PlayStation Brand Tarnished, But Sony Can Bounce Back

By James Brightman

PlayStation Network, and indeed the PlayStation name, may have been irreparably harmed from the events of the last week… if Sony doesn’t act to quickly counter the wave of negativity and stem the tide. The bad news is that the PSN disaster has already hit the mainstream – my father, a man in his 70s knows about this “PlayStation problem” and he doesn’t even use the internet. The reports are spreading, there’s talk of class-action lawsuits, and many gamers are simply fed up.

That’s the bad news. But here’s the good news: Sony has been through a PR nightmare before with the PS3 and managed to perform admirably afterwards. The PS3’s launch was a total disaster – the games weren’t good, the system was way, way too expensive and no one cared about Blu-ray. The negativity was rampant. People were wondering what had happened to the mighty PlayStation after the PS2 had so thoroughly dominated the previous console generation. Meanwhile, Nintendo was stealing the show with the Wii. Over time, however, some great games, a price drop, fantastic marketing and smart PR enabled PS3 to gain tremendous momentum.

That momentum was already being challenged in recent months by the surging Xbox 360 and the rise of Kinect, but it’s really going to hit a wall now thanks to the PSN crisis. We’re hopeful that with the right moves, marketing, customer outreach and public relations spin that Sony can once again recover. 

After all, there have been numerous companies over the years that have dealt with situations just as bad, if not worse than what Sony’s currently facing with this PSN breach. Unfortunately, some heads at Sony are likely going to roll for this screw-up, and we certainly don’t envy Sony’s employees at the moment, but hopefully those who remain at the company can take a close look at some of these corporate disasters and learn some lessons on how to win back customers.

Johnson & Johnson – Tylenol

Tylenol to this day remains one of the leading brands in pain medications. And that’s despite one of the biggest corporate disasters a company could ever deal with. Back in the early ’80s, seven people in Chicago were reported dead after taking extra-strength Tylenol capsules. As it turns out, some loathsome individual managed to put cyanide into Tylenol capsules, and Johnson & Johnson was forced into recalling about 31 million bottles, incurring a loss of $100 million. Tylenol’s market share fell off a cliff, but then Johnson & Johnson reintroduced the pills with a new triple-seal tamper resistant packaging and kicked off a campaign to win the confidence of consumers again, part of which included heavy discounts.

Apple – iPhone 4 Antenna-gate

Apple’s products have a near cult-like following with millions upon millions of consumers anticipating their new product launches simply because it’s the latest and greatest. Apple’s won over the hearts and minds of consumers, but it faced a serious stumbling block with the iPhone 4. It had become apparent that a design flaw in the new phone itself meant that phone calls could be dropped simply by holding the device in a regular manner. A user’s fingers would cover a part of the iPhone’s casing near the antenna and that would result in fewer signal bars and more dropped calls. Apple stupidly tried to brush aside the issue at first, saying it didn’t exist or that it was a software problem that could be patched. CNN called it the biggest tech failure of 2010.

Eventually Apple realised the error of its ways and offered free iPhone 4 cases to everyone. Most users wanted to protect their shiny new phones with cases anyway, and people seemed happy with the resolution. It’s all about how you speak to your customer – show them some respect and be honest. That’s finally what Steve Jobs did when he confessed that not all phones are perfect and everyone would get a free bumper case or be entitled to a full refund on returns.

Microsoft – Xbox 360

People can slam Sony all they want to for this PSN fiasco, but Microsoft went through something potentially far worse with its own console: the Red Ring of Death (RRoD). At this point, everyone reading this no doubt knows the story. Countless Xbox 360 units were failing on consumers, indicating a hardware malfunction with red lights. The speculation is that Microsoft even knew that it had a sub-par product but rushed to market to beat Sony in the next generation by a full year. It was common for our friends and colleagues to be on their third, fourth, fifth or even sixth replacement Xbox 360 unit. The machines just wouldn’t work – everything overheated constantly, crippling the circuitry.

The result was that Microsoft eventually admitted that there was a problem, and the company extended warranties to three years, paid back customers for repair fees and continually made improvement with iterations on the internal components on the 360. The new 360 slim model seems to work like a charm for most. The RRoD problem will never be forgotten, and for many companies it would have been game over, but Microsoft did everything it could to put the situation in the rear-view. Between Kinect, Halo, Gears of War, Call of Duty and more, people still love their 360 and have seemingly forgiven Microsoft.

Mattel – Lead paint scare

Mattel is the world’s largest toy maker, and its reputation today is mostly positive among consumers. The company faced a major crisis in 2007, however, when 436,000 Chinese-made die-cast toy cars depicting the character Sarge from the animated film Cars had to be recalled because they were suspected of lead paint coatings. Not only that, but Mattel also recalled 18.2 million other toys because their small, powerful magnets could harm children if swallowed. The company immediately became pro-active and reassured consumers of their commitment to safety. Mattel CEO Robert Eckert did 14 TV interviews on a single day and about 20 calls with individual reporters, and in the span of just one week, Mattel had responded to more than 300 media inquiries in the U.S. alone.

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These are just a few examples of corporate nightmares and how companies can recover. There are plenty of other instances (Toyota’s stuck accelerator problem comes to mind) we could point to, but the lesson here is that Sony needs to be as open about this entire PSN situation as they can be – even more so than they have been to date. There needs to be a line of open communication with customers, and it shouldn’t all come from PlayStation blog.

Kaz Hirai and Jack Tretton need to get out there and counteract all the bad press. Get on CNBC, get on Bloomberg, tell the world that you’re going to make PSN the most secure network ever envisioned and that you’re incentivizing consumers the world over to still use PSN. But most importantly, don’t BS your customers. That nearly backfired on Steve Jobs when he claimed the iPhone antenna problem was a “non-issue.” The difference is that Apple has a huge reserve of good will backing the company – Sony does not.