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Innovation Strategy Example: Sony’s Playstation 5 Digital Edition

Innovation Strategy Example: Sony’s Playstation 5 Digital Edition

Smart Product Positioning Takes the PS5 from 2020 to Today

This innovation strategy example shows that, sometimes, simplicity works. It can be wise to release different versions of the same product at different price points, based on whether they possess different features.

For example, Sony released the Playstation 5 with a standard and digital edition. Generally, both editions of the PS5 have identical features and capacity to run various games.

Innovation Strategy Example:
So What’s the Feature Difference?

Launched in November 2020, one difference between these PS5’s was price:

  • PS5 Digital – $399
  • PS5 Standard – $499

This is the key difference: the standard edition has a disc drive and costs $100 more because of this disc drive. As a result, the standard edition can read and play any physically existing DVDs, Blu-Ray, or Playstation games you may have.In contrast, the digital edition can only run and play games or media through online services. The YouTuber Proper Honest Tech gives a rundown of the two offerings in this video. You’ll notice, again, that the products look identical.

Innovation Strategy Example:
Why Did Sony Release Both Digital and Standard Editions of the Playstation 5?

Sony hasn’t officially released to the public their reasoning behind this innovation strategy example. But, once you look at the data behind console consumer preferences, it is not too difficult to infer why the company released a digital and standard edition of the PS5.

On the one hand, even as recently as 2017, 69% percent of console users would prefer to own physical copies of their games. So, it would seem unwise for Sony to alienate the majority of their consumers by releasing a PS5 that could not run physical copies of games.

Yet, on the other hand, it seems reasonable to assume that the number of console gamers who prefer digital-only copies of their games will only increase.

After all, it is rather unlikely that the gaming industry can avoid experiencing the cultural pressures that have normalized and keep increasing consumers’ desire for digital media ownership in the music and movie industry.

Ultimately, these cultural pressures suggest it would also be unwise for Sony to release a PS5 marketed with an expensive feature irrelevant to a significant customer segment.

Innovation Strategy Example: Sony’s Playstation 5 Digital Edition

Innovation Strategy Example:
Games are Going Digital

Indeed, if you look at the more recent numbers from 2021, nearly 80% of Playstation games were bought digitally, which suggests just how rapidly consumers are swapping to digital.

Thus, it was a canny innovation strategy to release a digital and standard edition of the PS5.

Doing so allowed Sony to cater to the preferences of its customers. Those with no interest in physical games could perceive they were getting a better deal on their PS5. Those preferring disc drives and physical games, could, by paying a relative premium, still get what they wanted.

Targeting both groups was also a smart innovation strategy example, because it allowed Sony to anticipate in 2020 what seems like the inevitable consumer swap to digital from physical.

Without needing to release a new generation of Playstation, Sony could deliver what consumers wanted. To put the point another way, Sony employed a tailored innovation strategy framework and a variation on “good, better, best” pricing.

Ultimately, this innovation strategy example shows a good strategy doesn’t need to be particularly complex. Sony clearly gave attention to the relevant information in consumer preferences, and acted accordingly.

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