing
Source: EEDAR (2011)
39
Annex 2 – Different Types of Gamers
Figure 4
Illustration of Different Types of Gamers
Source: egamer (2011)
Annex 3 – Sony’s Business Representation
Chart 17
Sony’s Business Representation
Source: Sony (2011)
40
Annex 4 - Consumer Survey Regarding Playstation Network Attack
Gamespot ps3 data breach and outage survey results (Sample size: 2,285.
Percentages were rounded, resulting in >100% response totals for some questions.)
How does the recent security breach impact how you feel about Sony and the
PlayStation Network?
1) I no longer trust Sony or the PlayStation Network - 14%
2) My trust in Sony and the PlayStation Network has not been affected by this -
35%
3) I will be able to trust Sony and the PlayStation Network more in the future
because the breach will force them to impose tighter controls - 23%
4) I trust Sony and the PlayStation Network but I'm going to change the amount
of information I share with them - 28%
How does the PlayStation Network security breach impact your trust in using
online services in general?
1) Negatively, I no longer trust any online services - 7%
2) Not at all, I understand that these events happen and it won't stop me from
using online services in the future - 71%
3) Positively, I think all online services will learn from this and become more
secure - 22%
Do you feel that Sony's response to the security breach was handled
appropriately?
1) Yes - 57%
2) No - 43%
How likely are you to continue using the PlayStation Network after services are
restored? -
1) Very Likely - 67%
2) Somewhat likely - 14%
3) Undecided - 10%
4) Somewhat unlikely - 4%
5) Very unlikely - 5%
How likely are you permanently switch from the PlayStation Network to Xbox
Live?
1) Very unlikely - 64%
2) Somewhat unlikely - 11%
3) Undecided - 13%
4) Somewhat likely - 3%
5) Very Likely - 2%
6) I have already switched to Xbox Live - 9%
Source: Gamespot (2011)
41
Annex 5 - Playstation Network “Welcome Back” Offer
North American "Customer Appreciation Program":

All PlayStation Network customers can select two PS3 games from the
following list. The games will be available for 30 days shortly after PlayStation Store
is restored and can be kept forever.
Dead Nation
inFAMOUS
LittleBigPlanet
Super Stardust HD
Wipeout HD + Fury
For PSP owners, you will be eligible to download two PSP games from the following
list. The games will be available for 30 days shortly after PlayStation Store is restored
and can be kept forever.
LittleBigPlanet (PSP)
ModNation Racers
Pursuit Force
Killzone Liberation
-A selection of "On Us" rental movie titles will be available to PlayStation
Network customers over one weekend, where Video Service is available. Those titles
will be announced soon.
-30 days free PlayStation Plus membership for non PlayStation Plus
subscribers.
-Existing PlayStation Plus subscribers will receive an additional 60 days of
free subscription.
-Existing Music Unlimited Premium Trial subscription members will receive
an additional 30 days of free premium subscription.
-Additional 30 days + time lost for existing members of Music Unlimited
Premium/Basic subscription free of charge for existing Premium/Basic members.
-To welcome users Home, PlayStation Home will be offering 100 free virtual
items. Additional free content will be released soon, including the next addition to the
Home Mansion personal space, and Ooblag's Alien Casino, an exclusive game.
Source: Sony (2011)
42
Annex 6 – Identity Theft Protection Program Offer
Last weekend, Sony Computer Entertainment announced that we will provide

complimentary enrollment in an identity theft protection program. Here are the details
of this program for PlayStation Network and Qriocity account holders in the United
States only. We are working to make similar programs available in other
countries/territories where applicable. Information will be posted on local
websites/blogs when available.
Sony Computer Entertainment and Sony Network Entertainment International
have made arrangements with Debix, Inc., one of the industry’s most reputable
identity protection firms, to offer AllClear ID Plus at no cost to PlayStation Network
and Qriocity account holders for 12 months from the time an account holder registers
for the program.
Please note that we will start sending out activation emails for this program
over the next few days, and you will have until June 18th to sign-up and redeem your
code. You will need to sign up directly through AllClearID, not on Sony’s websites,
and details, including step-by-step instructions for the program, will be emailed to
United States PSN and Qriocity Account holders soon.
The details of the program include, but are not limited to:
Cyber monitoring and surveillance of the Internet to detect exposure of an
AllClear ID Plus customer’s personal information, including monitoring of criminal
web sites and data recovered by law enforcement. If his/her personal information is
found, the customer will be alerted by phone and/or email and will be provided advice
and support regarding protective steps to take. The customer will also receive monthly
identity status reports. Debix works with an alliance of cyber-crime experts from the
government, academia and industry to provide these services.
Priority access to licensed private investigators and identity restoration
specialists. If an AllClear ID Plus customer receives an alert, or otherwise suspects
that he/she may be the victim of identity theft, the customer can speak directly, on a
priority basis, with an on-staff licensed private investigator, who will conduct a
comprehensive inquiry. In the case of an identity theft, the customer can work with an
identity restoration specialist to contact creditors and others, and take necessary steps
to restore the customer’s identity.
A 0.76€ million identity theft insurance policy per user to provide
additional protection in the event that an AllClear ID Plus customer becomes a victim
of identity theft. This insurance would provide financial relief of up to 0.76€ million
for covered identity restoration costs, legal defense expenses, and lost wages that
occur within 12 months after the stolen identity event.
More information will be available on the enrollment page, a link which will
be included in the email you will receive.
We continue to work around the clock to have some PlayStation Network
services and Qriocity services restored, and will be providing you specific details
shortly.
Thank you.
Source: Sony (2011)
43
Annex 7 - Playstation Store Environment

Figure 5
Playstation Store Home Page
Figure 6
Playstation Store Reality Show “The Tester” Page
44
Figure 7
Playstation Plus Page
Figure 8
Specific Game Page
45
Annex 8 - Playstation Communication Examples
Figure 9
Playstation 3 Price Reduction Ad
Source: Damage Control (2009)
Figure 10
Playstation 3 “Make.Believe” Uncharted 2 Ad
Source: Ads of the World 46

Figure 11
Playstation 3 “Mushroom Cloud” Ad
Source: Ads of the World
Figure 12
Playstation 3 Ad with Kevin Butler
Source: IndustryGamers (2009)
47
Annex 9 - Xbox Communication Examples
Figure 13
Xbox 360 Price Reduction Ad
Source: SlipperyBrick (2008)
Figure 14
Xbox 360 “Evolution” Ad
48
Figure 15
Xbox 360 Kinect “Contortionist” Ad
Annex 10 - Nintendo Communication Examples
Figure 16 Figure 17
Nintendo 3DS “Less Virtual, More Reality” Ad Nintendo Wii “Everybody’s Game” Ad
Source: Nintendo 5-Star Blog Source: Ads of the World

49
Figure 18
Nintendo Wii “Wii’ll Not Forget” Campaign
50
3. Pedagogical Note
3.1 Case Study Target Audience
This case study is destined to:
• Undergraduate or graduate marketing students, who are attending courses that

approach public relations, corporate reputation or branding.
• Marketing professionals that are involved in the management of crisis
situations, or work in the Public Relations department managing the
company’s reputation and its relations with stakeholders, with the perspective
of knowledge about a real case study.
3.2 Pedagogical Objectives
After working on this case study, students should be able to:
• Analyze a specific market, identifying the strengths and weaknesses of each of

the players, the opportunities and threats existing in the market, and the
consumer profile and behavior.
• Identify, in a crisis situation, the type of crisis the company is dealing with, as
well as its several stages.
• Manage a crisis situation in the most effective way, identifying what actions
the company should take at each stage so that the damage to its reputation is
minimized and the stakeholders’ trust is kept.
• Develop a communication campaign in a time of crisis.
• Manage an online store, taking into account the different purchasing
experience provided by this type of stores and privacy concerns that the
consumer might have.
51
3.3 Literature Review
3.3.1 Marketing Communications
According to Kotler and Keller (2011), marketing communications are the

means by which companies “attempt to inform, persuade, and remind consumers –
directly or indirectly – about the products and brands they sell”. Communication
allows companies to establish a dialogue with consumers and build relationships that
will lead to increased customer equity and more success in the markets they operate.
Companies have at their disposal several ways to communicate with
consumers. The effectiveness of each tool will depend on the kinds of goods the
company is promoting, the goals it wants to achieve, distribution strategy and the
budget available (Dionísio et al., 2004). These tools constitute the Marketing
Communications Mix (Kotler and Keller, 2011):
• Advertising – Paid nonpersonal presentation and promotion of ideas,

goods or services. This type of communication can be done by a
variety of media (broadcast, network, electronic and display). It is up
to each company to select and use the most appropriate media to use
according to the contents of the message it wants to communicate and
the consumers it pretends to target.
• Sales Promotion – Any type of short-term incentives to encourage
trial or purchase such as samples or coupons.
• Events and experiences – Events to promote interaction between the
company and/or its brands and consumers.
• Public Relations – Includes publicity and any programs directed to
employees, consumers, other companies, government and media that
aim to promote a company’s image or products. It usually has a higher
credibility that advertising.
• Direct Marketing – Direct communication between the company and
its customers or prospects via mail, telephone, fax or e-mail.
52
• Interactive Marketing – Online activities to engage customers and

prospects with the goal to raise awareness improve brand image or
encourage sales.
• Word-of-mouth – Communications between consumers about the
experiences they had while purchasing or using a company’s goods or
services. It can be oral, written or electronic.
• Personal Selling – Personal interaction with customer or prospects to
present products, answer questions and procuring orders.
In order to develop an effective communication strategy it is important to first

identify the target audience. If it is a large number of homogenous consumers then an
above the line strategy using above the line communications is better suited because
of the higher reach.
Then, the objectives should be determined. With its marketing
communications the company may want to introduce a new category to the market,
increase brand awareness, communicate a brand attitude or encourage a purchase.
Next, the communications are designed. At this stage the message strategy,
creative strategy and message source are decided according to the objectives. After
this, the communication channel is selected. The types of communications channels
available are: personal (personal selling and direct marketing) and nonpersonal
(advertising, sales promotions, events and experiences and public relations).
After selecting the communications channels, the budget is established. The
methods to establish a budget more commonly used by companies are: the affordable
method – the budget is defined according to what the company thinks it can afford;
the percentage-of-sales method – the budget is defined as a percentage of current or
expected sales; the competitive-parity method – the budget is defined in a way that
will allow the company to achieve share-of-voice parity with competitors; and the
objective-and task method – the budget should be developed taking into account the
tasks that will need to be executed in order to achieve the communications objectives
and the cost of those tasks (Kotler and Keller, 2011).
After the budget is finalized the media mix is selected according to the
characteristics of each tool and media. The final step is to measure the communication
results and its impact on the target audience.
53
Nowadays, companies are moving more and more to an Integrated Marketing

Communications (IMC) model especially because of the growing sophistication of
consumers and the new types of available media (Madhavaram et al., 2005). This not
only means that different consumers have to be target with different types of
messages but also that the communications design has to be able to adapt to the
different types of media while being consistent across all of them.
IMC has evolved from a tactical orientation to strategic one. An effective IMC
strategy is crucial in forming brand awareness and its image, making it one of the
most important drivers to build brand equity by harnessing the synergy across the
multiple communication vehicles (Madhavaram et al., 2005).
3.3.2 Public Relations
As explained previously, Public Relations and Publicity includes the programs

directed to employees, consumers, other companies, government and media that aim
to promote a company’s image or products. This communication tool is especially
effective when used in conjunction with other tools and when the company needs to
change consumer’s perceptions about their brands or products.
Kotler and Keller (2011) define Public Relations has having a high credibility,
the ability to reach hard-find buyers and the power of dramatization. The high
credibility comes from the fact that non-paid articles and news stories seem more
credible to consumers than paid adds where the company and its products are always
portrayed in a manner favorable to the company. Public Relations also has the ability
to reach buyers that avoid advertising on mass media and target promotions but like to
read news and articles. It is also easier to tell a story behind a company, brand or
product through public relations than it is through mass media where there are a lot
more of time and space restrictions.
Public Relations can be used to achieve a variety of objectives both to external
and internal publics (Dionísio et al., 2004). Examples of external objectives include
build awareness of the company, its brands and its products; attract investors and
build good relationships with the local community. Internal objectives include
keeping employees informed about company activities; creating a sense of belonging
54
and to generate sharing of values between collaborators. Some of the Public Relations
objectives can also affect both external and internal publics. These include improving
the credibility of the company and its products; stimulate the sales force and
preventing and minimize the effect of potential crisis situations.
This communications-mix tool can be used to influence a variety of publics,
ranging from those very close to the company like managers and workers, passing
through consumers and suppliers to the general public. It is the function of Public
Relations to build goodwill with the company’s key publics by providing them with
information.
Public Relations preforms four functions (Kotler and Keller, 2011):
1. Press Relations – Distribute positive news and information about the

company and its products to the press.
2. Product Publicity – Publicize specific products though sponsorship
3. Corporate Communication – Use internal and external
communications to improve the understanding of the company by its
several publics.
4. Lobbying – Attempt to influence decisions made by legislators and
other government officials in order to change legislation and regulation.
5. Counseling – Advise management about public issues and company
image.
As with any communications plan, a Public Relations plan should start by the
definition of objectives. Public Relations is especially useful when launching new
products, repositioning a mature product, trying to build interest in a product category,
influencing specific target groups, protecting products that have run into public
problems and building the corporate image.
After the objectives the messages and vehicles should be selected. There are
several vehicles, which the company can use to communicate with its different
audiences. The most used ones are publications (internal and external) such as annual
reports brochures, magazines or newsletters; public events such as conferences or
exhibits; sponsorship of sports and cultural events as well as other causes; favorable
news about the company; speeches; public service activities and identity media that is
carried by the company logos, stationary, brochures, signs, business forms, business
cards, buildings, uniforms and dress codes (Kotler and Keller, 2011).
55
Then the plan should be implemented and evaluated. The best indicator to
measure the success of the plan is the change in product awareness, comprehension,
or attitude resulting from the Public Relations plan (Kotler and Keller, 2011).
However, getting this information is not always easy. The easiest and most usual
measure to get is number of exposures carried by the media.
The big advantage of Public Relations is that it can have a very positive affect
in the public awareness and attitude towards the company or its products at a fraction
of the cost of advertising with a higher level of credibility.
A disadvantage of Public Relations would be that the marketer doesn’t have
control of how the press will handle the information handed to them, unlike
advertisement, where the message is predetermined. Without control over the final
message being transmitted to the audience, its effect can be undesirable for the
company. Also, there is no guarantee that the company will be able to get any
message across, since it is up to the news media to decide whether or not to run the
story or article. This may mean that the Public Relations campaign won’t bring any
return to the company.
3.3.3 Brand Management
According to the American Marketing Association, a brand is “a name, term,

sign, symbol, or design, or a combination of these, intended to identify the goods or
services of one seller or group of sellers and to differentiate them from those of
competitors.” In this definition it is possible to verify that a brand is used to define a
company’s identity.
With time that identification will become something more that the consumers
will associate with certain meanings in their minds. Kotler (2002) considers six levels
of brand meaning: attributes, benefits (functional and emotional), values, culture,
personality and user.
Aaker (1997) defined the five dimensions of brand personality: Sincerity,
Excitement, Competence, Sophistication and Ruggedness. Managers should develop
the brand keeping these dimensions in mind, as they will influence consumer
preference.
56
A strong brand can be one of the biggest assets of a company. Brands have a
value in the market (Brand Equity). According to Aaker (1991) this value is related to
the levels 3, 4 and 5 of the distinguished five levels of consumer attitude toward a
brand. These are:
1. Customer will change brands, especially for price reasons. No brand

loyalty.
2. Customer is satisfied. No reason to change the brand.
3. Customer is satisfied and would incur costs by changing brand.
4. Customer values the brand and sees it as a friend.
5. Customer is devoted to the brand.
This means that the higher the consumer satisfaction, loyalty and devotion, the
stronger a brand will be and the higher its value on the market. A company with a
strong brand orientation, where employees prioritize the brand will also be able to
have higher profits (Gromark and Melin, 2010). In order to create a sound branding
strategies, the managers have to take this into account and try to build a stronger
brand through consumer-based brand equity.
To achieve this, Keller (2001) outlined the Customer-Based Brand Equity
(CBBE) model. This model details four steps that are necessary to build a strong
brand:
1. Establishing the proper brand identity;

2. Creating the appropriate brand meaning, through strong, favorable, and
unique brand associations;
3. Eliciting positive, accessible brand responses;
4. Forging brand relationships with customers that are characterized by
intense, active loyalty.
This model also considers six brand building blocks: brand salience (how
often the brand is evoked on consumption situations), brand performance (how the
brand meets the functional needs of consumers), brand imagery (brand expression and
how the brand meets the social and psychological needs of consumers), brand
judgments (the opinion that consumers have of the brand), brand feelings (emotional
responses form the consumer to the brand) and brand resonance (the strength of the
57
bond between consumers and the brand. The strongest brands will all excel in all of
these areas.
We can conclude that the value of a brand in the market is very dependent on
how the customer feels about it and what actions he takes because of the brand. So, it
is also important to be able to measure the customer equity and the brand equity to be
able to manage a brand.
Rust, Zeithaml and Lemon (2004) developed a model with the aim to measure
the customer equity and brand equity by understanding what drives each one and to
what degree. Brand equity, which is all that the brand offers that is extrinsic to the
core product or service, is influenced by promotions, image and advertising, ethical
corporate behavior, brand awareness, attitude of consumers toward the brand and
brand ethics. The brand equity along with the value equity (price, quality and
convenience of the product or service) and the relationship equity (strength of the
relationship of the customer with the brand) will influence the brand choice of the
customer and as a result its customer lifetime value for the company because the more
times a consumer chooses a brand, the more loyal it becomes. With this we are able to
measure the customer equity, that is, the sum of the lifetime values of all the
customers from the company.
Sometimes a brand’s behavior can disappoint the consumers’ expectations,
resulting in a negative effect on the consumer-brand relationship. This is called brand
misconduct.
Research shows brand misconduct can have a negative effect on the economic
situation of the company because of the deterioration it causes in the consumer-brand
relationship and repurchase intention. However, the longer and better a consumer-
brand relationship is, the smaller is the deterioration caused by brand misconduct on
the quality of the relationship and repurchase intentions (Huber et al., 2010).
Brand extensions are an important part of brand management. A brand
extension strategy involves carrying the same brand through different product
categories. This can enhance the success chances of new products as they are born
with a brand that is already established in the market with its own image, reducing the
costs of introducing these products. In some cases, however, this strategy can lead to
the dilution of the brand.
Brand extensions can produce brand dilution even if the consumers accept
them. The consumers’ attitude toward the brand can deteriorate if there is a low fit
58
between the brand and the product category, even if the attitude toward the extension
is positive. A high fit does not guarantee a positive attitude toward the brand if the
attitude toward the extension is negative (Salinas and Pérez, 2009). To ensure the
success of the extension it is important to maintain coherence with the brand image
and transmit its essence through the different markets (Kim, J., 2003). Marketing
Communications have an important role in the introduction of a brand extension as it
initiates the process by which consumers start to associate the parent brand and the
extension (Martin and Matta, 2005).
In companies with a large portfolio of brands, research shows that a small
number of brands, which are market-leaders or have high annual sales, have a
disproportionately favorable impact on the reputation of the company (Varadarajan et
al., 2006). When managing brand portfolios, it is important to remove brands that can
have a negative effect on the company’s reputation, so that more resources are
available to strengthen stronger brands.
3.3.4 Corporate and Brand Reputation
Brand reputation is becoming increasingly an important topic. Before it was

mainly related to public relations and crisis management. Managers would act and
work on the reputation only when it was needed. Nowadays corporate and brand
reputation is crucial and should be managed strategically with a long-term mindset.
There are many interpretations in the literature of what corporate reputation
really is. Barnett, Jermier and Lafferty (2006), stated that while researching for the
various definitions of reputation they found three clusters of meaning: awareness,
assessment and asset.
The first is mainly related to the perceptions of stakeholders about the
company. The second one is related to judgment, meaning that the stakeholders would
evaluate the reputation of the company, instead of just having a certain awareness
about it. The third cluster of meaning is the definitions that view reputation as an asset
to the company. In fact, Smith and Wang (2010) concluded that companies with
higher reputation benefit from an average market value premium of $1.3 billion. A
high reputation is also related with a better financial performance, as it will usually
lead to a higher return on sales and return on assets. High reputation companies will
59
also have a lower cost of capital, since they experience less volatility in sales and net
income, as well as more stable stock price (Smith and Wang, 2010). Companies that
manage reputation strategically have a potential to differentiate themselves from the
competitors in the industry and build a more favorable position among internal and
external stakeholders.
Considering these clusters of meanings, the definition of corporate reputation
can be desegregated into Corporate Identity, Corporate Image Corporate Reputation
and Corporate Reputation Capital (Barnett, Jermier and Lafferty, 2006).
Corporate identity is the basic character of the firm (Melewar and Jenkins,
2002), which is influenced by the communication and visual identity of the company,
its behavior (corporate, management, employees), the corporate culture and by the
market conditions.
The corporate identity can be described as what the company really is, not
what others think it is. The Corporate Image is the perception of others about the
company. This is what people think when they think about the company or the brand.
The brand expression and marketing communication tools can influence the corporate
image.
Corporate Reputation is considered as the judgments that internal and external
observers make about a company. These judgments and opinions are not only
generated by the company expressions and communications but also by its actions and
the consequences they have. This is why reputation takes a long time to build (to
generate good feelings and beliefs in observers) but it can be destroyed very quickly
with a bad decision. This is the Corporate Reputation Capital, which varies over time,
and it is related to the value the reputation has to the company. Barnett, Jermier and
Lafferty (2006) conclude that corporate reputation is “the observers’ collective
judgments of a corporation based on assessments of the financial, social, and
environmental impacts attributed to the corporation over time”.
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Table 7
Synthesis Table of Corporate Reputation Related Concepts
Concept Meaning
Corporate Identity Basic character of the firm. Influenced by communication,
visual identity, behavior, corporate culture and market
conditions. What the company really is.
Corporate Image Perceptions of others about the company. Influenced by brand

expression and marketing communications.
Corporate Reputation Judgments that internal and external observers make about the
company. Influenced by company expressions,
communications and its actions throughout time.
Source: The author (2012)
In order to manage reputation, we should also measure it. There are several
ways to measure reputation from the financial performance of companies, views of
external shareholders to the personification metaphor (Vinhas da Silva et al., 2001).
There are two sides to the corporate reputation and both should be measured: the
internal view (employees) and the external view (consumers). After considering this
we must evaluate the feelings that both of these sides have regarding the company and
how they affect the satisfaction and retention of employees as well as the satisfaction
and loyalty of consumers.
When evaluating Corporate Reputation we must consider how the different
stakeholders view our products and services; employee satisfaction; quality of
external relationships with partners, suppliers, competitors and investors; company
innovation; ability to create value; financial strength; strategy regarding reputation
and the company’s culture (Cravens et al., 2003).
The reputation of a company is also affected by its employees. For this reason
it is important to have employees that are aware of its impact on the reputation. Helm
(2011) showed that employees, who are proud of the company they work on, because
they perceive it as having a favorable reputation, are more likely to be aware of their
impact on its reputation.
Proud employees will have higher satisfaction, commitment and will be able
to drive internal reputation building, transmitting to other employees and making
them more aware. These prouder employees will be more willing to contribute in the
workplace in ways that go beyond the specified job requirements (Helm, 2011).
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3.3.5 Crisis Management
Crisis management is a topic that is very related with corporate reputations.

When a crisis happens in a company it will, usually, affect its reputation. The way the
crisis will affect the company’s reputation is dictated by the actions that the company
took before, during and after the crisis. Crisis can have a big impact because of the
number of press mentions that they tend to generate. According to Coombs (2007), a
crisis can be defined as “the perception of an unpredictable event that threatens
important expectancies of stakeholders and can seriously impact an organization’s
performance and generate negative outcomes”.
We can consider four types of crisis: accidents, product safety/health accidents,
scandals (Marcus and Goodman, 1991) and employee-centered crisis (Wooten and
James, 2008). Accidents are one-time events that occur unexpectedly. They usually
have identifiable victims, which means that the organization can focus its containment
strategies on those victims (Wooten and James, 2008). Product safety/health accidents
are crisis related to product malfunction or containment. Scandals are usually the
results of faults or misdeeds by the company and have a very negative impact on the
company’s reputation, since they are difficult to deny (Wooten and James, 2008).
Employee-centered crisis usually happen because of faulty or poorly administrated
human resources practices that result in perceptions of inequity or unfair treatment.
(James and Wooten, 2006).
A crisis consists of five phases (Coombs, 2007):
1. Signal Detection - This is the stage when the company detects signals
that could lead into a crisis. In this stage is fundamental to be able to
get the answers as to how certain events came to be, what does it mean
and what actions should the company start to take (Weick et al., 2005).
2. Prevention and Preparation - This is often disregarded by companies.
In order for a crisis to be successfully managed, it is important to have
already a plan prepared with guidelines that would help the managers
to act quickly. This is difficult because the probability of a crisis
happening is low and companies face a large number of more pressing
concerns.
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3. Containment and Damages - In this stage the crisis is already

happening. The managers try to contain the crisis and minimize the
damages, mainly through public relations or communication to its
publics. The success of their actions will depend on the previous two
stages and the work that was done before the crisis.
4. Business Recovery - After the crisis, it is time for the recovery. This
means getting the company as soon as possible to their normal
activities and performance. If the recovery stage is well managed, the
company can even return stronger from the crisis.
5. Learning and Reflection - The last stage is regarding what the
company and its managers should take back from the crisis that
happened. This is a specially important stage, as it will influence the
signal detection and prevention stages because after a crisis, companies
are, generally, more aware of events that could escalate into a crisis
and will try to prepare better for them.
The reputation of a company can protect it in the event of a crisis. This is

called the halo effect. A strong reputation prior to the crisis may protect the
organization from the damages the crisis will generate. According to Coombs and
Holladay (2006), the halo effect could work in two situations. The first one is when
the cause of the accident that leads to a crisis was human-error. The reputation may
act as a shield in this case, because a good reputation will make stakeholders evaluate
the situation as technical problem and not a human or organizational one. The second
situation is when no cause is given for the accident. In this case, good reputation will
work as benefit of the doubt and will protect the organization from some of the
damages. Coombs and Holladay (2006) found support for the halo as shield and
mixed results for the halo as benefit of the doubt. Companies with a higher prior
reputation will affect the way stakeholders assess the accidents and the crisis. They
will be more likely to view the situation like it was not the fault of the company or
they will give the company the benefit of the doubt, when the cause is not clear (only
for organizations with very favorable prior reputation).
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According to the SCCT (Situational Crisis Communication Theory) (Coombs,

2007), crisis could be grouped into 3 clusters according to the degree of responsibility
attributed to the company: victim cluster, accidental cluster and preventable cluster
(Coombs, 2007).
The victim cluster consists of crisis in which the company itself is a victim,
such as natural disasters, product tampering or workforce violence. These types of
crises have a mild reputational threat since the responsibility is not often attributed to
the company.
The accidental cluster refers to crises in which that company’s actions leading
to the crisis were unintentional. These consist of challenges by the stakeholders that
the company is operating in an inappropriate manner, technical-error accidents
(industrial accident) and technical-error product harm (product recall). There is a
moderate reputational threat, as there is a minimal attribution of responsibility.
The preventable cluster includes crisis in which the company knowingly took
inappropriate actions, placed people at risk and violated a law or regulation.
Stakeholders will strongly attribute responsibility to the company and, as such, the
reputational threat is severe in these cases. Preventable crisis include human-error
accidents, human-error product harm, deceiving stakeholders, violation of
laws/regulations and injury to stakeholders.
When facing a crisis, companies should be worried in protecting their already
built reputation, through public relations and marketing communications.
The SCCT also considers several crisis response strategies that are divided
between primary crisis response strategies, where the crisis manager tries to deny,
diminish or rebuild the crisis situation, and secondary crisis response strategies, which
consist of bolstering the company during the crisis (Coombs, 2007). Primary crisis
response strategies consist of attacking the accuser, denying the crisis, blaming others
outside of the company for the crisis, denying the ability to control the events that
lead to the crisis, minimizing the damage caused by the crisis, compensating victims
of the crisis and apologizing by taking full responsibility. Secondary crisis response
strategies include telling stakeholders about past good works of the company, praising
stakeholders and reminding stakeholders that the company is also a victim of the
crisis. Each of these response strategies produces different effects. Depending on the
crisis type, a certain response strategy should be implemented (Coombs, 2007). Deny
strategies are more effective when the crisis belongs to the victim cluster, whereas
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diminish strategies will be more useful on accidental crisis, and rebuild strategies
should be used on preventable crisis.
Rebuild strategies are more positive for the reputation than diminish strategies
and the more severe a crisis is perceived to be, the more it will affect negatively the
reputation of the company (Claeys et al., 2010).
When considering post-crisis communication channels, research shows that
there is little difference between choosing video or print media. Print media, however,
seems to have a slightly more beneficial effect (Coombs, 2009). The fact that
difference is not very significant means that companies should try and deliver post-
crisis messages through a variety of media (print and video) in an effort to reach as
many people as possible.
In a crisis situation it is important for public relations professionals to monitor
how the media portrays the crisis to be able to predict how the different publics
perceive the situation (Choi and Lin, 2009). Consumer generated media, such as posts
on blogs and social media, should be used as effort to get more information to tailor
crisis response strategies. This type of media spreads rapidly and can quickly damage
reputation, while influencing consumer decision-making. It is important for the
company to respond to these online messages and not only news from the mass media
as it will facilitate consumers’ positive perception of the company’s social
responsiveness and employee treatment, improving its reputation (Park and Lee,
2007).
3.3.6 Online Privacy and Security
Online privacy is getting more and more attention in today’s world both b
consumers and companies. Nowadays, there is a large number of websites in which to
access all the contents it is mandatory to register. Sometimes only an e-mail and
password is necessary; other times additional personal information like home address,
telephone and name is also required. The problem is that users of these sites don’t
really know if their information is secure or not.
Several big companies like Google, Facebook or Apple have been having
trouble because of online privacy. For example, it was found out that Apple stored
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information about the location of its users on the iPhone, or the users of Facebook
were unsatisfied because they could not hide certain information from others.
Internet users are becoming more concerned about the personal information
they give to websites and its security from third-party access (Rapp et al., 2009).
In fact, security is one of the most important attributes when considering online
corporate brand image, second only to personalization (Vinhas da Silva and Alwi,
2008).
The Federal Trade Commission stated that the use of personal and financial
data of someone else to commit fraud or theft is one of the fastest growing crimes in
the United States. As a result, governments are also more aware regarding Internet
security and are updating their laws to protect Internet users.
“Consumers look to both organizational policies and governmental regulations
to safeguard their online privacy” (Lwin, et al., 2007). Companies should look at what
internal and external resources they can use to safeguard their consumers’ information.
For example, companies internally should work on their systems security,
mainly by using standard and updated security software. They should communicate
this to the consumer. Also, to improve the consumer’s perception of security they can
work with third-party authentication services like VeriSign and to abide by
governmental rules.
Online companies should also try to have simple but comprehensive privacy
notices. Consumers tend to read privacy notices to manage risk and to have more
control over personal information (Milne and Culnan, 2004).
However, consumers won’t read the notices if they are too exhaustive and
hard to understand. Unfortunately, that is the case most of the times, since most
companies do it to comply with regulations and not be informative to their consumers.
Research shows (Yang et al., 2009) that if online users have some concern
about the privacy of the information they disclose, they are significantly less willing
to give information but they are more willing to find ways to protect their personal
and financial information. There is not however a significant impact of privacy
concerns on the transaction intention. What this means is that when users have the
intention to purchase a product online, the fact that the site seems insecure to them
will not affect their intention to purchase the product. Most likely they will search for
alternative more secure websites that offer the same product or will make the
purchase in a physical store. Also, the more sensitive the information is, the less likely
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it will be for the consumers to disclose it and to make a purchase in an online

environment. Again, they will be more likely to protect their information if it is more
sensitive. Compensating the consumer for providing information will have a negative
effect if the information is sensitive and it does not have a significant effect on
privacy concert and the intention to make the transaction (Yang et al., 2009). It is
possible to conclude that it is best to ask for less sensitive information and
compensation should only be used when the information is not too sensitive.
Privacy concerns play an important role on online retailers. Eastlick et al.
(2006) concluded that lower privacy concerns would lead to greater trust. Misusing
personal information will increase privacy concerns and as a result decrease trust and
commitment, affecting negatively the consumer’s relationship with the online retailer
in the long run. Consumers may also decide not to purchase online just because of
their concerns about the collection and use of personal information. Consumers often
weight the problems of providing personal information against the value of being
registered on the website (Rapp et al., 2009). The online purchasing intent will be
greater if there are less privacy concerns.
Because of this, managers should try to lower privacy concerns as much as
possible, using seals of approvable form unbiased and credible third parties and
educating consumers on the benefits of information sharing (Eastlick et al., 2006).
The company’s reputation is also important in an online context, as a more
favorable reputation will lead to higher trust and less privacy concerns. If in the
beginning of its activity, the online retailer doesn’t have an established reputation,
then building one should be one of its top objectives (Eastlick et al., 2006).
Prior offline image of multi-channel retailers building their online brand will
have a halo effect on consumers, biasing their perceptions of the retailer’s attributes
and attitudes, affecting the perceived risk and loyalty. This doesn’t mean, however,
that the performance of the website itself won’t influence consumer loyalty and
perceived risk (Kwon and Lennon, 2009).
Research also determined that security breaches of private consumer
information could have a significant impact on the financial performance of the
company because of its negative effect on its reputation and the possibility of
governmental sanctions (Goel and Shawky, 2009).
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Figure 19
Synthesis Figure of Literature Review
Source: The author (2012)
Companies use marketing communications to build brands and also to

influence stakeholder’s opinions. One of the marketing communications tools is
Public Relations, which is used to promote the company’s image to the stakeholders
and also manages crisis situations that the company may encounter. The way a brand
operates in the market will also influence the stakeholder’s opinions of the company.
The reputation of the company will be affected by the brand performance in
the market, the judgments that stakeholders make about the company and also the way
the company faces crisis situations.
The brand’s actions on the market and the reputation of the company will then
form perceptions about the security of using the company’s online services. The
online performance of the company will be related to the privacy and security
perceptions of the consumers. If they have less privacy concerns, then they will be
more likely to share information and conduct online business with the company.
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3.4 Analysis Tools
The analysis of this case study should take into account quantitative and
qualitative elements. They complement each other and together should be able to
provide the target audience all the tools needed to solve the problems proposed by this
case study.
The quantitative analysis of this case study should be based on the following
information:
• Hardware market share of each of the consoles in the home console and
handheld markets, both worldwide and in the US (2011).
• Hardware sales evolution in volume for the total market, both worldwide and
in the US (from 2008 to 2011).
• Hardware sales evolution in volume for each of the available game consoles,
both worldwide and in the US (from 2008 to 2011).
• Hardware sales evolution in volume for each of the suppliers, both worldwide
and in the US (from 2008 to 2011).
• Software market share of each of the consoles in the home console and
handheld markets, both worldwide and in the US (2011).
• Software tie-ratio for each of the available game consoles, both worldwide and
in the US (2011).
• Software sales by rating in the US (2010).
• Software sales by genre in the US (2010).
• Percentage of DLC purchasers (2009, 2010, 2011).
As for the qualitative analysis, it should be based on this information:
• Characterization of the videogames market.

• Characterization of each of the market players: Sony, Nintendo and Microsoft.
This includes their STP strategy, position on the market, products and services
offered, and communication strategies. The target audience is asked to do a
SWOT analysis, which will help to better identify the strengths and
69
weaknesses of each of the players, as well as the opportunities and threats

existing on the market.
• Industry trends.
• Video game consumer characterization and demographics, including behaviors
and preferences of each type of gamers, and buying process.
• Consumers’ opinions regarding the Playstation Network data breach.
• Description of the Playstation Network crisis, including events before, during
and after the data breach.
70
3.5 Animation Plan
Session Objectives Means Time

- Case study presentation. - Hand out the case study to the
- Raise students interest to the students.
case study theme. - Summary of the case study by the
- Introduction to crisis professor.
management. - Brief explanation of the existing
1st 90
- Introduction to the video games types of crisis and phases of a crisis,
Session min.
market. as well as the tools public relations
has to manage them.
- Characterization of the video
games market, including the main
players.
- Know the case study. - Individual reading and diagnosis of
- Resolution of the first question. the case study.
Out of
- Analysis of the market and its 75
the
players. min.
Session
- SWOT analysis.
- Case study comprehension. - Brief discussion about the market

- Divide the students into work and SWOT analysis.
2nd 90
groups. - Explanation of the crisis events.
Session min.
- Resolution of the questions - Discussion regarding the answers
related to the crisis (2, 3 and 4). to the questions.
- Resolution of questions 5, 6 and - Analysis of the cases study
Out of
7. information in groups. 180
the
- Resolution of questions 5, 6 and 7. min.
Session
- Prepare PowerPoint presentation.
- Presentation of the resolution of - 15 min. PowerPoint presentations.
the case study by each group. - Evaluation of the presentations by
3rd - Main conclusions of the case the professor and the students. 90
Session study. min.
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3.6 Animation Questions
1. What’s the importance of public relations and crisis management for today’s
companies?
2. What do you think of the trend in the market to move from physical products
to digital ones? What consequences can this bring to the video games market?
3. Do you think that today’s Internet environment is safe for consumers and
users?
4. In your opinion, what are the critical success factors that companies need to
have in order to stay competitive in the video games market?
5. What part/question of this case study did you find more challenging?
6. What other questions or information would you add to this case study?
72
3.7 Case Study Resolution
Question 1: Do a SWOT analysis of the 3 main players in the video games

market, identifying the strengths and weaknesses of each player, as well as the
opportunities and threats of the market. How does the Playstation brand stand
against its competitors, considering the US market?
Sony
Strengths Weaknesses
• Strong exclusive content for their • The Playstation 3 has the lowest
platforms, with a strong first-party market share (in volume) of the 3
development and a strong third-party home consoles.
support. • The PSP is dominated by the
• Free online service available for their Nintendo DS in the handheld market.
software platforms. • High RSP of their consoles.
• Multi-functionality of their consoles. • The Playstation 3 and PSP have the
• The Playstation 3 has the highest lowest software market share (in
software tie-ratio in the US. volume).
• The superior technology of the • Their online platform (Playstation
Playstation 3 when compared to other Network) is still not profitable.
competitors’ prepositions. • Security flaws of the Playstation
Network.
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Microsoft
• Very strong presence in the US • Worldwide presence not as strong as
market (36% of hardware market in the US (29,2% of hardware market
share in volume). share in volume), with a very poor
• The Xbox 360 shows the highest presence in Japan (7,2% of hardware
growth in sales volume, especially in market share in volume).
the US. • No gaming dedicated handheld
• Highest software tie-ratio worldwide. platform.
• Very good online service (Xbox • Users have to pay to play online.
Live), especially because of the • Weaker first-party development.
integration it offers. • Low number of exclusive software.
• Variety of the online content
available on the Xbox 360.
Nintendo
• Worldwide market leader in the home • Lowest software tie-ratio on the home
console and handheld markets (43% console market.
of hardware market share in volume • Nintendo shows the biggest drop in
for home consoles and 67,4% for
sales volume from 2008 to 2011.
handhelds).
• Complicated and featureless online
• Worldwide market leader in the
service.
software market (40,8% of software
market share in volume for home • Weakest graphical quality and
consoles and 73,6% for handhelds). functionality of the hardware (Wii).
• Nintendo has the most innovative
image in the industry.
• Broader target market, as their
hardware is promoted for people of
all ages.
• Strong first-party development.
• Nostalgic value of their characters
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Market
Opportunities Threats
• More and more people are playing • Decreasing sales of the total market,
games, as experiences for all ages are as the limit of the installed user base
offered. is close to being reached (worldwide
• Consumers dedicate more time to yearly sales drop about 35% from
home-living. 2008 to 2011).
• Increase of gaming as a social • Development of other gaming
experience. platforms, such as smartphones or
• Growth of digital content sales. internet browsers.
• Increase of innovative independent • Nowadays, consumers have a wide
development teams. variety of entertainment available at
• Opportunity to upgrade hardware all times (smartphones, tablets)
functionality as technology • Gaming consoles are fairly expensive
progresses. product, which can be a barrier for
purchase due to the current economic
crisis.
We can make the following conclusions about Playstation’s position in the US market.
• The PlayStation 3 has the lowest market share in the Home Consoles market
with 21,7% followed by the Xbox 360 with 36,1%. The Nintendo Wii is the
leader with 42,2% (in Volume).
• In the US handheld market, the Nintendo DS is the market leader with 72,3%.
Sony’s Playstation Portable represents 27,7% of the market (in Volume).
• The Playstation 3 sales evolution in the US shows a slight increase in sales,
from 2008 to 2011 of about 1 million units. The sales of the Xbox 360 show a
bigger increase than those of the Playstation 3, especially from 2009 to 2010,
when sales increased by almost 2,4 million units. Nintendo’s home console, on
the other hand, shows a steady decrease in sales volume from 2008 to 2011,
showing a decrease of almost 5 million units in this time period.
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• The Playstation 3 is the most expensive in the market. However, it also has
more advanced technology than the others, such as Blu-Ray support. The
Nintendo Wii is the least expensive of the 3 and has the lowest graphical
quality.
• Sony and with Nintendo have the strongest first-party development, while
Sony has the stronger third-party support. However, PlayStation 3 and PSP
have the lowest software sales.
• The Playstation 3 has a strong online service that allows players to play online
or free. However, the Xbox Live service is considered stronger and has a great
variety of digital content but does not offer free online play. Nintendo's service
is considered complicated and offers little more than online play (free).
• The Playstation 3 has the highest software tie-ratio on the US, while the
Nintendo Wii has the lowest.
Question 2: Considering the SCCT (Situational Crisis Communication Theory)

(Coombs, 2007), identify the type of crisis cluster the Playstation Network breach
belongs to. Please justify.
The SCCT considers that a crisis can be grouped into 3 types of clusters:
victim cluster, accidental cluster and preventable cluster. The main difference
between these clusters is the degree of responsibility that stakeholders attribute to the
company.
The Playstation Network breach crisis belongs to the accidental cluster. This
cluster refers to crisis in which the company’s actions that led to the crisis were
unintentional.
On the Playstation Network breach, Sony was a victim of an external attack.
However, it was not the attack itself that caused the crisis, but Sony’s actions after it,
as a big part of the consumers considered that Sony didn’t act in the most appropriate
manner. These actions by Sony were not intentional and were a result of Sony not
being prepared for an attack on the Playstation Network. Also, Sony’s actions before
the crisis, such as removing features from the Playstation 3 console and suing hackers
may have indirectly caused the attack.
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Question 3: A crisis consists of five phases:
1. Signal detection
2. Prevention and preparation
3. Containment and damages
4. Business recovery;
5. Learning and reflection
Considering the first 4 stages, what happened in each stage on the Playstation
Network crisis? What actions did Sony take in each stage? Please make a table
with two columns, one with the events and the other with Sony’s actions.
Stage Events Sony’s Actions

Signal • Sony removes “OtherOS” function, • Sony sues members of
Detection making the console a target for “fail0verflow”, George Hotz and
hackers. other hackers.
• “Fail0verflow” claims to have • Sony settles with George Hotz. He
cracked the Playstation 3 security. agrees to not distribute the tools for
• George Hotz jailbreaks the Jailbreaking the Playstation 3.
Playtstaion 3 and publishes the
necessary files.
• “Anonymous” threatens Sony with a
message and starts “denial of service”
attacks on Sony’s websites.
• “Anonymous” releases a video
protesting against Sony and
indicating a new wave of attacks.
Prevention • Sony doesn’t seem to be prepared for
and an eventual crisis situation (no plan,
Preparation no specific crisis team).
Containment • Hackers successfully break into • Sony detects the breach 3 days later
and Playstation Network and were able to but doesn’t release any information to
Damages get personal data from 77 million the public.
users. • Sony closes Playstation Network one
day after detecting the breach,
without disclosing the cause to the
users.
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Containment • Users realize that something is wrong • Sony releases a statement saying that
and after Sony issued a statement that the the outage would continue for more
Damages Playstation Network outage was due time, as they were rebuilding the
to an external intrusion. system and strengthening the network
• The group “Anonymous” denies any infrastructure.
involvement on the attack. • Ten days after the attack, Sony
• Consumers show discontentment confirms that personal information
because of the time delay and their stored on the Playstation Network
trust was compromised because third servers had been compromised.
parties had been able to obtain their • Sony responded to consumers by
personal information. saying that there was a difference in
• On the day of the apology, Sony and timing between the identification of
private investigators discover another the intrusion and when they learned
data breach on the Sony Online that personal data had been obtained.
Entertainment breach. • Sony requests help from the FBI.
• The Subcommittee on Commerce, • Sony apologizes for the Playstation
Manufacturing and Trade of the US Network data breach and announces
Congress releases an inquiry into the the “Welcome Back” program.
breach of the Playstation Network to • Sony shuts down the Sony Online
find out how it happened and what Entertainment servers after finding
Sony would do to compensate the out about the breach and alerts the
consumers. public the next day, stating what kind
• The group “Anonymous” denies of information had been obtained.
again any involvement after • Sony responds to the US Congress
investigators found a file on the with a letter stating the process that
servers with the group’s motto. they used to find out what had
happened and that they would take
responsibility and provide
information to the consumers. Sony
was also in the process of improving
the security of their servers.
• Sony claims that the earlier attacks by
“Anonymous” had weakened the
network and could have possibly
made the attack possible.
• Sony states that the Playstation
Network is on the final stages of
testing and would be restored shortly.
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Business • The Playstation Network goes online • Sony states that the network had gone
Recovery in Europe and America, with some of online with security enhancements.
the features. The Playstation Store • Sony apologizes at the E3 press
would only go online about a month conference.
later. • Sony unveils the Sony Entertainment
• A month later the Playstation Network.
Network is fully restored in every • Sony announces that the Playstation
region with Japan being the last one. Network is now more secure than
• The Playstation Network Breach ever, with 3 million new users and
leads to a class action lawsuit. better sales numbers.
• Sony names Philip Teitinger as Chief
Information Security Officer.
• Sony changes the TOS of the
Playstation Network to prevent class
action lawsuits.
Question 4: What alternative actions would you propose in each stage, in order
for Sony to have managed the crisis more effectively? In the Learning and
Reflection stage, state what do you think Sony and its managers should take
back from this crisis.
Signal Detection:
In this stage, Sony should have tried to understand first why the hackers were
taking those actions and to be able to plan their course of action. With that in mind,
Sony should have taken these actions in the Signal detection Stage:
• Make the removal of “OtherOS” an option: Allegedly, Sony removed the

“OtherOS” option for security reasons. However, about one year later, hackers
were able to crack the Playstation 3 security. As such, removing the “OtherOS
option doesn’t seem to have had a significant effect on the Playstation 3
security. Instead, with this action, Sony managed to upset consumers and the
hacker community. Sony should have taken a different approach by removing
the option only in new consoles and issuing an update that instead of just
removing the feature, it would prompt users if they wanted to remove or keep
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it. By taking this course of action, it is very likely that Sony would not have
upset the consumers or the hackers.
• Try to contact and work with the hackers: When the group “fail0verflow”
and George Hotz were able to crack the Playstation 3 security, Sony should
have reached out to them, instead of suing them a few weeks after. It would
have been much better for Sony contacting the hackers to find out their
intentions and possibly invite them to work for Sony to strengthen the
Playstation 3 security. This could have avoided further attacks by the hacking
community and opening the Playstation 3 for piracy. Suing them should have
been the last resort option and not the first.
• Comment on “Anonymous” messages and try to contact them: The group
“Anonymous” could have been the one responsible for the Playstation
Network breach. As such, Sony ignoring their messages and not trying to
contact them may not have been the best options. Sony should have tried to
contact the group to find out their intentions and released a public statement
saying what they intended to do regarding the group’s threats. This would
make it easier for the general public to side with Sony.
• Release tools from homebrew development: The main reason hackers try to
crack a gaming console’s security is to be able to run unsigned code and
develop games and applications for the console. Sony could have released
public tools for developing games and applications for the Playstation 3 and
maybe even offer a distribution platform for these applications, such as the
AppStore from Apple. The applications and games could be free or paid. Sony
would receive a percentage of the sales of the paid ones. This would not only
extend greatly the software catalog for the Playstation at a low cost for Sony,
but would discourage any hackers and groups like “Anonymous” to protest
against Sony.
Prevention and Preparation:
The prevention and preparation stage seems to have been disregarded by Sony,
as they were clearly not prepared for what happened.
• Make a plan with guidelines, in case of crisis: This plan should have started
to be made as soon as Sony decided to remove the “OtherOS” option as
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negative reactions by the consumers and the hacker communities were easy to
predict. Also, since Sony removed the option for security reasons, it would
have been important to have a plan already made, in case hackers are able to
crack the Playstation 3 security. This plan becomes even more crucial after the
threats by “Anonymous” and their “denial of service” attacks. If Sony had
given more importance to the group, it would have been easier for them to
prepare for the worst-case scenario, which was what happened. With a plan,
Sony would have been able to react quicker to the attack, minimizing the
damage to its reputation.
• After the plan, prepare for an attack: After making a plan with the actions
to take in case of an attack, Sony should start preparing. This preparation
should have included a security check on all Sony’s servers and hiring security
specialist, in case the hackers make an attempt. By being prepared, Sony could
have prevented the attack and the negative consequences it brought to the
company.
Containment and Damages:
Sony didn’t manage the previous two stages in the most effective manner. As
such, their actions while the crisis was occurring were less than optimal.
• Do not hide or delay information to the consumer: There may have been a
time delay between the identification of the intrusion and when Sony found
out that personal data had been obtained. However, Sony should have been
clearer to consumers about this. As soon as the intrusion had been identified
and the Playstation Network closed, Sony should have informed consumers of
what it knew at that point, not only by sending press releases to specialized
media but also by sending e-mails to registered users. As the situation
developed and Sony acquired more information about what was happening,
this type of communication should have continued, so that the media and the
Playstation Network users were always kept informed of the current situation.
This would prove very beneficial for Sony and would have greatly reduced the
discontentment showed by the users.
• Shut down all servers with connections to the Playstation Network: Doing
this would have prevented the additional data breach on Sony Online
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Entertainment servers and further reputational damage would have been

prevented.
• Use diminish and rebuild crisis response strategies: Sony used a rebuild
crisis response strategy by offering the “Welcome Back” pack and the Identity
Theft Protection Program. Even though diminish strategies are not as
beneficial to reputation as rebuild strategies; they are proven to be very
effective in crisis belonging to the accidental cluster. This means that Sony
should have tried to diminish the importance of the crisis in a credible way.
For example, they could make a case by saying that other similar situations
have not affected users in a significant way, while working with the media to
try and portrait that perception.
Business Recovery:
This stage was the most successfully managed stage of this crisis. This is
shown by the positive recovery made by the Playstation Network after crisis events.
Still, some actions would have made the recovery even better.
• Compensate developers affected by the outage: This is a very important

action, as the developers support is crucial for the success of the Playstation
Network. The compensation could be in the form of a discount over Sony’s
royalties, a special highlight on the store for the developer’s games or feature
the developer’s games on Playstation Plus offers. In fact, all of the games that
missed their expected launch dates because of the outage should have been put
in a special section on the store for at least a month after the Playstation
Network had returned.
• Communication campaign about Playstation Network increased security:
A dedicated communication campaign would have much more impact than a
few statements made by Sony’s executives and would restore the consumer’s
trust more easily. It should be mainly based on public relations, as well as
direct marketing. Mass marketing campaigns are not advisable, as it would
increase the scope of the crisis.
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Learning and Reflection:
The last stage of a crisis is the learning and reflection stage. This stage is about
what the company and its managers can take back from the crisis situations. It will
also greatly influence the signal detection and prevention stages of the following crisis.
Sony and its managers should have taken from the Playstation Network crisis, the
following:
• Detecting signals and preparing for and eventual crisis is extremely

important: This is probably the most important thing Sony learned from the
Playstation Network crisis and it will certainly be helpful in future crisis the
company may face. In the best case scenario the first two stages may prevent
the crisis completely. If the crisis is not prevented, then having a plan will
ensure a proper management and better outcome for the company and its
reputation with the consumers.
• Think about the consequences of certain actions: As a big multinational
corporation, Sony’s actions may have big consequences on millions of people
and can also have a negative impact on the whole company. Because of this,
each action must be carefully thought and thoroughly analyzed. Sony clearly
did not do this when it decided to remove the “Other OS” option or when it
decided to go after the hackers.
• Share information with the consumers: Sony failed at this part during this
crisis as it tried to hide the information for a while, until it was forced to
release it. This should never be done and the sooner the victimized consumer
is fully aware of the situation, the better. The company should also try to
comfort the consumers and show them that it is there to solve the situation.
• Consumers’ private information should be very well protected:
Consumers give information to companies all the time, especially online. It is
very important to companies to realize that private information is very
valuable for the consumers and should make everything to ensure it is
protected by having updated security software on their servers and doing
security checks regularly.
• Public relations are very important in a crisis situation: In a crisis situation
it is especially important to have a competent public relations management
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team. Public relations will deal with any communication with the company’s
stakeholders, being the consumer, shareholders or the press. The way these
communications are managed will shape the opinions of the different publics
about the crisis and greatly influence its outcome.
Question 5: How would you increase the PlayStation Network profitability?

Think about actions that will bring more users, more usage and more benefits.
Include in your answer the actions you would do and their specific objectives.
These would be the actions that we would use to improve the profitability of
the Playstation Network by bringing more users, more usage or more benefits to its
users:
More users:
• Include a $20 prepaid card on new Playstation 3 consoles: Including a $20

prepaid Playstation Network card, would certainly increase the number of
registered users. Also, it would allow new users to get familiarized with
Playstation Store and could create the habit of shopping for games and
download online content.
• Communication campaign: A communication campaign explaining the
benefits of being registered on Playstation Network would be an effective way
to bring more users. This campaign would be concentrated on mass media (TV,
print and outdoor advertising) to reach everyone with a Playstation console
that can connect to the Playstation Network. Besides bringing more users, this
communication campaign would also have the objective of increasing the
consumer database, so that Sony can communicate with its consumers more
effectively.
More usage:
• More promotions on the Playstation Store: Even though there are usually
promotions available on the Playstation Store, especially for Playstation Plus
members, this is an area that can be improved. There could be a promotion of
day/week, where a game would be featured and discounted for a day/week.
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These discounts would be available for all users, with Playstation Plus users
getting an additional discount from 5% to 10%. Another type of promotions
would be the seasonal ones, where, several games would be discounted for a
period of time in a season, for example on christmas or summer. These
promotions would increase the usage of the network and the sales of the store,
as users would be more tempted to visit the store more often to check the
valuable promotions.
• More free-to-play games: Not only these games can be very profitable but
this action would increase the usage of the Playstation Network. The
Playstation Store only has one free-to-play game available, DC Online
Universe, which saw a significant increase in its user base after the change to
free-to-play, which means that users are more willing to play these games, as
the there is no cost barrier. In order for these games to be profitable for the
network, Sony would have to ensure that users can buy additional content very
easily or get companies to advertise on the games.
• Extend the Playstation Store to other devices: The Playstation Store
nowadays is available on Playstation consoles, such as the Playstation 3,
Playstation Portable and Playstation Vita. It would be beneficial for Sony to
make the Playstation Store available on other devices, such Sony’s tablets and
cellphones, with Playstation content created specifically for those devices,
such as Playstation 1 games. Users could also make purchases and program
downloads for their Playstation 3 while on the go.
More benefits:
• More exclusive content: Having more exclusive content in the store would
add value to the network. This content would consist of exclusive games
available only on the Playstation Store but also of shows, like “The Tester”,
as with this type of shows users keep checking the store looking for new
episodes. Sony could also extend the content of the store by releasing the
homebrew development tools discussed on question 4.
• Exclusive Online Limited Editions: Offer through the Playstation Store
exclusive limited editions of Playstation software titles. These editions would
include exclusive content not available at retail and could include exclusive
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free downloadable content, game soundtrack or making-of videos. When

purchasing games through the Playstation Stores, consumers have the
disadvantage of not getting a physical product and having to wait for the
download to complete. This action would make consumers more willing to
buy games from the Playstation Store, as they would offer content not
available anywhere else. It would also be beneficial for Sony, as the cost of
providing a digital product is less than the cost of a physical product.
• Cloud gaming: Offering cloud gaming on the Playstation Network would be a
great benefit to its users. It could be used to try out games without having to
download anything and without having to wait. It could also be used for users
to access their Playstation 3 on other devices, such as the Playstation Vita or
cellphones. Users could continue playing their Playstation 3 games and buy
content even when outside. This feature would be initially available only to
Playstation Plus members.
Question 6: Since Playstation Network breach, Sony has been making an effort
to make the network more secure. Develop a communication campaign for the
Playstation Network to communicate this message to the consumers. State the
actions, their objectives and the targets. Use at least one public relations action.
1. Newsletter
Target All registered Playstation Network users.

Objectives • Explain to all registered users the changes made to security.
• Reinforce Sony’s position about private information.
• Inform users about good practices regarding information sharing.
Description In this action Sony would send to consumers a newsletter, briefly
explaining the changes made to security, such as advanced security
technology, increased levels of encryption, additional firewalls and
early warning systems to detect breaches. Sony would also use this
newsletter to assure consumers that their information is well protected
and give advice about good practices regarding sharing private
information online, to show consumers that Sony cares about them.
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2. Playstation Store Ad
Target Playstation Store users.

Objectives • Promote Playstation Network security in an online shopping
environment.
Description On the home page of the Playstation Store, there would be an ad
saying: “Playstation Network is back and it’s better than ever!”. Users
could click on the ad, which would take them to a page where they
watch a short video about the security technology on the Playstation
Network and new available features. On this page, users would also be
able to download the “Welcome Back” content and download videos
and demos about future PlayStation Network releases.
3. Playstation Network E3 Booth
Target Members of the press and developers attending E3.

Objectives • Elucidate the press and developers about the enhancements made to
the Playstation Network security.
• Generate good news about the Playstation Network security on the
media.
Description During E3 2011, Sony would make a booth dedicated to the Playstation
Network. Playstation Network managers as well as the person in
charge of security would be there. This booth would be mainly used to
inform press members and developers about changes made to the
network’s security, as well as new future features. This would be a
good way for press members to find out more about what happened
during the attack and get a better sense of Sony’s improvements to the
network. Press members would also receive a handout, so that they can
better transmit specific information to the final consumer. Developers
could also visit the booth to get information about Playstation Network
security, as well as finding out more about Sony’s compensation
program for those affected.
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4. Press Release
Target Specialized news media.

Objectives • Inform press and specialized media that weren’t able to attend E3
or the Playstation Network booth about the enhancements made to
the Playstation Network security.
• Generate good news about the Playstation Network security on the
media.
Description Sony would send by e-mail or fax to all specialized news media a press
release with similar information to the handout given at the Playstation
Network E3 booth, so that all media has access to information
regarding the enhancements made to the Playstation Network security.
The press release should also include a contact that press members can
use to get further information.
Question 7: Apart from the communication campaign, what actions would you
propose to decrease privacy concerns and increase consumers’ trust on the
Playstation Network? Think about the privacy concerns that consumers might
have when shopping on the Playstation Store and how would you change it, so
that those concerns decrease.
Decreasing privacy concerns and increasing consumers’ trust will increase

consumers’ usage of Playstation Network and increase the sales of the Playstation
Store. We propose the following actions to achieve those objectives:
• Provide alternative payment methods: Playstation Network users can only

pay when shopping on the Playstation Store by credit card or by using prepaid
cards ($20 or $50) available on retailers. Therefore, users that are more
concerned about giving credit card information can only pay with the prepaid
cards. These prepaid cards can be useful in certain situations (for example, to
give as a gift) but are not the most practical method. A good solution would be
to offer other alternative payment methods, such as PayPal (also available on
Xbox Live) or Moneybookers. These services are very used in the US and
88
would make the payment experience easier for those with privacy concerns, as
they don’t have to provide credit card information. It would also be a faster
experience, as only the account information for the service is needed (usually
e-mail and password).
• Ask for less information during registration: Upon registration, users
should only be required to enter the desired username, password and e-mail.
Further information is not necessary to Sony and users should only provide it
if they want to. Optional information would include the name, address and
birthdate. This would make the registration process easier and quicker, while
decreasing privacy concerns, as the level of private information shared would
be lower. However, in case consumers wish to ad credit card information, they
would have to provide the name, address and birthdate.
• Third-party certification: This would be another action that would decrease
consumers’ privacy concerns and increase their trust in Sony. Sony should hire
an independent company, such as VeriSign, to certify the security protocols of
the Playstation Network and its store. After finishing the certification, Sony
would put a small logo on the corner of the logging in screen, on the home
page of the store and when paying stating: “Certified by:”. Consumers would
then be less worried about using and making transactions on the network, as it
would be certified by a credible identity.
• Simplify TOS: Most users accept the terms of service without reading them or
having any idea of what they say. Alongside the complete version, Sony
should provide a simplified TOS version with the most important points that
any user should know. Anytime the TOS is altered, users should be notified
with a simple explanation. This action would make Sony seem more
transparent when it comes to their policies and, as such, it would decrease
privacy concerns.
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3.8 Resolution Slides
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91
92
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4. Case Study Take-Away for Management
Nowadays, we live in a connected world. People establish online relationships

with each other and with companies. These relationships are able to develop because
of the ability to share information online. For a company, having information about
consumers is a big advantage. With that information the company can build a
database that can be used to prolong and improve the relationships it has with is
customers, which it will lead to more business and more profit.
It is the obligation of the company to protect the personal information of its
customers and to inform them of how that information will be used. However, many
Internet users do not pay special attention to this and share information with a wide
variety of companies, without knowing how their information will be handled.
This case study looks into a specific case, where personal information of
registered users on a network (Playstation Network), belonging to a big multinational
company (Sony), was compromised. This resulted in a crisis situation for the
company involved, as users of the network were not pleased with what happened and
how the company handled the situation. This is not the first time personal information
is compromised and it will not be the last. It is important that companies, which keep
personal information of their customers, are prepared for similar occurrences.
The study of this case allows to:
• Understand the video games market, including the strengths and

weakness of each player, consumers’ profile and behavior, as well as
opportunities and threats present in the market.
• Understand how a crisis developed in a big multinational company and
its impact on the organization and its consumers.
• Identify a crisis type and its different stages, as well as the best crisis
response strategy and best action actions to take in each stage.
• Learn strategies to manage an online business, while taking into
account the privacy concerns of consumers.
94
In crisis situations, public relations are especially important, as they are

responsible for managing communications to stakeholders. These communications are
crucial to manage a crisis situation effectively and to be able to keep the trust of
stakeholders and the loyalty of consumers.
The best course of action to take on a crisis situation will depend on the type
of crisis and the degree of responsibility attributed to the company. The preparation of
the company before the crisis, its ability to contain the crisis and how it recovers
dictate how well the crisis was managed. Even though Sony has recovered well from
the crisis, its actions on previous stages were not the most effective.
As information spreads much faster nowadays, crisis managers should be
prepared to act immediately after signs that could lead to a crisis are detected. If they
take the correct actions quickly, the crisis may still be avoided. It is, therefore,
important for companies to dedicate resources to detect signals that could lead to a
crisis, so that they are able to be better prepared and as a result, be able to better
contain damages during a crisis, as well as recovering positively.
After doing this case study we can conclude that in order for companies to
keep a good reputation and the trust of stakeholders, it is important that a crisis
situation is managed in the most effective manner. For this, it is important that the
company establishes a crisis team to detect signals and to start preparing for an
eventual crisis situation with a plan and general guidelines on what to do. If a crisis
situation does happen, it is important for companies to be truthful to consumers and
not withdraw any information from them, while at the same time shape the opinion of
the media, so that the crisis is portrayed in a more favorable manner to lessen the
impact on long-term reputation.
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102

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BRAND REPUTATION AND CRISIS MANAGEMENT:

PLAYSTATION NETWORK CASE STUDY

João Pedro Lebre Pereira

Augmented Reality – Live, direct or indirect, view of a physical, real-world

Brick-and-mortar – Physical location for a business or organization, such as a store.

Denial-of-service attack – An attack to attempt to make a computer resource

EEDAR – Electronic Entertainment Design and Research. It is a private video game

ESA – Entertainment Software Association. It is is the trade association of the video

ESPN – Entertainment and Sports Programming Network. It is and American global

First-party Developer – A developer that is part of a company that manufactures a

First-party Software – Software developed by a first-part developer.

GDC – Game Developers Conference. It is an international event focused on video

Independent Development – Development of video games without the financial

Netflix – American provider of on-demand Internet streaming media, such as movies

PayPal – Global e-commerce business allowing payments and money transfers to be

PSN – Playstation Network.

PSP – Playstation Portable.

RSP – Retail Selling Price.

Software – Computer programs and applications. In the video games industry, it

Third-party Developer - A third-party developer is a developer that is not part of a

Third-party Software – Software developed by a third-party developer.

Table 1 – Sony Hardware Overview ............................................................................ 15

Table 2 – Video Game Console Launches ................................................................... 17

Table 3 – Microsoft Hardware Overview .................................................................... 19

Table 4 – Nintendo Hardware Overview ..................................................................... 21

Table 5 – Worldwide Hardware Sales by Year (in Volume) ....................................... 33

Table 6 – US Hardware Sales by Year (in Volume) .................................................... 33

Table 7 – Synthesis Table of Corporate Reputation Related Concepts ....................... 61

Chart 1 – Worldwide Hardware Market Share in Volume (Home Consoles) ............. 34

Chart 2 – US Hardware Market Share in Volume (Home Consoles) .......................... 34

Chart 3 – Worldwide Hardware Market Share in Volume (Handhelds) ..................... 34

Chart 4 – US Hardware Market Share in Volume (Handhelds) .................................. 34

Chart 5 – Worldwide Hardware Market Sales Evolution (Volume)............................ 35

Chart 6 – Worldwide Hardware Market Sales Evolution by Supplier (Volume) ........ 35

Chart 7 – US Hardware Market Sales Evolution (Volume) ........................................ 36

Chart 8 – US Hardware Market Sales Evolution by Supplier ..................................... 36

Chart 9 – Worldwide Software Market Share in Volume (Home Consoles) .............. 37

Chart 10 – US Software Market Share in Volume (Home Consoles) ......................... 37

Chart 11 – Worldwide Software Market Share in Volume (Handhelds) ..................... 37

Chart 12 – US Software Market Share in Volume (Handhelds) .................................. 37

Chart 13 – Worldwide and US Software Tie-Ratio (in Units)..................................... 38

Chart 14 – US Software Sales by Rating (2010) ......................................................... 38

Chart 15 – US Software Sales by Genre (2010) .......................................................... 39

Chart 17 – Sony’s Business Representation ................................................................ 40

Figure 1 – Playstation Network Breach Timeline (Part 1) .......................................... 28

Figure 2 – Playstation Network Breach Timeline (Part 2) .......................................... 29

Figure 3 – Playstation Network Breach Timeline (Part 3) .......................................... 30

Figure 4 – Illustration of Different Types of Gamers .................................................. 40

Figure 5 – Playstation Store Home Page ..................................................................... 44

Figure 6 – Playstation Store Reality Show “The Tester” Page .................................... 44

Figure 7 – Playstation Plus Page .................................................................................. 45

Figure 8 – Specific Game Page .................................................................................... 45

Figure 9 – Playstation 3 Price reduction Ad ................................................................ 46

Figure 10 – Playstation 3 “Make.Believe” Uncharted 2 Ad ........................................ 46

Figure 11 – Playstation 3 “Mushroom Cloud” Ad....................................................... 47

Figure 12 – Playstation 3 Ad with Kevin Buttler ........................................................ 47

Figure 13 – Xbox 360 Price Reduction Ad .................................................................. 48

Figure 14 – Xbox 360 “Evolution” Ad ........................................................................ 48

Figure 15 – Xbox 360 Kinect “Contortionist” Ad ....................................................... 49