The next time you spot a moody teenager pestering their parents about the latest video game while walking down the high street, remember that they know not what they do.
Driven by fierce competition in the video games sector, firms such as Sony, Microsoft and Nintendo stop at almost nothing to get gamers hooked to their latest ranges. Worldwide sales of games software will be worth £14.1 billion by 2004, according to research firm Datamonitor, and games console manufacturers are dreaming up increasingly sophisticated ways of getting gamers' attention. While a vicious price war between manufacturers looks set to slow - the price on one of the latest consoles has already dropped by £140 within a year of its launch - the use of targeted online marketing is growing.
One of the first firms to realise the web's usefulness in reinforcing brand loyalty was Sony Computer Entertainment Europe for its well-established PlayStation2 (PS2) brand, which launched across Europe in November 2000. Given the success of Sony's original PlayStation console (now known as PSone), which has sold more than 90 million units, anticipation for PS2 was intense. This was exacerbated when Sony delayed the console's launch by a month to ship in enough units to fulfil pre-launch orders. Because of this demand, David Patton, vice-president of European marketing at Sony Computer Entertainment Europe (SCEE) decided that initial European marketing for the console should be toned down.
"Such was the European demand for PS2 at launch that a lot of our discussions about launching the product were concerned with not over-hyping the market and disappointing consumers through lack of availability," he says.
"In the UK, all available stock had been sold before the launch date because we implemented a reservation scheme ahead of street date." Despite the delay, says Patton, the reservation process helped SCEE to target gamers online.
"This scheme allowed us to gain an understanding of exactly who our opinion-leading consumers were by gaining their contact details, including email addresses," says Patton. "This was an important element of our online strategy."
Although PS2 has better graphics than its predecessor, Sony made little reference to its technical features in initial marketing, instead pushing its usage as a means to have fun, play or compete with others. "We never defined the PS2 consumer, because you can't," says Patton. "But we could define the Play-Station world - we called it 'The Third Place'. In doing so, we sought to extol the unique benefits and fun of PS2 gaming."
The Third Place concept was famed for its off-the-wall TV ad by TBWA London. Directed by David Lynch - who built his reputation with cult films such as Blue Velvet and TV shows such as Twin Peaks - the black-and-white ads featured strange characters such as a bandaged individual and a man with a duck's head. A web site of the same name (www.thethirdplace.com) was equally challenging and ominous. "This is far from an obvious promotional web site," claims Patton. "It's constantly evolving. It offers little in the way of product promotion. It's about subtly defining the PS2 world in a way that appeals to core opinion-leaders."
However, Sony's biggest online investment has gone into the main playstation.com site, which, says Patton, is produced by a team of more than 20 staff in-house and draws more than 20 million page impressions a month.
"It continues to grow at a significant rate, and new builds are introduced on a monthly basis," says Patton. "It is key to our communication strategy and is an important platform from which we can launch a wide range of marketing initiatives."
PlayStation leads the home console market worldwide, according to Datamonitor, which predicts PS2 penetration of 90 million homes worldwide by 2004.
So it would take the effort of a large multi-national with a proven history in successfully marketing new technology products on a global scale to challenge it.
Enter PC software giant Microsoft and its Xbox. A departure from its normal PC focus, Microsoft's decision to enter the high-end gaming market was met with surprise from industry watchers. Investment analyst Merrill Lynch said in March 2001 that the software giant's move into the console market could drain up to $2 billion (£1.28 billion) from its cash reserves before it reached breakeven.
Although some believed Xbox was part of a Microsoft conspiracy to take over the world by offering users a powerful gaming console, PC, CD player and DVD system for all the family, initial marketing has so far pushed the console at hardcore gamers.
"The aim of the work was to champion the role of play in our lives and to provoke play, which was reflected in our strapline," says Harvey Eagle, European ad manager at Xbox. "Xbox offers a range of experiences in music, games and movies, so in that sense we are targeting everyone. But we are focusing primarily on gamers and the way in which they socialise." e
The Xbox's focus as an entertainment device for a specific audience is emphasised by Eagle's appointment - during his previous employment as a talent scout in the music industry, he signed US techno artist Moby and UK dance act The Prodigy.
Launch activity for the Xbox in Europe was initially focused online, with a site supporting the campaign's 'Play More' strap-line (www.playmore.com), which was followed by online promotions with MP3.com Europe, rich-media banner ads by Tangozebra and interactive TV ads on Sky digital.
Developed by ad agency Bartle Bogle Hegarty (BBH) and web agency Dare Digital, the playmore.com site launched before the console's roll-out across 16 European countries on 14 March. It acted as a central resource for odd, simple games such as Stationery Olympics, which saw players compete in track-and-field events using office equipment such as paper clips.
The site also hosted promotional viral video clips, including BBH's 'Champagne', a 51-second film that showed a person's life from birth to the grave using the strapline 'Life is short, play more'.
"I think the 'Champagne' viral film was a highlight," says Eagle. "More than one million people have downloaded and viewed that execution. It was our intention to create a really compelling piece of content, which would then be passed on."
'Champagne' was later edited down to a 30-second cinema and TV ad, only to be banned by the Independent Television Commission after complaints from viewers who had recently been bereaved. But the ad still won a Golden Lion at the 2002 Cannes International Advertising Festival.
"We saw 400 different versions of the clip on p2p networks - people had recorded their own versions," says Justin Kirby, managing director of viral marketing agency DMC, which tracked the viral ad at the start of the campaign.
"It was phenomenal. It got people discussing it in news groups, blogs and chatrooms. The clip was almost a vehicle of communication because it created a dialogue. At the time, there seemed to be an information vacuum about the Xbox. They couldn't make a Flash-based game for the campaign because it would have detracted from the console's power. Video was the only tool they could use."
The restrictions of promoting high-quality video games to PC users via a 56k modem could explain Microsoft's decision to relaunch the playmore.com site through web consultancy Agency Republic.
Nevertheless, Microsoft used both rich-media banners and dhtml executions to push the Xbox's first games, Project Gotham Racing and Halo.
"I can't talk about details, but in the coming weeks and months you'll see a new and improved site," says Eagle. "There will also be a CRM programme both online and offline in the UK, France and Germany, designed to deepen the relationship with early adopters of the console."
But Eagle is reluctant to be drawn on online marketing any more than necessary. "I've said it before, but this is a marathon not a sprint.
It's important, but the success of the Xbox is with the games over time, rather than any one campaign."
Compared with the sometimes dark and often surreal approach of its competitors, the launch strategy for Nintendo's GameCube console is a little more upbeat.
"Our 'Life's A Game' campaign used above-the-line and online marketing," explains Franco De Cesare, who was head of marketing at Nintendo Europe during the GameCube's launch - he's now a consultant at the firm.
"We used Nintendo's brand values - fun, irreverent, approachable. Online was an integral part of the drive."
The GameCube's 'lighter' theme fits in well with Nintendo's previous use of its cartoon-style Pokemon and Mario game characters. But De Cesare says the GameCube was not positioned purely as a children's product, as shown by Nintendo's use of sophisticated online promotions during its EUR100m (£62.8m) European marketing campaign. "We never see consoles as kids' brands. Gaming is an attitude," says De Cesare. "There are a lot of older people with a gaming attitude to life. The average age of a GameCube owner is 23 years old."
Before the launch of the GameCube on 3 May, TV ads were supported by online activity in March on the web site (www.nintendogamecube-europe.com). Further evidence of Nintendo's push to an older audience came in an online partnership with Emap's network of magazine sites in March.
Visitors to sites such as Kerrang.com and Internet-Magazine.com were shown animated ads with details of Nintendo's CubeClub.co.uk promotion - a series of events promoting GameCube units in dance clubs across Europe. Nintendo's rich-media ads achieved clickthrough rates of 20 to 25 per cent. Nintendo's pan-European sponsorship of the official FIFA World Cup site (www.fifaworldcup.com) also "worked wonderfully for us", De Cesare claims.
Each console's use of online marketing has evolved and grown as internet usage becomes more widespread. And online marketing also has the potential to take the lion's share of marketing activity once the next phase of the console war - online gaming - begins.
"If console online gaming takes off, and I think it will, online marketing could become a very important tool," says Frederic Diot, an analyst at Datamonitor. "Once the market has reached a critical mass in terms of players, console manufacturers will be able to try more interactive marketing methods. Each manufacturer will want to take full advantage."
Datamonitor estimates that the value of the online gaming market will grow from £437m in 2002 to £1.89bn in 2005, due mainly to the growth of online services in the console sector. The potential revenues from games console online communities, branded email and even music downloads are obvious, but console manufacturers are being careful not to over-promise.
After all, the limitations of narrowband technology in the UK are understood to have contributed to the eventual demise of web-enabled games console Sega Dreamcast.
Sony chose to begin its online assault on gamers in the US. In August it began selling modem adaptor kits that allow PS2 owners to connect their consoles to the web.
Microsoft has also announced details of a US online service, called Xbox Live, which will launch on 15 November. Indeed, online gaming appears to be central to Microsoft's own gaming strategy, given that all Xbox units come with a pre-installed modem. Sony Computer Entertainment Europe, meanwhile, has begun both broadband and narrowband online gaming trials for its console in the UK with ISP BTopenworld, but no definite plans for a commercial service have been announced.
Microsoft's Eagle hopes the Xbox Live service will be available in Europe by the end of the year, but he won't be drawn on any synergy between online gaming and marketing. "It's true to say online gaming is important to us, but we'll market the console in the relevant medium," says Eagle.
"It's of critical importance, but it has to be integrated."
De Cesare is also cautious about the potential of online services. Although Nintendo intends to release an online gaming adaptor for the GameCube in Japan, there are no plans to roll out services in Europe. "Online is a marketing tool for our brand experience and information," he says. "We'll be using it in future to deliver that message and increase sales."
Sony backed PS2 in surreal drive
On 4 March 2000, Sony Computer Entertainment Europe (SCEE) launched the PlayStation2 (PS2) games console in Japan. On 24 November, it brought it to Europe with the strapline 'The Third Place'. It was available at launch for £299; Sony cut it to £199 last September, then to £169.99 in August.
By December 2000, one million units had been sold across Europe - more than 165,000 in the UK. A year later, nearly 25 million had been shipped worldwide.
Offline marketing was spearheaded in November 2000 by a surreal TV ad created by TBWA London, directed by David Lynch.
The campaign focused on Sony's strength in creating a personal gaming environment, with no mention of technical features.
November also saw PS2 branding in equally surreal TV ads during ITV's UEFA Champions League.
The campaign was supported online at www.thethirdplace.com. The official European site (www.playstation.com) has up-to-date details of games and products.
In August 2001, an ad about a man who dreams he is a werewolf hit UK cinemas, backed by web site www.iamthewolfman.com.
Xbox made a £346m debut
The Xbox was launched in the US on 15 November 2001, five months before the console was unveiled to gamers across 16 European countries, including the UK, on 14 March 2002.
Microsoft has never officially revealed the marketing budget, but it is understood that the software giant has put $500 million (£346 million) into its console debut.
Nearly three million have sold worldwide - more than 500,000 in Europe as of May 2002. The console's launch price of £299 was later cut to £199, then dropped to £159.99 in August.
Before launching the Xbox, Microsoft worked with ad agency Bartle Bogle Hegarty and Dare Digital to develop a branded site (www.playmore.com), which was launched in February. A viral film, 'Champagne', was later made into a TV ad, which was banned, while the site has had more than 15 million page impressions.
TV, print and cinema brand advertising was supported by digital advertising - managed by Universal McCann Interactive - on music, sports and entertainment sites. Traffic to playmore.com benefited from banner ads across all of MP3.com Europe's localised music sites, along with sponsorship on MSN's instant messenger service.
The brand also featured on Sky Digital in iTV ads created by Bartle Bogle Hegarty.
Nintendo ran a £64m promotion
Even before its European launch on 3 May, Nintendo decided to cut the cost of its GameCube from £170 to £129. Backed by a £64m campaign called 'Life's A Game', more than one million units have been sold.
Nintendogamecube-europe. com went live in March to support TV and press activity.
Traffic was boosted with activity through publisher Emap and its titles in March. Visitors to the magazine publisher's sites were shown rich-media animated ads that directed them to CubeClub.co.uk. This showcased Nintendo's themed club nights designed to promote the console.
As well as activity on MTV.co.uk, Nintendo secured pan-European sponsorship of the official FIFA World Cup site (www.fifaworld cup.com), which ran until the end of June.
As part of the deal, Nintendo branding also appeared across several of Yahoo!'s European portals.
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