Here’s an interesting question for a strategic-minded CFO: When is the right time to enter an existing product market with your own contender?
All kinds of considerations might play into answering that. Those certainly include the health of that market and what your competition will look like. For instance, you might recommend against targeting a market where almost all the players have exited because of lackluster sales.
Sony’s MLB the Show was the only player in the baseball console video game market until Major League Baseball developed its own contender.
Until now, leagues have licensed video-game development rights to companies like EA Sports and 2K Sports. But baseball console games — as opposed to online games that don’t require a “controller” device connected to a console — have not proven especially popular. After 2K and others left that market, Sony’s MLB the Show had a corner on it.
The broad video-game market certainly can be lucrative. But kids account for a large portion of the customer base — and kids have been steadily falling out of love with baseball for a long time.
The number of kids age 7 to 17 who played baseball fell by 24 percent from 2000 to 2009, according to the National Sporting Goods Association. Most studies show baseball is no better than fourth in popularity for kids among major team sports, and recently soccer has drawn even with the one-time National Pastime, according to ESPN.
As former National League president Len Coleman told The Wall Street Journal, “The days of kids being born with a glove next to their ear in the crib and boys playing catch in the backyard by age three, those are over.”
So, it’s a risk-management issue. MLB took a risk by expending the resources to build its own game, rather than the tried-and-true, safer course of turning over development to a third-party licensee. It’d be going too far to say the video-game venture will fail; surely its green-lighting of the product was based in part on market research. Plus, Sony’s product has performed well; the market of mobile-device users is much bigger than the market of Playstation owners; and at $19.99, MLB’s game, called RBI Baseball ’14, has a $40 pricing advantage over its entrenched competitor.
But it’s still bothersome, in musing about the likely fate of this new video game, that baseball, sadly, is too slow for many kids who’ve never known an environment other than the hyper-speed one they were born into. They prefer recreational activities that are ceaselessly active, explaining the ongoing growth in soccer’s popularity as much as baseball’s decline.
One wonders: Might companies, despite strong motivation and huge efforts to analyze their markets rationally, still possess a vestigial bias toward their field? Might MLB, though a successful enterprise (for now), be so immersed in its view of baseball’s appeal that it’s a little too optimistic the new game will be a hit? The answer, and a possible learning moment for companies, may be only a few innings away.
