Game Pricing Under Fire

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One of the most important marketing tools we have is also the simplest to use. It’s the price tag. This has been one of the core issues facing the console business lately as we watch retail sales drop year by year, month by month. Game publishers have been privately (and sometimes publicly) asking console makers to reduce prices in order to stimulate demand for software. Of course, reducing prices is the last thing anyone wants to do. Hardware makers in particular have a lot of costs that need to be covered somehow.

Hardware makers would much rather talk about value than price. And, it’s true, value is important. When you add in enough goods and services to something, its value increases — and so does its desirability. This is the basic argument going on between the Xbox One and the PlayStation 4 right now, between $499 and $399. Sure, the PS4 is cheaper, but for $100 more you get the improved Kinect and all the additional cool features it brings. Even so, it will be easier for people to put together $399 to spend on a new console than it will be to get $499. Microsoft will certainly work hard to make people understand the value of the Xbox One at $499, but an extra $100 may be a deal-breaker for some buyers.

An example of just how important pricing is can be seen with the Nintendo 3DS. The handheld console debuted at $249 in the US, and while it had some good initial sales demand fell off sharply. Yes, there was a lack of great software. The 3DS sales began climbing once good titles began appearing . . . but only after Nintendo dropped the price to $169. Suddenly the hardware looked much more reasonable, and people started buying it.

This is why many publishers are hoping Nintendo will drop the price of the Wii U, currently at $349 (for the version most people buy). The hardware isn’t selling well right now, and its prospects look even dimmer when it’s up against a PS4 at $399 in a few months. Nintendo’s CEO Iwata has staunchly resisted any idea that a price cut is needed or imminent, and no doubt will continue to do that right up until the day when the price cut happens. The strength of the Wii U’s Christmas may depend on what its price tag will be — at $299 it would sell better, and at $249 it would probably fly off the shelves.

Hardware is not the only part of the game business where price is a big issue. Games have been suffering serious price erosion over the past decade, though you wouldn’t know it by looking at the standard retail price for new software. The massive growth of free-to-play games on PCs and mobile platforms has transformed consumer expectations for game pricing. The fact that you can download and play thousands of top-quality games for free means that people don’t think games need to be $60.

It’s not just free-to-play games that have caused this transformation. The growth of the used games trade has had a similar effect; if you’re not getting a collector’s edition, why not get a game for a little cheaper because someone else has already played it If you shop around on eBay and other sites, games can get remarkably cheap. The continuing value of online multiplayer also affects consumer attitudes and behavior. Why buy a new game if you’re still having plenty of fun playing Call of Duty with your friends As for PC game, Steam has changed player behavior dramatically with its steeply discounted sales. Not sure if you want that new game for $60 If it’s available on Steam, wait a while and see if it goes on sale.

Publishers have tacitly acknowledged this price erosion with bundles (Game of the Year Editions) and programs like Platinum Hits for the Xbox 360, where games that once sold for $59.99 go for $19.99. If you don’t need to have the latest game right when it comes out, you can get a great deal on it. There are so many games available now that you could make a huge stack of really great games to play and never spend more than a fraction of the original retail price.

Is it any wonder, then, that new game sales at retail have been declining for the last five years Publishers have wisely decided, so far at least, to avoid hiking prices on new games for next-gen consoles. We’ll continue to see high-priced Deluxe Collector’s Editions in an effort to wring more profit from the most enthusiastic fans. And new games will almost always be appearing with downloadable content (DLC) available on day one in order to goose the profit margins. Yet budgets continue to climb for game development, and pressures to reduce pricing continue to increase. What’s the answer?

Digital distribution holds part of the key by taking all the physical costs out of the equation. No more manufacturing and shipping costs means more margin, if you can hold the same retail price. Increasingly, though, we’re seeing that holding the same retail price is getting harder. No, changes will have to come either from switching business models or from changing the way games are developed.

The business model change is not easy. Games can either become free-to-play, or perhaps ad-supported or subscription-supported. All are difficult to implement on existing brands, as Activision discovered when it tried to add a subscription fee for the Call of Duty Elite service. Many MMO’s are transitioning to the F2P model, and it look like World of Warcraft is preparing to do just that in the future.

The development change is also not an easy one. Games could be designed on a less epic scale, with smaller teams and shorter development times, and then sell them digitally for $20 or $30. If it’s a new IP, that’s a faster and less risky way to see if there’s an audience for it. Yet game designers have to wrap their heads around an entirely different concept of the scale and scope of a design. Tim Schafer famously failed to do just that when he recently told the world his Kickstarter-funded Broken Age game would be delayed by more than a year because he “designed too much game.”

The amount of play time you get with a new game was set for years by the cost of putting a disc in a box, which meant the retail price had to be high enough to allow for a good profit. That lead to games being long enough to justify the price, and since games were sold mostly on having better graphics than the last game, budgets kept rising. Now it’s time to break that cycle and rethink everything from the ground up. Many new publishers are already doing that with success, but it’s a far more difficult task for large publishers with decades of experience doing things the old way.

In the end, the game industry has to come to grips with the fact that customers now have an enormous array of options for playing games, and many of them are free or low cost. Twenty years ago, if you wanted a new game you would go to a retail store every month and see a dozen choices over all the platforms. If you didn’t like one of those, wait for next month. Now, thousands of new games are released every week. High-quality games like League of Legends and World of Tanks are free, and have new content appearing every week or two. Many console games have strong multiplayer audiences and new DLC for them every month or two for only $10, and that can give a game a whole new life.

Does this mean the death of the AAA game Not at all. Publishers will continue to look for ways to make massive development pay off, and to reduce risks. We’re going to see new IP spread across multiple platforms, including mobile (such as Ubisoft’s helper applications for new console games). Marketers will be an important part of this discussion at all levels, from design to business models. It’s time to get creative with development and business models and marketing, not just with the game design. There’s no one guaranteed way to make money from a game. Customers are much more hesitant to spend a lot of money on a new game that can’t be returned. (Taking away the potential for resale was a big part of the backlash against Microsoft’s initial Xbox One policies.)

Pricing is going to be a very important issue this holiday season, as older consoles struggle to boost sales in a difficult environment. Most analysts expect price cuts on existing consoles to boost demand while making room for new consoles at the high end. Next-gen games will probably come without a price increase, and as digital distribution becomes standard practice on next-gen consoles we may see more titles from major publishers at lower initial prices.

‘Now We’re In Blockbuster World’

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Tony Key

The Ubisoft booth at E3 was crowded with attendees, and the noise level was high as software and demos were all around. We went behind the scenes at the Ubisoft booth to sit down with Ubisoft’s senior vice president of sales and marketing, Tony Key. He provided some insight into how Ubisoft plans to deal with new consoles, new IP, new sequels, and a very busy holiday season ahead.

Your CEO Yves Guillemot told me that Ubisoft will be increasing its marketing spend this year. What’s driving that?

By increasing our marketing, our goal is actually to lower our risk. We spend so much time, energy and money creating these experiences like Watch_Dogs and Assassin’s Creed, you need to match that now on the marketing side. You’re making a huge bet on the development side, you’ve got to be all in. It became very clear to us about two years ago that this is a blockbuster world we live in now. That means we have to be able to match the resources our production teams are putting in on the marketing side. You saw that with Assassin’s Creed III, that was our largest marketing campaign ever as a company. What’s interesting now is it doesn’t feel so big any more. This year we’re looking at Assassin’s Creed IV, and Watch_Dogs, and saying ‘That’s what it takes nowadays, that’s what we’re going to keep doing.’

Is the budget for Assassin’s Creed IV bigger than the budget for Assassin’s Creed III?

It’s not bigger, but it’s probably smarter. I think we’ll get more. With Assassin’s Creed III, that was the first time we really tried to go to the next level on the marketing. You’re talking double what we’ve ever spent before on marketing. When you suddenly double your marketing budget, you end up learning a lot of things about what works and what doesn’t work. We’re making smarter choices this year based on the experience. Each year we’re going to get smarter about that. We’ll get 20 percent more effectiveness out of the Assassin’s Creed IV money just because we’ve learned so much.

How is the marketing mix changing for Ubisoft?

The world seems to be moving towards these personalized experiences. That’s why open-world gaming is one of the big must-haves for this next generation. People want to have their personal experience when they’re playing the game, so it’s the same in marketing. We want to try and create marketing content that allows people to customize how they receive it, how they consume it. It’s so much broader now, we’re all learning so much more every day about how we can utilize social media successfully. Assassin’s Creed has 4 to 5 million people in their Facebook community right now, so for us it’s how do you leverage that How do we leverage our hundreds of thousands of Twitter followers, how do we leverage the fact that we’re getting 50 million views on YouTube of Assassin videos Those are things that just a few years ago we didn’t even have access to, but they do take resources. As much as everyone likes to thing they’re completely additional, they still cost money.

Our media mix has evolved over time. TV plays a different role than it did five years ago, but our research shows that it still matters. We have a lot more opportunities in the digital space. What we like about the digital and social space is the ability to measure the effectiveness of what we’re doing. But just because you can measure it doesn’t mean you have the ability to measure it in-house. You have to develop those tools, you have to develop that experience, you have to manage those big data questions, which data matters, which data doesn’t matter and what is it really telling me That’s many jobs at a company like ours now, and I actually have a hard time finding people to do it.

It’s a relatively new skill set to analyze that data and make it actionable for the marketing team. For us, that’s the next frontier. We thought we had business intelligence, and every day we find out how much less we have than what we want. The more we learn, the more we realize there’s so much more that we can do to understand what our customer wants, how they want to consume our content, which vehicles are effective and which are not. I spend a lot of my time doing that.

Watch_Dogs is a new IP without the years of audience building that Assassin’s Creed has. How does that alter the marketing challenge?

That’s part of the reason why it’s so hard to bust out a new IP. There’s no proven DNA for people to latch onto for people to say ‘I understand what that brand is about.’ Especially when you’re annualizing something like Just Dance or an Assassin’s Creed, you understand that experience and you either want to be part of that community or you don’t. We can tap into that and get a faster start. With Assassin’s Creed IV, we start with those 4 million users on our Facebook page. With Watch_Dogs, we’re in acquisition mode — we’re trying to find people who are intrigued by the concept of what Watch_Dogs is all about, about the surveillance and the hacking. It’s a whole different strategy in the social space — we’re trying to acquire people, where with Assassin’s Creed we’re trying to get more engagement.

We’re rolling the boulder up the hill, and eventually you get to the top and you have that momentum. Even with all the great press and all that excitement around Watch_Dogs, there’s still less awareness outside of the core gaming community than we need to have when we finally launch that game. Because now we’re in blockbuster world, and Watch_Dogs needs to be a blockbuster because it deserves to be and as a company that’s what we need it to be. It’s the most ambitious production in the history of Ubisoft, and we need to make sure that everybody who likes videogames has a chance to decide that this game is going to be hot. That’s the hard part about a new brand, that awareness outside the core needs to be created.

Watch_Dogs is ambitious in the sense that the budget is higher, or the design is more ambitious, or both?

I will say that Watch_Dogs cost more than Assassin’s Creed I, that was in 2007. The point is games have been getting more and more expensive. With Assassin’s Creed, it was an established brand when we went to make Assassin’s Creed II. We had a technology baseline, we know what the game is about and what things work. What we’re doing at that point is looking for innovation to add on top. The ambition on Assassin’s Creed is to make a great game every year; we know we have fans. With Watch_Dogs we went straight to expensive. We’ve spent four years by the time this thing launches building this product. We didn’t even know what next-gen specs would be when we started. For us, we have ambitions beyond any new brand that we’ve ever introduced as far as sales. We want it to be the biggest new brand ever introduced in the video game space.

You want Watch_Dogs to be the foundation of a big franchise, then?

Absolutely. That’s what all our games are about; we won’t even start if we don’t think we can build a franchise out of it. There’s no more fire and forget – it’s too expensive.

We feel like we’re in a really good place with Watch_Dogs, but until we’re the biggest game of the year we’re not going to be satisfied.

This fall there’s going to be tremendous attention focused on games for new consoles, but the majority of revenue will come from games for current-gen systems. Simultaneously you want to say how great your games are for new consoles, but also how the games you have for existing consoles are the best ever. That’s a difficult line to walk, isn’t it?

With Assassin’s Creed IV and Watch_Dogs, we’re shipping those games also on next-gen. We do understand that the most likely the majority of sales will occur on the current generation because people just won’t be able to get the hardware, either Xbox One or PS 4, the minute they want it because they won’t be able to make them fast enough. Those machines are going to sell well, and just like most hardware launches they’re going to be constrained for a while. The key is, when you’re making a truly next-gen experience like Watch_Dogs, it’s that the DNA of what makes that game special still exists in the current gen.

That’s what I think they’ve changed with Watch_Dogs; next-generation absolutely adds more power, more density in the environment, more immersion. But what’s cool about the game, the core cool thing, needs to translate to current-gen and it does. We haven’t actually shown those versions of the game off yet. What I like about the brand is it’s really next-gen game design, and that’s not hardware dependent. Watch_Dogs is a game that transcends hardware in my opinion. It’s really what the game is about that’s special, not that it’s on a PS 4 or a PC or an Xbox One. It’s going to be a great game on PS3, it’s going to be a great game on Wii U, it’s going to be a great game on Xbox 360.

Last we cleaned up at E3 because we were pretty much the only next-gen game around. Watch_Dogs for us is really a franchise because we’re tapping into something people really care about, never more than last week than when the NSA PRISM scandal broke.

(Editor’s note: This is part one of a two-part interview.  Read part two here.)

New Grand Theft Auto 5 Trailer Released Today

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Gamers can rejoice. More information in the form of a brand new trailer for Rockstar Games’ mega-franchise Grand Theft Auto V was released today. It’s the first major trailer since Rockstar put out three parallel trailers in April, each focusing on one of the three main characters in the upcoming game.

Rockstar has been characteristically slow-paced with reveals for the next installment in their blockbuster franchise. Both publisher and game were noticeably absent from the E3 show floor last month. Even as the game launch nears, the most prominent traditional marketing beats this year besides the aforementioned three-character trailer were a massive banner that was laid out in Warsaw, and the reveal for the game’s cover art painted as a mural on the side of an unassuming building in Chelsea, New York.

On the content marketing side, Rockstar did launch an interesting tactic with the resurgence of The Epsilon Program, a religious cult featured in Grand Theft Auto: San Andreas. Through a website purportedly representing the cult, fans could submit their name and photo to become one of five people chosen to have their likenesses appear as cult members in GTAV, with entries closed in late May. It was an interesting way of getting gamers involved in the GTA universe.

Grand Theft Auto has always been famous for pushing the envelope for what’s possible (and acceptable) in video games, which has brought it a lot of clout among gamers and helped firm the IP in game industry lore. This newest trailer will help move the hype train forward for the first sequel in more than five years, and fans holding their breath for the September 17 release date can at least exhale and breath normally for its near five-minute runtime.

Source: RockStar

Top Social Games And Apps In India Revealed

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India has quickly become one of the biggest smartphone markets in the world today. The country is currently the third largest in the world as far as smartphone ownership is concerned, having recently just moved past Japan to take the spot behind China and the U.S. As you might expect, Android phones dominate the market in India. The following infographic shows some detail about the Indian smartphone market.

Facebook is also becoming popular in India, and Metricsmonk has released information regarding the top 10 Facebook apps and games. The top app used was Samsung Mobile’s Facebook app, which has 3.4 million monthly active users. Other top apps included Microsoft’s app, Nokia’s app, Yahoo!, and TripAdvisor.

In the realm of games popular in India, social crime solving game Criminal Case is king with 3.7 million monthly active users, which is 2.7 million users more than the next most popular game, FarmVille 2.

Other familiar games that can be found on the list include FarmVille (#8), Angry Birds Friends (#6) and Diamond Dash (#9).

Source: Techinasia

The Holiday Marketing Apocalypse

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The frenzied carnival atmosphere of E3 is fading into memory, and the calm of summer is descending on the game industry. Not really — it’s anything but calm in the marketing departments of game companies. Savvy marketers are sharpening their plans for the holidays, knowing that it’s going to be a brutally competitive season this year. Marketing budgets will be huge for major releases, the noise level will be extreme, and the traditional game industry will be competing for consumer dollars against other devices. Let’s take a closer look at some of the factors involved.

Imagine a family with one or two kids, looking to spend perhaps a few hundred dollars at Christmas for a major entertainment device. They may look at consoles, and the range of options will be dizzying: the Wii, the Wii U, Xbox 360 in several versions, the Xbox One, the PS3, PS4, the 3DS, the PS Vita. Prices will range from $99 up to $499, and there may be multiple different bundle packages for the holiday as well. The choices don’t stop there: There’s also the Ouya for $99 at most of the same retail outlets, the GameStick, and the Gamepop, all Android-based consoles for low prices.

We may also see a Google console, a revamped Apple TV with and App Store, and Amazon with a Kindle TV console box, all probably around $99. That’s not all — families will be bombarded with ads for tablets, with a bewildering array of features, screen sizes and prices ranging from $99 all the way up to $999, stopping at every major point in-between. You can bet all of those tablets will be pushing their game-playing ability and how it’s the ideal electronic gift for the whole family to enjoy.

Hardware marketers will be trying to explain the distinctive benefits of each individual product in their line, while trying to keep consumers from spending all of their money on a tablet. It’s going to be a very difficult task indeed. This will all be taking place while all of the leading game franchises will be launching new editions, and trying to explain why you should buy the current-console version even though the next-gen console version looks so much better. Really, they’re both great. What exactly is the difference again

The marketing conflicts will take place on several battlefields. At retail stores in September, massive displays for GTA V will be dominating the space. By October, we should be seeing the retail strategy unfolding for new game hardware and key software titles. Precise availability dates haven’t been announced for new consoles, but it’s absolutely certain that both the PS4 and the Xbox One will be available in quantity prior to Thanksgiving weekend, the biggest shopping period in the USA. The consoles may well arrive weeks before that time, maybe even a month ahead . . . but they will be in stores for Black Friday.

For new consoles, retail kiosks where consumers can try out machines are usually seen as a critical part of the strategy. Where those kiosks are placed, what games are on them and how widely distributed they are will be an indication of how serious Microsoft, Sony and Nintendo are about marketing new consoles. Nintendo in particular should be looking to get people experiencing new Wii U software for themselves, especially after seeing the response to the Best Buy test Nintendo conducted during the week of E3.

Other battlefields will be TV advertising, social media, online and print advertising. Traditionally, new consoles have been introduced with a bombardment of television ads to reach a broad demographic. This time, many of the younger consumers are spending far more time online than watching TV, so marketers will have to get more creative to reach them. Sony’s Guy Longworth hinted that the company will be using social media more strongly than ever before this year. Print advertising will probably end up the loser in the shifting marketing budgets, though Game Informer will still see its share of ads.

Let’s not neglect the massive battles that will be occurring between rival game titles this holiday. Activision has already declared an increased marketing spend for its key titles this Christmas in order to fend off competition. The war between Call of Duty: Ghosts and Battlefield 4 will be huge. In particular, watch the retail spaces to see who dominates end caps, whose standups have more impact, and which title gets strong licensing support from peripherals manufacturers.

Another battle to watch will be between Skylanders and Disney Infinity, competing for the kid’s market with toy/game crossovers. Activision has had a huge shelf presence at key retailers like Toys R Us for Skylanders. Will Disney spend what it takes to get a similar impact at big chain stores Skylanders has an advantage in the sheer number of products, if you count all the older versions of the toys. This will be a fascinating marketing struggle to watch as it unfolds at retail stores.

It’s one thing to see which marketing effort is better funded, and it’s entirely another to see which product sells more. We probably won’t know much about relative sales of competing products until after the new year begins. Winners will be proudly proclaiming numbers early and often; second and third place products will be looking for other metrics to tout rather than sheer sales numbers. Remember, when the marketing dust settles, it’s sales and profits that ultimately determine the winners.

Analyzing The Console Marketing At E3

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The marketing battle for the hearts, minds and wallets of consumers this holiday has begun, and as the armies have taken the field we can analyze their strategies and initial positions. While the statements from Microsoft, Sony and Nintendo can provide clues to their strategies, how the companies chose to spend money at E3 is more revealing.

Microsoft led off the E3 week with a presentation at USC’s Galen Center. The presentation focused mostly on the Xbox One with two important exceptions: Introducing a new version of the Xbox 360 (with no pricing announced), and a version of World of Tanks for the Xbox 360, as well as some upcoming games available free to current Xbox Live members. Microsoft used the bulk of the presentation to show a series of exclusive games coming to the Xbox One, with some mention of additional features of interest like the integration of Twitch TV to allow easy sharing of game content. The presentation closed with the release schedule (November) and the price: $499.

Microsoft did what it set out to do: Show off some of the best games headed to the Xbox One, and drum up excitement and interest in the hardware and software. The price point wasn’t really a surprise, but it was greeted with silence as the audience thought about the implications. Microsoft didn’t go into details of what the Xbox Live service would look like or cost on the Xbox One. Details about used games and connectivity requirements for the Xbox One had been posted prior to E3 on a special web site Microsoft set up, with the obvious hope that those issues would be forgotten in the excitement over the games being shown.

Sony’s presentation strategy was very different than Microsoft’s. For starters, Sony invited attendees to the event two hours early, and gave them free food (from gourmet food trucks) and free beer. Nothing like some free beer to put an audience in a receptive mood. The presentation itself was very different than Microsoft’s in a number of important ways. Yes, Sony spent the bulk of the time showing off new and exclusive games to generate excitement, just as Microsoft did. The main difference was that Sony led off with the PS Vita, describing the new titles coming and the underscoring the handheld’s utility with the PS4. It was, effectively, a relaunch of the PS Vita.

Next Sony showcased a number of strong PS3 titles that are arriving this year before moving on to the PS4. In its presentation, Microsoft spent very little time on the Xbox 360, though its fall lineup is scarcely less impressive than Sony’s PS3 lineup. Sony also took pains to highlight its movie and music divisions and how they would bring media content to the PS4. Ironically, Microsoft did essentially the same thing in its May 21 Xbox One event and was panned by gamers for it; here the gamers seemed happy to hear about non-game content.

Sony made sure in its presentation that Microsoft’s hopes for no further questions on used games and connectivity would be dashed. Sony declared there would be no restrictions on used games and no connectivity requirements for the PS4. Unlike Microsoft, Sony went in to some detail about how its PlayStation Plus program would work for the PS4, announcing that members will get a free version of Drive Club for the PS4 as the start of a series of free games. At the same time, Sony announced that a PlayStation Plus memebership would be required for multiplayer online play, a change from the PS3. Capping off the event, Sony announced the PS4 price: $399, undercutting Microsoft by $100.

While much has been made at E3 and afterwards of the rival showings, and Sony’s initial PR advantage, it’s easy to overlook some important facts. First of all, the Xbox One and the PS4 are virtually identical in the broad sense, with the same basic architecture, I/O, and storage. The primary difference is the inclusion of Kinect with the Xbox One; on the PS4 you’ll have to buy the Eye for $60 to get some of the same functionality. The more powerful Kinect hardware easily accounts for the price difference.

The real differences between the two consoles will come with services and policies, as well as the lineup of exclusive games. While right now Microsoft’s policies are not as popular as Sony’s, it’s perfectly possible to change policies with a single press release. Microsoft can do that at any time — as could Sony. There’s also the persistent rumor that Microsoft may offer a subsidized package for the Xbox One, with an ISP offering a discount on the hardware if you sign up for a long-term contract. That could mean a chance to get an Xbox One for $399, or even $299 or less up front. That could completely change the value equation.

Finally, Nintendo had a non-event event; instead of inviting the press and others to the Nokia Theater for an event like Microsoft’s or Sony’s, Nintendo brought people into its E3 booth. The idea was to avoid talking at length, and instead give the press a chance to get their hands on the games. Hardware (whether the Wii U or the 3DS) was de-emphasized to the point of invisibility; the games were front and center. The decision made sense on several levels. Nintendo can avoid direct comparisons of its presentation with Sony or Microsoft, because Nintendo didn’t really have a presentation. There was no news to announce about hardware, so why spend time talking about hardware The weakness of the Wii U is currently its lack of compelling games, and Nintendo demonstrated that there are some very desirable games coming soon for the Wii U. The fact that there was only a handful of games compared to other platforms let Nintendo focus on presenting each title to its best advantage.

The company booths echoed the presentations. Microsoft’s booth was all about the Xbox One, with the Xbox 360 relegated to a corner area. Sony’s booth spread its signage and game demos equally between the PS Vita, PS3, and PS4. Nintendo’s booth focused on games, devoting the most space to the key games coming for the Wii U. Here we see what the fall strategy will be: Nintendo will focus on a few key games, Sony will try to sell all three of its platforms, and Microsoft will focus most of its attention on ensuring the Xbox One gets off to a good start.

The actual spending involved for each company will make a huge difference as to the outcomes. Microsoft is rumored to have spent over $400 million launching Windows Phone 7, so a marketing spend on that scale is certainly possible. Nintendo has plenty of cash to spend, but will find itself constrained by Iwata’s promise of 100 billion yen in profit for the fiscal year; the company will want to get a quick return on any marketing spending to achieve that goal. Sony is recovering from its financial troubles, but it still isn’t swimming in cash, so the marketing spend will probably be closely scrutinized.

Predicting which console will sell more this holiday is a fool’s game. We still don’t know the final pricing of all hardware and services from all players; there may be more bundles or deals (or price cuts for the Wii U) yet to come. We also don’t know the scope or scale of the marketing campaigns planned. Finally, all of these companies are in it for the long haul; whether one company or another sells a million more units this Christmas isn’t critical. Each manufacturer needs to establish a good user base and continuing sales momentum, and more importantly to keep that going in the slower times of February and March of next year. It’s perfectly possible that all three console makers can ‘win’ this Christmas on those terms; it’s not a zero-sum game. Keep that in mind as you watch the marketing battle unfold.

Exclusive: Watching The Buzz On New Hardware At E3

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Who’s winning the buzz war over new console hardware is going to be one of the big questions coming out of the show. Of course, marketers for each company will be busy measuring tweets and likes, and compiling figures for the CEO to admire. We don’t have access to that internal data, but there are other ways to figure out who’s coming out ahead in the buzz battle. One simple way to watch the buzz is to use Google Trends; put in the search terms (like Xbox One or PS4) and get some quick comparisons.

There’s more than just Google Trends to watch, of course. Check out the support from major publishers for the next-gen consoles. Are the AAA titles appearing on both PS4 and Xbox One, or only one of those Given the architectural similarities between the two platforms, major publishers would generally be developing a title for both platforms — unless given an incentive to do otherwise. Or the executives at a company may have decided that, based on what they know, that one console will do substantially better than the other. That seems unlikely, though; there are too many unknowns at this point to be picking a winner at this stage. The general approach is to maximize the return on development by porting a game to all possible platforms — unless there’s a very good reason not to.

It will be tough to pick leaders by looking at gaming-focused media, because they are going to have huge amounts of coverage of all the major players. A better bet to get a read on what the average consumer might think is to look at mass media’s coverage. They will tend to cover all the major players fairly equally, but they may zero in on one as possessing some feature or exclusive game that makes a particular impression.

The really important item to look at is the number of exclusive games for the platform. Here are three time frames to look at: Launch titles, titles appearing before the end of the year, and titles announced for 2014. While media and the publishers may make a fuss over launch titles, what matters more to the sales over the holiday is the number of titles available before the end of the year. Even customers who buy the new console at launch won’t likely buy more than one or two titles at the same time. New software appearing over the following month might as well be a launch title for most buyers.

The longer term sales picture for the next-gen consoles depends mostly on the flow of new games. While titles of any kind are good, exclusive titles help make the buying decision in favor of one platform over another. This is particularly true in the case of the PS4 and the Xbox One, which are generally similar in architecture and features and will have many of the same AAA titles from major publishers. It’s important to note that a revival of Wii U sales will depend greatly on Nintendo’s ability to deliver a steady stream of solid new games, whether their own or from other publishers.

Let’s not forget, too, that asking around can provide some useful insights. If everyone you ask mentions the same console as the winner, somehow or other that console has managed to get ahead of the competition. Don’t forget to ask why someone thinks more of one console or another; the answers will give you clues as to the most effective selling points that have swayed opinions. You may get some ideas on what makes for good buzz for your own products, as well.

While some media may feel the urge to crown a ‘winner’ of E3 between the different consoles, or between the new games being introduced, that’s not going to matter much to the ultimate bottom line. Sure, it’s a nice thing to mention on package copy or in an ad, but ‘Best of E3’ isn’t something you can deposit in the bank. The battle for market share is only beginning at E3, and will continue for years. It’s quite possible that each manufacturer can ‘win’ on their own terms, by meeting sales and profitability projections, even though only one can be the best-seller in a given market over a given time period. Let’s not lose site of the ultimate goal of all of the marketing and PR activity: Generating higher profits. In the long run, if marketing can’t do that it’s a failure, no matter what customers (or marketing execs!) may think.

Exclusive: The Publisher Challenge For E3

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This year’s E3 will be dominated by the introduction of two new consoles, Sony’s PlayStation 4 and Microsoft’s Xbox One — and Nintendo will be striving to get renewed attention for the Wii U. The media’s attention will naturally be focused on the shiny new consoles, and the hardware makers will be doing everything possible to keep and hold that attention. If your job is marketing games, though, it’s looking like E3 will be a very difficult show.

The problem won’t be with marketing games for next-gen consoles; after all, those games will be the real focus of attention for next-gen consoles. Once you’ve seen the box and the controller, the excitement is pretty much over — until you launch a game. Console makers will be showing off what games can be like on new hardware.

Unfortunately, this will also be true for publishers like Activision, Electronic Arts, Ubisoft and others. The media will be swarming over the publisher’s booths specifically to see what Call of Duty: Ghosts or FIFA looks like on next-gen hardware. That’s fine as far as it goes, but the reality is that next-gen software sales for the holidays will be only a very small fraction of overall publisher revenue, no matter how enthusiastically consumers buy new consoles.

Let’s run a few numbers to examine this. Suppose Sony and Microsoft have a fabulous introduction of new consoles, and buyers snap up them up as quickly as new consoles have ever sold. There will be, at best, two months of sales for new consoles in 2013. That would mean perhaps 3 or 4 million new consoles sold for both Microsoft and Sony; perhaps 8 million between the two companies. From all indications, there will be a fair number of titles available at launch — perhaps as many as a dozen for each console.

So a hit title on one of the new consoles might sell as many as a million units . . . maybe even two million units. That sounds impressive, until you think about Call of Duty’s ability to sell 20 million units of a new title without even trying hard. EA’s big hits like FIFA will likely be in the 10 to 15 million unit range. Next-gen title sales, therefore, will likely be on the order of 10 percent to 20 percent (at best) of current-gen software sales for the holidays. That’s a nice addition to the holiday revenues, but marketers have to worry about that 80 percent of revenue coming from games for current-gen consoles.

There’s the challenge: Draw the attention of the media, and the buyers, and the attentive gamers to your new games for current-gem consoles. Somehow convince people that despite the lack of next-gen power, these games are deserve $60 of their love. (And don’t forget the DLC! Can I interest you in a collector’s edition ) Here, then, is the true indicator of marketing success at E3: Getting substantial attention for a game on current-gen hardware. If you see a company doing that, you can expect that company will have a good Christmas.

It’s going to make for some interesting tactics as marketers strive to overcome the attraction of shiny new hardware. Will we see more video More people dressed up in costumes Perhaps some unusual giveaways, contests or events Expect the unexpected. E3 will be the place to watch for game marketing next week.

Exclusive: How Microsoft Can Win E3

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Microsoft’s Xbox One reveal generated an immense amount of coverage in game media and the mainstream media as well, and also some criticisms among gamers. The challenge facing Microsoft at E3 is to fully win over gamers and set the stage for the company to become the #1 next-gen console this holiday season. Beyond that, Microsoft also wants to lay the foundation for victory against rivals Apple and Google for control of the television set into the future. The Xbox One could be the cornerstone of Microsoft’s grand crossover strategy involving smartphones, tablets, PCs and consoles. It’s an incredibly ambitious marketing task, and it begins with E3.

The console marketing struggle seems much like a presidential campaign. The three major candidates all need to appeal to their base (in this case, gamers) in order to win the primary (the E3 show). When the fall campaign for the all-important audience in November (when next-gen consoles begin selling), the prize goes to the candidate who can appeal to the largest possible audience – and thus get the most sales. Winning the hardcore gamers will not be enough to beat a console that has appeal to a broader audience.

Microsoft and Sony are clearly the two major-party candidates, well-funded and with powerful backing from key groups (big publishers), albeit with two widely different messages. Nintendo is the wacky third-party dark horse candidate, with the offbeat policies and perhaps some compelling new ideas that may appeal to a broad swathe of the audience.

So far, at least, it appears that Sony will be making its appeal primarily as a game machine, and in the fall perhaps alluding to some media features in an effort to make the console more appealing to people whose primary use case may not be games. Microsoft, by contrast, appears to be aiming to win the hearts, minds and wallets of the broader audience of TV watchers, sports fans, and media consumers. Nintendo is probably going to focus on key Wii U titles shipping for the holiday season, stressing the strong appeal of familiar brands in new and hopefully exciting games.

The E3 show will see Microsoft working to shore up its image among gamers, which it must surely be aware it needs to do after the criticisms in the game media. Microsoft has to clarify the situation with used games and whether or not the Xbox One needs to be connected all the time. At the same time, expect Microsoft to stress the advantages that gamers will gain from being on a connected platform.

Beyond that, Microsoft needs to display an impressive set of games both for launch and in the next year to convince gamers that the Xbox One is a great investment in cutting-edge, immersive gaming. Microsoft will have to resist its impulse to talk about non-game features of the Xbox One; the company should save that for the marketing aimed at the mass audience. Microsoft must give the gamer audience watching E3 coverage the exciting new games they are craving.

We can expect a Microsoft presentation focused relentlessly on games, and a booth to match. Third-party publishers will be featured along with Microsoft games, as the company will wish to show the broad support expected for the Xbox One. More interesting will be to see the range of genres on display; will Microsoft reach out to casual gamers and the younger gamers as well as the hardcore, older crowd It’s likely that we will see some titles showing a lighter side, but the proportion will be illuminating. Microsoft has to choose between strengthening its appeal to the hardcore, or broadening the appeal to the mass audience. Odds are we’ll see more hardcore titles showcased in prime spots, given that this is E3 and that Microsoft’s first concern will be the most committed gaming audience.

Microsoft will also be revealing more information on its services for the Xbox One. Sure, we expect to see all the familiar things from Xbox Live, no doubt enhanced in many ways. The question will be how is this service made available Will there be an annual fee What’s the price point Will some Xbox Live features be available to all for free These are critical questions in gauging the likely market acceptance of the Xbox One. A $10 monthly fee on top of several hundred dollars for hardware might be a significant barrier to sale, if the perceived value of the services provided is not sufficiently high.

There’s also a persistent rumor that Microsoft might offer a version of the Xbox One at a lower retail price, such as $299, with a commitment to a $10 or $15 per month, 2-year contract (what services this contract might include, if any, are unknown). While this would boost the overall price, it would give Microsoft a strong selling point for the Xbox One – “it’s less money up front than a PS4 or Wii U.”

Microsoft has a larger target than the game industry, and the marketing of the Xbox One will doubtless reflect this. Microsoft intends to not only exceed Sony and Nintendo in market share for the next round of consoles; it wants to preempt Apple and Google from owning the television experience. Keeping the lead in the console market is just an early battle in this long-term marketing war. We won’t see this strategy emerge until closer to the launch date for the Xbox One, when Microsoft will be unleashing a broad marketing campaign. If this is indeed Microsoft’s marketing plan, we’ll see advertising targeted to a broader demographic that focuses on the TV experience and other non-game aspects of the Xbox One.

Microsoft cannot allow the long-term goal to get in the way of the short term objective of being seen as the leader coming out of E3. There’s a fine line to walk, with the necessity to highlight the Xbox One’s exclusive games and gaming features, yet make sure to reference the non-gaming features that could appeal to gamers and that set the console apart from the PS4. Done properly, Microsoft will emerge roughly equal to Sony in terms of horsepower, and the nature and number of exclusive game titles. There may be some games with features using the advanced Kinect functionality or other Xbox One features that may give Microsoft an edge over the PS4. Microsoft will certainly try to make that point, but we don’t yet know if all the PS4 capabilities have been revealed.

The service comparisons will be important to gamers. Broadly, PlayStation Network and Xbox Live will both offer achievements, connections with friends, multiplayer matchups, and a wide variety media to devour. Pricing models and details of what you get could be a strong differentiator here. Sony may have a rotating supply of free titles, like they do with PlayStation Plus; Sony’s also already strongly committed to supporting free-to-play titles, which Microsoft is just toying with now. Sony appears to have a much more friendly environment for indie developers, and may end up with a broad array of innovative, inexpensive titles that Microsoft won’t be able to match.

Microsoft and Sony may hold back the most important thing fans want to know: How much will these new consoles cost Pricing can be a powerful marketing tool, and announcing a price first gives your competitor a chance to craft a strategy in response. Still, retailers will need to know the price before placing orders, so neither Sony nor Microsoft can wait too long. Don’t be too surprised, though, if we still don’t know the pricing by the end of E3.

One important thing to look for at E3 is the placement given to Sony and Microsoft in the booths of major third-party publishers like Activision, Electronic Arts, and Ubisoft. Will Sony and Microsoft get equal billing, or will one be favored over another Clearly Microsoft and Sony have both been working with major publishers, and we’ve already heard some of the deals. Will Microsoft end up with better placement at third-party publishers, or will Sony Parity should be expected; if one company has better placement with a key publisher, that can be significant boost in the tough holiday market. Of course, the danger for the third-party publisher is picking the wrong console to back, with possibly painful results to the bottom line.

Get your popcorn ready, because the marketing battle will take center stage at this E3.

Exclusive: How Sony Can Win E3

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Sony’s eager to regain the unquestioned leadership in the console business it enjoyed back in the PlayStation 2 days. Since that time, the company has struggled against larger corporate issues (the massive losses in the television business, tough times in the movie business, missteps in mobile devices) while losing the console leadership to Nintendo’s Wii (and in the USA, to the Xbox 360). The PlayStation 3 was powerful yet expensive initially, and the complicated architecture made it hard for developers.

 Now Sony is looking to correct the problems of the past with the PlayStation 4, seeing in this console a chance to regain leadership in the console business, secure a stronghold in the family room, and help bring Sony back to profitability while burnishing the company’s brand. So far, the company has revealed basic hardware specs for the PS4, and featured some partial game demos and enthusiastic developers at its initial unveiling in February.

Going into E3, Sony knows that Microsoft is going to come at it full force with a very competitive console and the ability to spend massively on marketing. Plus, Microsoft has timed its console unveiling to be close to E3, hoping to dominate the media between now and the show. Sony needs to put on a powerful E3 performance to blunt Microsoft’s momentum and regain the spotlight.

Realistically, neither Sony nor Microsoft should expect to run away with a clear lead in buzz after E3. Both companies will be showing lots of games with spiffy graphics and interesting features; some of the games will, probably, be the same titles. The biggest titles from Activision and EA and Ubisoft aren’t going to be exclusive to any one console, after all. The consoles from Sony and Microsoft are going to have the same basic architecture (the CPU and GPU), and probably similar I/O, memory, and storage. Sure, there will be differences in controllers, and motion detection and other features, but there won’t be immense differences.

There lies Sony’s first challenge: Differentiate the PS4 from Microsoft’s console. Journalists (especially mainstream media) will tend to lump them together; what’s key will be the differences that get mentioned. Sony’s task is to make sure that people talk about the PS4, they mention key things about it that Microsoft’s console doesn’t have. (Perhaps the controller’s Share button The touchpad The network features ) Sony needs to clearly identify its key advantages and make sure everyone knows them — and agrees that those features are key reasons to buy the console.

We can expect an array of software in various stages to be shown at the show. One of the key selling points is going to be the starting lineup of software for the PS4; what will you actually be able to play this Christmas (And the answer better not be “Ridge Racer!”) Sony has some strong studios that should provide interesting exclusives. Sony will be leaning on exclusives to sharpen the distinction between the PS4 and Microsoft’s offering.

Sony may or may not reveal details of its marketing plan at E3. Usually, that’s not considered to be something the media or the consumers are interested in, but it’s something retailers are keenly interested in. What sort of marketing spend will Sony commit to How much TV advertising Who’s the target audience The big retail chains will certainly want to know these things, but Sony may keep that a secret until later, in order not to give Microsoft any help in figuring its strategy.

Sony will be more constrained than Microsoft when it comes to budgeting. While Sony has eked out a modest profit for the fiscal year, that was achieved mostly through the sale of assets and careful cost controls. Until the good times return, Sony’s going to be careful with its spending. The PS4 launch is important, though, and will likely command a healthy budget. It will almost certainly not be all Sony marketers could wish for; they will have to be creative to get the most impact.

The biggest weapon in the marketing arsenal is, of course, the price point. We may or may not see pricing announced at E3. On the one hand, if Sony announces a relatively low price (like, say, $349 or even $399) and Microsoft doesn’t announce a price (or does, and it’s higher), Sony will get a solid head start in winning consumer hearts and minds. On the other hand, what if the yen suddenly drops in value; Sony could wind up losing a lot of money if it chooses a price for the PS4 too soon.

It’s quite possible both Sony and Microsoft may wait a while longer to reveal pricing; this gives the competition less time to craft a strategic response, after all. However, it’s unlikely that Sony will be pricing the PS4 to lose a lot of money. The company just can’t afford that sort of investment right now. Microsoft has piles of cash in the bank so it can afford to take a loss, but the company’s recent pricing of its Surface tablets shows it’s reluctant to lose money on hardware even to buy long-term market share.

Sony has also hinted that the PS4 will maintain a solid price point, which probably means that the PS4 will be more like $400 or $500. Ultimately, though, Sony will probably stress value: if you get any games or other content with the console, for instance. The company could decide to pre-load content on the PS4 hard drive to give consumers a taste of the various media (games, movies, music) it’s possible to buy on the console.

Sony’s initial February event was relentlessly focused on games, games, game designers, indie games, and games. Oh, and the PS4 also plays games. Did we mention games You may be forgiven if you aren’t sure whether the PS4 plays movies or music, too, because Sony sure didn’t spend a lot of time on that. Sure, E3 is focused on games, but if Sony expects consumers to shell out hundreds of dollars for its new console hardware, they’ve got to show people the PS4 plays movies and music and sports just fine, thank you. Just how much Sony chooses to showcase the non-gaming features of the PS4 at E3 will tell us a lot about how the company intends to market the PS4 to consumers.

It will be interesting to see how much effort Sony puts into the PS Vita for E3; that will tell us how important Sony considers that device to its holiday success. This could be a chance to effectively relaunch the PS Vita, stressing its connectivity with the PS4 and ability to play PS4 games remotely. Or, Sony could ignore the PS Vita in favor of the PS4, which would effectively mean that Sony has given up on the PS Vita and is letting die a natural death. Watch the Sony E3 presentation carefully, and see what percentage of it is devoted to the PS Vita. That will tell you exactly how important Sony considers the PS Vita, no matter what they may say later. That event time is precious, and will be measured out to precisely what Sony thinks will provide the best return on that time investment.

The holiday season will be marinating in game marketing, between the three big console players, upstart Android consoles like Ouya and GameStick, AAA titles like Call of Duty: Ghosts and Battlefield 4, and a slew of tablet and mobile hardware and games. Sony’s challenge is to find a way to stand out in the crowd and convince consumers to drop hundreds of dollars on what may well be the last console the company will ever produce. This will require a clear message, compelling value, and the resources and creativity to get that message to every possible target. Will Sony pull it off We’ll check in after the dust settles from E3 and reassess the situation.