Game Console Marketing: Faddism vs. Evangelism

Which is better - spreading your product gospel through slick marketing campaigns or having your own customers doing the talking for you? I think the answer is pretty clear. But what about the breadth of your product's reach?

What if you have a loyal, passionate following of hard-core users but you want to expand beyond this core? Don't you run the risk of alienating those core users as your product becomes increasingly mainstream? And is this a problem, or simply a natural and expected evolution following the product life cycle?

These are just some of the thoughts that went through my head upon reading an interview with Shane Kim, Head of Microsoft's (MSFT) Game Studio, by Dean Takahashi, author, blogger and writer for The Mercury News.

One Q&A in particular prompted my own questions about marketing strategy and customer-driven product evangelism (the bolding is my own):

Q: I (Dean Takahashi) talked to Peter Moore recently. He said we will have an answer to
the approachability of the Wii in the next three to six months. I asked him if that meant you are doing mass market games. He said no. It would be a combination of things. Is this part of your strategy?

A: First of all I wouldn’t say it is an answer to the Wii. That sounds way too reactive. While Nintendo is enjoying a lot of early success with the Wii, for us, part of our strategy has always been to appeal to expand beyond the core gamer. That goes back to our primary objective to win this generation.

We know from prior experience that you don’t win the generation just by winning the core. If we want to win this generation, we have to expand beyond that. Now is the right time for us to do that. The first two holidays were really about competing for the core gamer. I agree with Peter it is not just one thing. It is an end to end strategy to appeal to a broad audience. It’s not just about content. It’s not about how you market the platform. You have to do all those things if you want to reach a broader audience. That will be a challenge for us because we have been so strong with the core gamer.

It’s been part of our strategy all along.

Wow. There is a lot going on here. Let me try and parse the language to identify some of the key issues:

1. Being reactive is bad
Information Arbitrage question: But reactive to whom?

Isn't being reactive to the needs of your market good? Isn't this called being customer-centric?

If a competitors' strategies are working and yours are not, is there shame in being reactive (which entails being humble, learning and listening, which is not necessarily a core competency of many of those involved in gaming)?

2. Winning the generation means moving beyond the core

It is conceivable that a successful console strategy could be built around the core - as long as you don't spend billions building it.

Figuring out how to "cross the chasm" is essential in positioning the early sales strategy, lest you be pigeon-holed as a hard-core application.

3. A winning strategy is built off of success in selling to the core

Nintendo's (NTDOY.PK) success with the Wii would indicate that this isn't necessarily true.

You might actually develop a strategy and product that is not well-suited to the broader audience if you initially cater to the core, whose requirements are likely very different (and more costly).

4. Appealing to a broader audience means delivering an "end-to-end strategy"
IA question: an end-to-end strategy to appeal to a broader audience involves precisely what?

Does end-to-end mean offline/online/gaming and media?

If so, the Wii's low-end entry strategy that can subsequently be upgraded is a much lower risk, lower cost way of building an installed base which can be upsold later, no?

5. Appealing to a broader audience will be a challenge due to strength with the core
IA question: but why? Due to concerns over alienating the core or the difficulty in moving beyond the perception of being a hard-core application?

Is the core essential to your DNA, i.e., not simply as a stepping-stone to a broad market strategy?

If the core is essential, how do you lower the price/feature point to a level that represents an attractive value proposition to the broader audience but doesn't alienate the core?

An interesting point to note about Nintendo is that its "core," unlike Microsoft and Sony (SNE), is not in its user base but in its IP - namely, its stable of timeless characters. Mario. Zelda. Donkey Kong. Characters who have had appeal across generations and have acted as the glue of the Nintendo franchise. This kind of core - a mass-market, family-friendly core - is invaluable. And is something possessed by neither Microsoft nor Sony. An interesting post discussing Xbox 360's keys to victory offers some insight into how the Xbox 360 can compete for the mass-market against Nintendo:

6. Broaden the audience with more family-friendly IP

If Microsoft wants to be able to compete with Nintendo for the family-friendly market, it not only needs to bring down the price of the core package, but it's got to introduce more kid-oriented IP, whether through its own studios or licensing partnerships with third parties. Rare's Viva Pinata and Banjo Kazooie may help, but the 360 is still very much a hardcore gamer's machine and is dominated by hardcore titles like Gears of War, Crackdown, Ghost Recon, etc.

This, however, is an area where Microsoft's Xbox Live Arcade service can give the 360 a leg up. XBLA already has a good portfolio of titles for people of all ages and it's only going to continue to grow. MS recently announced that they have 6 million Xbox Live members, but how many of these are actually gold-level, paying members, let alone people who pay to download Live Arcade games?

If MS wants to make the 360 more appealing to a broader audience, not only should Xbox Live be made free, but Xbox Live Arcade should offer an ad-supported type of service that lets users play games for free – similar to what GameTap just announced

This would likely go a long way toward getting more "soccer moms" and their children interested in the 360.

Interesting stuff. My belief is that while Dean's interview was with respect to the Xbox 360, a similar conversation could have been had with Sony product management regarding the PS3. Both consoles are currently in the midst of an identity crisis, having their legions of loyal fans but having a hard time breaking into the mainstream. A high price point. Consoles loaded with features that reflects a far grander strategy than simply gaming. In short, a high-risk strategy that is heavily dependent upon changing market perceptions about a gaming console's use and the features and functionality desired by the broader market.

But even more importantly, the issue to me is that Microsoft and Sony have to convince the recreational gamer of at least one of two things in order to buy their products:

The features and functionality over and above those of the Wii are worth paying for

The console should be viewed not simply as a gaming tool but as a multimedia vehicle in the living room

These are hard things to convince people of. If I'm not a hard-core gamer do I really care about all the bells-and-whistles of the Xbox 360 and the PS3? Probably not, and certainly not to the tune of $200-$300 more than the Wii. And what about the box-in-the-living room argument? I think this approach kind of sticks them in no-man's-land. The multimedia consoles are still expensive - period. There is no getting around this. So is the broad market going to lap this up? Hmmm. Risky bet. And what if the money isn't really the gating issue, would the monied multimedia buyer choose to use their gaming console as their multimedia portal? I'd strongly doubt it. So I'm not sure where this puts Sony and Microsoft in this quest for the mass market.

That said, there is one thing that could surely drive sales if only it happened: viral word-of-mouth selling by existing customers, the kind that gets people to the store tomorrow because they just have to have what their friends have. Now this can either be a faddish thing or an evangelical thing, and I'd posit the difference between the two as being:

Faddist: I observe something an influencer has. I think it's cool. I get that thing. But once that thing is no longer cool I move on to the next cool thing.

Evangelist: An influencer whom I respect has something cool. They tell me about it. They show it to me. I trust them. I buy the thing. I like the thing. I then become an influencer and tell others about the thing. And so on...

Tommy Hilfiger was a prep-school fad phenomenon. It's appeal spread like wildfire. Stores were built, specialty boutiques in high-end department stores were constructed, the advertising machine kicked in and distribution quickly moved mass-market. The early-adopter cool left the brand, but by then it had become firmly mass market.

They engineered the transition extremely well. But the road is littered with brands that had a rapid ascent, only to peter out after the transition from fad to mass-market didn't take. Wrong messaging, wrong product, inadequately capitalized, bad management - there are a litany of reasons for these failures. But there is fundamentally greater risk when one is reliant on marketing-push versus evangelist-pull, because it sets a higher bar for being convinced then if one is "sold" by an evangelist. Because you trust an evangelist. They are your friend and/or someone whom you respect.

Nintendo and Apple products are being effectively pushed by evangelists. Sure, slick advertising augments these more organic efforts, but make no mistake: In general, people that own Apple products love them and talk about them. Frequently. The same with Nintendo and the Wii. I just can't get people to shut up about these products.

But I can't say the same for Microsoft and Sony, notwithstanding how cool or slick their graphics are or how many features and functions their consoles have. Either I don't know the people that are the evangelists (notwithstanding the fact that I know dozens of people that have the Xbox 360 and the PS3, yet never evangelize to me about them) or they are just not into spreading the gospel. And this is a problem. And raises risk. The holy grail is to have millions of evangelists out there pounding the pavement for you, completely unpaid. They are the best sales, marketing and PR force money can't buy.

Comments

[Jon T]

Sounded to me like rather defensive waffle...

Translation: "Wii has sold to the widest gamer market possible which has been our gameplan all along too, but we have failed miserably to achieve it".

[Jon T]

..which in my opinion goes a way to answering the question why Microsoft doesn't have evangelists: it is just too arrogant.

In other words, if you think and act like you own the whole world, you have a mightly big problem.