cfo.com

Print this article | Return to Article | Return to CFO.com

Xenakis on Technology:Squandered Opportunities

While an explosion in computer games provides many marketing tie-in opportunities, most are not exploited.
John Xenakis, CFO.com | US
December 27, 2000

Go to the Microsoft gaming zone (www.zone.com) on the Internet, and play the game "RadioShack RC Riot," and you'll be able to play a car-race game in which all the cars are graphic duplicates of remote- controlled cars that are available in Radio Shack retail stores.

But why bother to head out to your local Radio Shack, when a mouse-click or two lets you order one of the Radio Shack cars online?

Or play "Adrenaline by Toyota," and race a Toyota Truck around the Track—and enter a contest that lets you win a truck.

"Toyota went back and tested people who played the game, and brand recognition was much higher than for people who just saw a TV ad," brags Ed Fries, Microsoft's VP of games publishing.

These are just two examples of advertising and tie-in opportunities with games that are starting to appear, now that we're entering a year where the size of the computer games market is expected to explode.

Computer games go through cycles of about five years, with the duration of the cycle determined by the relative success of game consoles that you hook up to your TV sets. Different companies have been the market leaders in each of the last few cycles—Atari, Nintendo, Sega, and Sony have all been leaders in previous Cycles.

This year, Sony is looking to repeat its past success with the PlayStation console with the PlayStation 2, which was just released a couple of months ago, and so far they seem to be succeeding.

"When the PlayStation 1 was launched in September 1995, they sold half a million units by year-end," says Edward Williams, investment analyst with Gerard Klauer Mattison, a New York City-based investment bank. "By contrast, Sony will sell over one million PlayStation 2 units by year-end, so they've sold twice as many units in significantly less time."

That's true despite the fact that a chip shortage has kept the PS2 in limited supply, he noted. "The raw demand for the PS2 game system is huge, and they'll have shipped over three million units by March," says Williams.

But Sony doesn't have the market to itself. Microsoft will be shipping its new X-Box console in the fall of 2001. It also plans a massive marketing campaign with the intention of having the X-Box console dwarf the PS2.

And analysts expect Nintendo to come out with its Game Cube—a video-games console—early in 2002. Nintendo targets a different demographic, young children, as opposed to the children in their 20s that are targeted by Sony and Microsoft. The three companies combined are expected to create a surge in gaming an order of magnitude larger than we saw in the last explosion, in 1996.

A new game-console cycle means a lot of new business for game developers, and that means lots of games—not only for game consoles but also for online gaming systems and standard PCs. This means that there will be an explosion of new games coming out in the next two years.

As I put together the holiday edition of this column, on the topic of computer games, I was astounded by how many obviously excellent marketing opportunities there are for tie-in's with games—and how these opportunities are being ignored and squandered.

In two specific cases, although the games themselves were marketed successfully, the opportunity to market tie-ins with the games was not used.

Consider, for example, the very peculiar story of the game Deer Hunter, from games developer Infogrames (www.infogrames.com). Analyst James Lin, of the investment bank Sutro & Company tells what happened: "WalMart wanted a game that would appeal to deer hunters, and found that there was nothing on the market."

Infogrames responded by putting together a super-cheap Deer Hunter game that did little more than let you shoot at a deer as it passed a fixed target. "Deer Hunter 1 and 2 sold over two million copies combined," says Lin, "just because the game appealed to deer hunters."

The company is now on Deer Hunter 4, and it's a mainstream game, according to Infogrames VP of development Steve Ackrich. "We try to make the experience as close to real hunting as possible, and now we also have bird hunting and other types of hunting. There are a lot of people who like to do these sports," he says.

Let's look at another story. When I was writing an article about computer games back in the 1980s, I received a review copy of Links, a golf-playing game from Access Software (now owned by Microsoft). I installed the game and played it a few minutes and thought, "Boring! Booooooooring!"

Well I was sooooo wrong. Access put me in touch with some users: fanatics who went out to the real golf course in the morning, and then played on the virtual golf courses on Links in the evening, as well as people who set up and participated in online golf tournaments.

The special appeal was the golf courses themselves. Links had highly realistic versions of the country's major golf courses. You could watch a golf tournament on TV and follow along in the game, or you can simply try out the course yourself by playing the game.

The latest version, Microsoft's Links 2001, actually contains a golf course designer module, permitting a local guru to design a virtual version of a golf course in his home town and make it available to other local golf players!


A Visceral Connection
What these examples have in common is that they show games that, while their tie-in potential has been left dormant, they are successful on two levels: they're fun to play and their content appeals to the players on a visceral level as well.

The market contains lots of so-called "first- person shooter" games (games in which the person playing just shoots at things). But of all of them, Deer Hunter selectively appeals to people who actually go out and hunt deer. Similarly, while there are many sports games, golf games selectively appeal to golf players.

It's this visceral connection that seems to me to be largely not exploited so far. This looks like a marketer's dream to me, as the games target specific niche markets that might be hard to reach in other ways.

In fact, I believe that games could even be used to advance political causes. Take, for example, both sides of the gun control issue. A game like Deer Hunter could be used as political support for gun-control opponents. So could Hitman Codename 47 from Eidos (www.eidos.com), in which you have to plot out a long, complex strategy before you can accomplish your mission of shooting the bad guy.

What about games for those who favor gun control? I haven't seen any, but it would be an interesting challenge, and I can imagine one: The town of Happyville is having a crime spree because there are too many guns around.

Your job is find all guns hidden around town; each time you find one, the crime rate drops and the standard of living goes up. Maybe you could even get this incorporated into a special version of Simsville (described below).

The point of all this is that marketers, whether for consumer products or politics, have a potent method to find and single out the people in their target markets. Marketers can take advantage of games that have a visceral connection for their users. People tend to play such games because they remind them of themselves in some way.

There are many ways for marketers to exploit such connections, and they're not all that expensive. Banner ads on online game services such as www.zone.com or www.uproar.com cost only a few hundred dollars, and there are literally hundreds of thousands of people who use these services every day.

Although top-selling games cost millions of dollars to develop, simple niche games can be developed for just a few hundred thousand dollars. These games could be tailored to suit a marketing message and can be sold in stores, made available in online gaming services, or even be installed on an organization's own Web site to draw traffic there and keep people from leaving.

The fact is, today's video games, whether they're PC games, console games, or online games, are loaded with possibilities for tie-in marketing. You can see this easily by looking at some of the major games available today:


According to Steve Kleynhans, analyst for the Meta Group, computer games are becoming considerably more mature, in many ways. "Next Christmas will be stellar for the gaming community," he says. "The big thing [about the new games] is being totally immersed in the game, feeling a part of it. A good graphic presentation, rich and textured, is essential. But now we're seeing that being extended to a much richer audio experience in games."

Whether it's video or audio or something else, the number of opportunities for product promotion are endless.

One thing I'd like to see done in terms of tie- ins to games is something similar to product placement seen in movies. But I'd only favor it if it were done in the right way. For example, any user spending $50 for a game would resent having to stare at a Coca-Cola ad throughout the game.

But how about this: there's a can of Coke in one of the rooms, and the player picks it up and drinks it to gain points, and then throws the empty can away and never sees it again. Coke has a very effective ad that doesn't linger and cause resentment, and hopefully the game will be a few bucks cheaper to compensate for the advertising. It's a win for everyone. (Send John Xenakis your questions and comments for Xenakis on Technology (XOT) to xot@jxenakis.com.)




CFO Publishing Corporation 2009. All rights reserved.