Sega ambushed its video game competition last week with the surprise launch of Sega Saturn into North America.
The manoeuvre was a coup for Sega in a competitive marketplace estimated to be $320 million wholesale in Canada alone.
Two months ago, Sega announced that Saturn, launched last November in Japan, would not be released in North America until Sept. 2.
At Electronic Entertainment Expo (E3) in Los Angeles on May 11, Sega dropped its bombshell: Sega Saturn had been delivered to stores across North America at 9 a.m. that morning.
Jeff McCarthy, vice-president and general manager of Sega Canada, says Toys R Us, CompuCentre, all Hudson’s Bay stores and about 100 independent Canadian stores got Saturn shipments.
McCarthy says Sega had been building up to the surprise announcement since early May with teaser advertising, including random posting of the Sega Saturn logo, a ringed globe resembling the planet Saturn, in major centres.
The logo has also been appearing on tv stations across Canada, including tsn and MuchMusic, in the lower corner of the screen where stations often run their own logos.
A heavily weighted television campaign consisting of one 60-second and two 30-second spots broke in major markets on May 11 and will be supported with print, radio, and in-store presence.
Two themes are being used in the advertising, ‘It’s Out There’ and ‘Theatre of the Eye.’
Sega’s u.s. agency, Goodby Silverstein and Berlin, of San Francisco, created the campaign, while Media Experts, of Toronto, handled Canadian strategy, placement and promotions.
McCarthy says the target market for Saturn is males 18-30, slightly older than the 12-24 demographic of Genesis.
He expects Saturn players to be those who have used Genesis for a few years and are looking to trade up to the next gaming experience.
The older demographic will also have the financial means to buy Saturn, which retails for $499.
Saturn also plays audio cds, photo cds and Karaoke, and it will eventually play cd movies using an mpeg adapter, which will be released later.
Five games are available now for Saturn, with 20 titles expected by September.
Importantly, McCarthy says, Sega has interested major software publishers such as Electronic Arts and Acclaim Entertainment in designing for Saturn.
‘We’re in the razors and blade business,’ he says. ‘We’re trying to drive hardware sales with software.
‘Our research tells us that the key is the gaming experience. The hardware that delivers it is almost secondary.’
Because the video game market is bigger than the film business, it has caught the attention of film studios such as Warner Bros. and Paramount, which both have interactive divisions as well as recently formed Dreamworks.
‘For them, it’s a very lucrative business,’ McCarthy says. ‘If they can make a film, they can make a game from that without having to sell off the rights.
‘We’re now seeing proposals from filmmakers who want to make the game and movie at the same time,’ he says.
‘It will become much more difficult for us as game people to license movie properties, that’s why it’s important for us to develop properties we can control like Sonic the Hedgehog and Virtual Fighter.’
Sega has been in the arcade business for 40 years and has tried to duplicate the experience with Saturn, a 64-bit cd-rom-based system, which is its entry into a new category known as the ‘next generation of video games.’
Several other major companies will be launching systems into this category this year, systems which claim faster play, arcade-like quality, and richer graphics and sound than entry-level 16-bit Sega Genesis or rival Super Nintendo Entertainment System.
Before E3, Sega’s major opponent, Nintendo, announced that its Ultra 64 system would not be released in time for Christmas but will be held back until April 1996.
Ron Bertram, marketing communications manager for Nintendo Canada, says, that ‘rather than launch the system with two or three good games, we thought we’d give the developers more time so we can come out with fantastic games for launch.’
To fuel the necessity for lucrative, proprietary game titles, Nintendo has bought a stake in Rare, the British-based developer of its 1994 hit, Donkey Kong Country for Super NES.
Although Ultra 64 has been delayed, Nintendo will be launching a product and gaming category this August with the release of Virtual Boy.
Virtual Boy is a table-top self-contained unit that does not hook up to a tv set. Players look into an eye-piece similar to a microscope and experience 3-D game play.
It will retail at $219 and include one game.
Leo Burnett ,Toronto is handling the launch campaign.
Unlike its competition in the new video game market, Nintendo’s Ultra 64 is a cartridge-based system, not cd-rom.
Bertram says Nintendo is staying with cartridges because the response time for start-up is immediate, although the company is investigating coming out with an accessory for Ultra 64 after its release that will provide additional memory capabilities that could be either a cd-rom or tape-based system.
Ultra 64 will intentionally retail at a lower price point then its competitors, under US$250.
Bertram says price is a big consideration because Nintendo expects the markets for Super NES and Ultra 64 to be similar, ages 8-18.
‘This is still a business about kids’ kickback time and after-school hours,’ he says.
Sega is not the only company hoping to take advantage of its headstart on Nintendo.
Sony Computer Entertainment, a new division of Sony, is spearheading the entertainment giant’s first venture into the video game business with the worldwide summer launch of the Sony PlayStation, which is expected to sell for about $499.
Sony spent 12 years and $500 million developing the system’s technology.
Butch Freedhoff, general manager of Sony Computer Entertainment Canada, says Sony has been making cd-rom-based entertainment for many years, so a video game system was a natural evolution.
Sony also happens to be the world’s largest producer of cds at 40 million a year.
Freedhoff is confident of the success of PlayStation, and not only because of the equity of the Sony name.
‘We have the ultimate game machine,’ he says. ‘We have more horsepower and more features than the competition, for the same money.
‘PlayStation has the ability to do 3D graphics in real time.
‘The other feature we think is outstanding is that once the cd-rom game cartridge is loading, the player can pull the cd out of the game and put in their favorite audio cd and listen to it while playing.’
Sony has signed more than160 software companies and will have 15 to 20 game titles available for the launch of PlayStation and a total of 50 by Christmas.
Freedhoff predicts the primary audience for PlayStation to be aged 12-24, but sees the secondary market to be broader because of its price.
Sony is also hoping to attract more females to the gaming experience and is working with focus groups to help to grow that market.
Sony has tabbed PlayStation as its biggest venture for 1995 and 1996 and will put the lionshare of its resources behind it.
Chiat/Day is handling North American advertising. C/D San Francisco will produce the creative and the Toronto office will handle Canadian strategy and media.
Another major play, Panasonic has been in the market since last August with its Real 3DO Interactive MultiPlayer and earlier this year began shipping a new streamlined model.
An aggressive print, Cineplex and tv campaign from DDB Needham ushered the MultiPlayer onto the market.
Ian Jackson, sales manager for Panasonic Canada, says ‘there will be a lot of activity out of Panasonic and 3DO as this year progresses.
‘In the high season, this fall, when all the companies are actively looking for mindshare, we’ll be there,’ Jackson says.
Panasonic parent Matsushita is one of the backers of 3DO, of San Francisco, the company that developed the technology it has licensed for the MultiPlayer system.
Sanyo Electric, of Japan, and Goldstar, of South Korea, will also be coming out with 3DO systems, while another licensee, Creative Technologies, has developed a circuit board that will allow computers to play 3DO games.
Jackson says the MultiPlayer is an advanced video game platform that does more than just play games.
He says it also plays all standard audio cds, Kodak photo cds, and an mpeg adapter that will be on the market this summer will allow it to play full-motion video.
Most of the game software is written in Dolby SurroundSound, so audio output is high-quality.
Jackson believes 3DO may become the standard for entertainment systems because it will be available from more than one company.
‘Consumers shouldn’t have to buy just one brand,’ he says. ‘They should be able to select from a realm of different brands.
‘Take vcrs, for example. Matsushita came out with vhs when Sony was working on Beta.
‘It’s not restricted and it’s not proprietary. It’s now the accepted standard, and, for the consumer, it comes down to who has what price, what promotion.’
