Console Industry Taking the Game to a Different Level--Mainstream


The video-game industry is about to unleash a billion-dollar bombardment of hype aimed at making characters such as Mario the plumber and Munch the Gabbit as ubiquitous as Christina Aguilera and Harry Potter.

It’s an unprecedented push for an entertainment medium that for years has been overshadowed by Hollywood’s glitz. But if the geeks of games get their way, the industry this fall will undergo a high-priced marketing make-over that will transform video games from a niche activity to a diversion every bit as pervasive and compelling as movies and television.

Most of the money will flow from Microsoft Corp., Nintendo Co. and Sony Corp., all of which have spent billions building new game consoles they hope will find their way into as many living rooms as possible and usher in the next generation of digital entertainment.

The immediate goal is, of course, to move consoles, which run between $200 and $300. Games cost $50 a pop. Long term, though, the game industry wants to infiltrate the American psyche as something more than a novelty for attention-deficient teenagers. In addition to playing games of unprecedented technical sophistication, this new generation of boxes can connect to the Internet and play DVD movies and music CDs.


The three companies also are jockeying for dominance in a $20-billion market that has historically supported only two platforms. For the last five years, Nintendo and Sony have ruled. Both are keen to protect their multibillion-dollar franchises from newcomer Microsoft.

This means saturating consumers with the message that video games are not just for kids anymore. Beginning this month, various forms of that message will appear on a barrage of television commercials, magazine ads and Web sites.

Recognizing the limits of traditional media in an increasingly fragmented world, the game companies also will hawk their machines at sporting events, on soda bottles, in fast-food restaurants, at college campuses and even on street corners, where high-tech trucks and vans will offer banks of consoles to passersby.

Nintendo is hosting parties at nightclubs across the country to hype its Gamecube console. Sony boasts celebrities such as Britney Spears and Snoop Dogg at events touting its PlayStation 2. And Microsoft is outfitting two customized big rigs to stage mobile bashes in 40 cities.


Buzz around the three consoles has been building since spring, when video-game enthusiasts got their first look at the machines side by side at the annual Electronic Entertainment Expo in Los Angeles. Sight unseen, thousands of gamers have signed up to buy Xbox when it debuts in November. Toys R Us Inc. reported this week that its online store sold out its first batch of Xbox consoles in 30 minutes.

This “war of the tech titans,” as one executive put it, also has other industries clamoring for a piece of the action. Soft-drink companies and fast-food restaurants competed to offer the best marketing campaigns for competing consoles.

Ad Campaigns Burst Coke’s Dollar Bubble

The cash infusion couldn’t come at a better time for a beleaguered advertising industry grappling with a soft economy and reduced spending by corporate advertisers. The slowdown could give the game industry’s push higher visibility than it might otherwise have received. Campaigns are being devised by some of the biggest names in the ad business--McCann-Erickson for Microsoft, Leo Burnett Co. for Nintendo and TBWAChiatDay for Sony.

The amount the three companies plan to spend during the next 12 to 18 months is nearly five times more than what Coca-Cola Co. spent advertising Coke and Diet Coke in the U.S. last year. And it’s double what America Online spent last year blanketing the planet with trial CDs.

Microsoft’s share is $500 million worldwide to promote its Xbox console. Nintendo and Sony each plan to spend $250 million in North America. Worldwide, Nintendo will spend $475 million. Sony did not release global numbers.

“It’s significant simply because of the sheer amount of money that’s being spent,” said Michael Goodman, senior analyst with the Yankee Group, a Boston technology consulting firm. “Microsoft’s $500 million is an absolutely huge amount of money.”

John O’Rourke, Microsoft’s director of marketing for Xbox, acknowledged that the campaign is “one of the largest for any single product launch, if not the largest” at Microsoft. Last year, the Redmond, Wash., software giant spent $150 million advertising its MSN online service, plus several hundred million more marketing the service. Six years ago, it spent $200 million promoting its Windows 95 operating system.


Spending in the game industry has grown faster than the industry itself. Sony, for example, spent $40 million in 1995 to market the original PlayStation console in North America--less than one-sixth of its current budget. Meanwhile, revenue for the overall video-game industry has only doubled since 1995--from $10 billion to $20 billion worldwide annually.

“Five years ago, I’d put a few ads in gaming magazines and maybe a TV campaign for the top 1% of our products,” said Chip Lange, vice president of marketing for Electronic Arts Inc., a leading game publisher in Redwood City, Calif. “Now, I have multiple print ads, street marketing teams, college marketing teams, promotional events, sponsorships, TV ads, Internet, you name it. Our industry is growing up.”

Turning video games into a force equal to television or movies won’t be easy. The campaigns must appeal to hard-core gamers without mystifying mainstream America. Console companies do this by tackling age groups in stages, starting aggressively with consumers who are likely to read Stuff magazine, then spreading a softer marketing message to those who buy Reader’s Digest.

As the newcomer to console games, Microsoft has the most work ahead in establishing its Xbox. Nintendo has been marketing games for 25 years, and Sony’s PlayStation is synonymous with video games. Microsoft’s entry into an industry with more casualties than successes is punctuated by a giant question mark.

The company hopes to serve up some answers with a round of TV ads that will begin airing in October. It’s also teamed up with Taco Bell Corp. and Connecticut-based South Beach Beverage Co. to include Xbox consoles in a fleet of eight SoBe “Love Buses” that crisscross the country to various concerts and sports events.

“It’s the hot category of the year, and my team wants to be there,” said Debbie Myers, Taco Bell’s vice president of media services, entertainment and licensing.

More About Branding Than Moving Boxes

Sony has shipped more than 5 million PlayStation 2 consoles in North America and 15 million worldwide. It hopes to build a broader, older audience. About 13% of PlayStation 2 owners are 35 to 54, said Andrew House, Sony’s senior vice president.


Sony hopes to duplicate the success of the original PlayStation, which has sold 33 million consoles in the United States, or one for every three households. That means TV commercials, movie trailers and ads in everything from Newsweek and Time to Rolling Stone and Vibe. Sony also draws on celebrities from its film studios and music labels to attend PlayStation 2 parties.

Nintendo is quietly plotting similar strategies for Gamecube and Game Boy Advance, a hand-held console introduced this summer. But instead of rap stars, Nintendo will lean on its universally recognized Mario and Pokemon characters. It also will rely on McDonald’s and Frito-Lay to distribute game pieces that give collectors a chance to win a console, said George Harrison, senior vice president of marketing for Nintendo of America in Redmond, Wash.

If past console launches are any indication, most of the machines will be snapped up this holiday season, analysts agree. So why spend so much money to move machines that are likely to sell anyway?

“It’s not just about moving boxes,” said Mary Bihr, vice president of marketing for LucasArts, a game publisher based in San Rafael, Calif. “It’s about establishing a long-term brand. You’re battling for consumer mind share. When you look at discretionary income spending, brand is very important because it’s a lifestyle purchase. You need to create cachet for your brand.”


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