Brand Management of Video Game Industry - Essay Example

 Brand Management: Individual Project – Nintendo Wii This assignment required extensive secondary research which had to be focused towards the videogame industry along with the handheld device industry i.e., the mobile phone industry. As the brands we selected were owned by companies which also mark their presence in the international markets of electric appliances and computer software, the group had to search for information on three different industries with the gaming console being the third one. To analyze the branding strategies of Nintendo Wii, I was solely responsible to search for the brand Nintendo Wii on the internet along with present literature, my text books and study material to apply the principles of Branding and critically analyze the strategies of Nintendo in order to manage its brand Wii in the game console industry. For this assignment, various marketing reviews were researched upon. Scholarly articles and text books were researched for concepts of Brand Positioning, Product Design, Building Brand Equity and Nintendo’s strategies of Wii were analyzed in the light of the latter. In order to analyze the branding strategies of Wii, I used the concept and applications of Disruptive Strategy to see where Nintendo has positioned its Wii (Kim et al, 2005). This concept is also known as the “Blue Ocean” strategy where the brand is positioned in the virgin space or spot in the market which hasn’t been targeted by the competition yet (Anthony, 2008). On the basis of that, Nintendo targeted the market of former gamers or non-gamers who were not habitual gamers but did play games produced in Flash or other computer games like Solitaire. Besides the brand positioning of Nintendo’s Wii, I also studied the product design of Wii in the light of the competitors’ products, Play station 3 and Xbox. Nintendo’s unique design was found to be easily used and controlled by both beginners and expert and adept players (Nintendo, Inc. 2007). Other brands namely Sony Play Station and Xbox have complex controls with non-intuitive or illogical buttons that are shapes and require time for the players to get used to them. Nintendo’s Wii on the other hand is uniquely designed to cater to the needs of non-gamers and soft-core players who find it more user-friendly (Nintendo, Inc. 2007). This also helps Nintendo’s Wii to become more of a family brand where an adult or a non-gamer can give a fair competition to a hardcore player in the family belonging to the ideal gamer demographic profile of aged 18 – 35 years. As far as the pricing is concerned, Wii was targeted for the down-market in the game console industry. This meant that Nintendo had to push the prices down in order to attract more consumers. Its advertising and promotional strategies helped Wii to become the most selling brand during Christmas time and especially amongst families who preferred to own only one of all the consoles in the market which lead them to purchase Nintendo’s Wii. In the short-run, Nintendo did capture the market with its unique design, price and going down-market strategy but in the medium-run Nintendo was planning to go in direct competition with the other up-market brands namely Sony’s Play Station and Microsoft’s Xbox. What these major players failed to realize was that Nintendo was positioned just as a casual gaming brand whereas Nintendo did not only wish to stay with the family positioning as it believed that there was no casual gamer and that only non-gamer-or-former gamer existed which made Nintendo see a huge potential beyond the down-market’s easy gamers market (O'Gorman, 2008; Malstrom, 2009). With long-term plan in consideration, when Nintendo established its brand of Wii in the down-market, it then moved into the up markets which were being catered and ruled by Sony’s Play Station and Microsoft’s Xbox. Now, the mass households who owned a Nintendo could already enjoy the experience of games of Play Station’s kind with more adult content and grown up and conventional games like Twilight Princess, Mario Kart Wii, Super Mario Galaxy etc. By adopting this strategy, Nintendo first established a strong customer base in the gamers’ market which was ignored by Play Station and Xbox first and on the basis of that customer base which Nintendo could play with, it then moved Wii to the next level by introducing games which Play Station and Xbox could consider hardcore games and hence feel threatened (O'Gorman, 2008). But by the time Sony and Microsoft realized this, it was too late for them as Wii had already established itself as a strong brand in the market, bringing itself on the platform to move the families from non-gamers to what could be considered as gamers in the perspective of its competitors. However, by bringing its down-markets to the up markets, Nintendo has also threatened its own customer base. Those families and non-gamers who were indifferent to gaming consoles, have now been moved up markets of the gamers by Nintendo’s marketing. This leaves Nintendo’s Wii’s markets vulnerable to Play Station’s and Xbox’s marketing efforts as Nintendo has automatically brought more consumers for them to target (Matthews, 2011). The only strength which Nintendo’s Wii has over hardcore game consoles is its unique design which is easy to use and its affordable price range. Not to forget, it was Nintendo who would convert these non-gamers to gamers and hence, would establish strong brand equity. But then again, no customer is loyal. If Nintendo does not innovate and introduce high standard games and software in line with those produced by its competitors’ vendors, it will face serious consequences as it will lose its existing customer base to its competitors as now, these non-gamers would be expecting more from Nintendo. This decision has lead Nintendo’s Wii to a head-on competition with Play Station and Xbox in the up-market. The strategy of moving the down-market to the up-markets may back fire on the performance of Wii as there are more superior brands available in the markets which feature better graphics and more complex gaming techniques which is just what gamers look for (Matthews, 2011). References MALSTROM, S. (2009), “Casual Gaming and the Birdman Fallacy”. MATTHEWS, M. (2011), “ Analysis: Xbox 360 Capitalizes On Wii Contraction Through February In U.S.”, Gamasutra, March 11 O'GORMAN, P. (2008), “Wii: Creating a Blue Ocean the Nintendo Way”, Palermo Business Review, No. 2. KIM, W. C., & MAUBORGNE, R. (2005). Blue ocean strategy: how to create uncontested market space and make the competition irrelevant. Boston, Mass, Harvard Business School Press ANTHONY, S.D. (2008), “Nintendo Wii's Growing Market of 'Nonconsumers”, April 30, Innosight. NINTENDO, INC. (2007). Remote controller for Nintendo Wii. USA, Nintendo, Inc Brand Management: Individual Project – Sony Play Station [Name [IDs [Date [Course Number / Prof I have researched on Sony’s Play Station branding and marketing strategies. I have gone through different research papers and articles that were available on online libraries and have also sought guidance from reference books and review journals. After perusal of all the research material which is mentioned in the Reference list, it can be concluded that Sony has a long way to go till it can claim to be a threat to the market leader Wii. Sony, being an electrical corporation, has various resources devoted to other of its ventures. Play Station was launched in the year 1994 in Japan. It had marked its presence in the global markets by the year 1996 and generated immense response from the market (Marketing Week, 1996). With the original Play Station, Sony targeted the ‘hardcore’ audiences who were men and aged 18 – 36 (Veldrie, 2005). At the time of its launch, Play Station was launched at approximately USD 200. After milking the market for about five years, Play Station 2 was launched, which became the best-selling game console of all time. In November 2005, it achieved the status of fastest game console to reach the mark of 100 million units sold. With this success, Sony went on to launch PS 2’s successor PS3 in the year 2006 which was launched globally in the year 2007. January of this year 2011 marked a milestone for Sony as it was noted to have sold 150 million units worldwide (Sony Computer Entertainment, 2011). PS3 however, did not receive as robust response as its predecessor did. It was launched with the platform of an advanced technology called the Blu-Ray multimedia. With this, Sony’s Play Station 3 was set to compete with other major players of the market called Wii, Nintendo’s brand and Microsoft’s Xbox (Brandweek, 2006; Knufken, 2008). All versions of Sony’s Play Stations have been premium priced and set to skim the markets during the first months of its launch. As the product matured in the markets, it was launched in other countries. However, past data shows that this strategy has not helped Sony to beat the market leader Nintendo who is leading the pack with about 40% of the total market share. This would come as a surprise that almost three years ago, the brand Wii governed 75% of the total market share, which has now fallen to 40%. Sony has not been able to build a strong customer base despite its state-of-the-art technological arrangements for its PS3. This owes to two facts: Sony invested too much on its product development and the new technology cost more than it should. With high production costs, Sony feared bankruptcy as its competitor Wii was operating on much better profit margins and Sony had to catch up with its sales. The company actually lost money after launching PS3 and however, did manage to barely sustain on the basis of their Blu-Ray technology (Knufken, 2008; Seekingalpha. (2006). Sony Play Station has always been competing against its traditional rivals namely Xbox and Nintendo ever since it was launched. PSX and PS2 however did manage to keep the rivals off their backs by introducing new games which proved to be instant hits amongst the audiences. When Sony launched PS3, the company did manage to sell a few consoles but that was only for the short-run when problems of bugs hit the console. Not only the prices were high, but there were problems associated too with the games which included disappointing selection of games. PS3 was positioned as an ultimate hardcore gamers’ choice. After unsuccessfully skimming the market, Sony cut PS3’s prices to $300 and repositioned itself as a family brand with complete entertainment solutions. The reason for this was explained by company officials who acclaimed that Xbox had already managed to capture the core gamer market and that, Xbox was fairly popular amongst the hardcore gamers and so, this left little room for Sony to target hardcore gamers. Even though Sony’s Play Station 3 had better capabilities than its competitors, it wasn’t able to attract enough consumers. Besides gaming, Sony’s officials also pointed out that they were missing out on a huge chunk of the market by focusing only on gaming and therefore, keeping this in mind, PS3, which could play Blu-Ray movies, DVDs, enable the user to download movies from the internet; was repositioned as a family package for entertainment where it will not only be used for games but for all other entertainment purposes too . By doing this, it was subliminally following the market leader Wii’s strategy to build a stronger customer around families by going in the deep blue ocean (Malstrom, 2009). This was also comparatively easier for Sony to do so because it already had strong brand equity in the market with booming success of Play Station X and Play Station 2. Sony claims that the marketing campaign which was launched to reposition PS3 was the biggest and costliest since the launch of the brand. This strong marketing support to the Play Station 3 helped Sony to reposition it in order to build a stronger customer base as Wii was already going down-market. However, this leaves Xbox to be the only exclusive brand positioned as a hardcore gamer’s choice. This leaves Play Station and Wii in direct competition but the Play Station can be expected to have an advantage over Wii because of market offerings. But then again, it is attributed to the product’s complex features and high price which became a setback for Play Station 3’s sale initially when it was launched. Therefore, with new positioning as a family entertainment package and attractive prices, Sony however still lags behind Xbox and Wii however it can be expected to perform well in the near future because of this repositioning strategy which has enabled it to avoid direct competition with Xbox, the ultimate gamers’ choice and its product attributes have given it an edge over Nintendo’s Wii. References MARKETING WEEK (1996). AdValue: The successful launch of the Sony PlayStation. MARKETING WEEK. 19, 38-40 VELDRE., D., (2003). Playstation Warms Up. BandT.com. [Online] 27th November 2003. Available at: http://www.bandt.com.au/news/playstation-warms-up [Accessed 1st April 2011] BRANDWEEK., (2006). Game Plan Xbox, PS3~, Nintendo unleash new weapons to win console war. Brandweek. 47, 11-11. SONY COMPUTER ENTERTAINMENT, (2011) "Playstation2 Sales Reach 150 Million Units Worldwide. Sony Computer Entertainment. Press Release. February 14, 2011. Available at: http://www.scei.co.jp/corporate/release/110214_e.html Accessed 1st April 2011. KNUFKEN, A. (2008), “The Format Wars: Sony Proves that It’s the Player, Not the Game, That Wins”, Business Pundit. SEEKINGALPHA. (2006), “Why the PlayStation 3 will Bankrupt Sony”, [Online] Available at: http://seekingalpha.com/article/17605-why-the-playstation-3-will-bankrupt-sony Accessed 1st April 2011 Brand Management: Individual Project - XBox [Name [IDs [Date [Course Number / Prof On this assignment, I have contributed on the information and data along with its analysis on the second largest game console brand: Xbox. The brand positioning of Xbox, along with its current market position and future prospects for the brand is discussed in the light of academic sources of information, such as review journals, online articles, news, academic study material such as text books and marketing review papers were analyzed and interpreted according to my own understanding and approach towards the topic. Xbox was launched in the year 2001and was released in the global markets by 2002. Its major competitors have always been Sony’s Play Station and Nintendo’s brands. As Xbox was launched around the time when Sony released its Play Station 2, (a massive success), it had to face immense competition from an already established brand of Play Station which had already created its hype in the game console market. Play Station 2 was highly waited for and when it was launched, it achieved many milestones of being the fastest grown game console with 100 million units sold in the first five years . As there was already a lot to work for, Xbox aimed to go head-on with its competitor Play Station and targeted the ‘hardcore’ gamers’ market. Slowly and gradually, Xbox caught up with the giant Sony and surpassed its sale as Play Station 2’s markets matured (Brandweek, 2006; Melanson, 2009). When Xbox was launched, it was positioned as the ultimate gamers’ choice, with games like Halo, Street Fighter IV, Marvel vs. Capcom 3 etc were primarily targeted towards the hardcore gamers with age demographics ranging from 18 to 36 . Besides this, the brand of Xbox carries more value added benefits which any of its competitors has. With Sony’s Play Station 3 as a complete solution for the family’s entertainment where consumers can watch Blu-Ray movies, download their favorite media besides playing games, and hence, is now positioned as more family oriented and on the other hand, Xbox features live multiplayer support under its service called Xbox Live. Alongside all, the Xbox does not operate on Blu-Ray which gives Sony an advantage because people who want the ultimate gaming experience, would want to avail the utility of the technology of Blu-Ray. Conversely, in response to the Move of Play Station 3, Microsoft introduced the Kinect which is somewhat similar technology (Yin-Poole, 2010). This kind of product mix specifies the strategy of Xbox. It does not want to cater any other market beside the hardcore gamers’ sector. Wii, which seems to be the first one to realize the potential in the down-markets of non-gamers and ex-gamers, was a first-mover in the latter and was successful in targeting the mass market beyond the scope of just hardcore gamers. This made it the biggest game console seller in the market with a massive of 75% to its credit in the year 2008. However, as Sony repositioned its Play Station 2 and launched Play Station 3 along the same lines, Nintendo was to be faced by enormous competition from the global giant which threatened its position. Nintendo started to lose its share to Sony’s Play Station and was further threatened by Xbox’s market offerings. Currently, Nintendo survives at 45% of the total market share in the game-console industry. It was a first-mover in the down-markets but was not able to sustain its position because of its simpler design in front of what Sony’s Play Station 3 had to offer in terms of product performance. Besides this, Xbox is known to have provided a range of hardcore games for its hardcore gamer customers so this left Xbox alone in the up-market of hardcore gamers (Malstrom, 2009). Xbox has big names like the Street Fighter, Call of Duty, Halo etc under its umbrella which have hooked the gamers to Xbox (Sony Computer Entertainment, 2011). Moreover, Xbox is backed by the giant Microsoft itself which is an expert in software production. Wii is still the market leader however it has lost its share greatly to the two brands in the quest of winning the market. Yet, the three cannot be directly compared against each other as Wii and Play Station have positioned itself in different markets and Xbox is still considered as the hardcore gamers’ choice. It will not take long for Xbox to completely cloud over this market which will become saturated in the near future. Xbox will have to come up with more tactics to keep itself alive in the sector of ultimate gamers or it will have to move to the bigger markets of families and will have reposition itself in accordance with the same. But it will be too long because by the time, Sony’s Play Station and Wii will already be in a much stronger position and it will be difficult for Xbox to penetrate in their turf (Matthews, 2011). However when the overall share of the market is concerned, Xbox stands at the second number which means that Wii’s strength of cheap prices does not have an impact over all as such, it can be seen that the brand is losing its position to the two competitors namely Play Station and Xbox (Matthews, 2011). This would mean that Xbox’s pricing complements its revenue share and that, its revenue in the comparatively smaller up-markets is large enough to become a threat to Nintendo. Besides this, Nintendo’s strategy to bring the non-gamers and ex-gamers to the platform of gaming offers a huge opportunity for Xbox as well as its primary target market is the gamers. Non-gamers who were being converted to gamers, would want to explore more options in the game consoles present in the industry and hence, that could be the time when Xbox would need to gear up its marketing efforts in order to cater to the growing size of its target market owing to Wii! (Matthews, 2011) References YIN-POOLE, W. (2010), “Move and Kinect sales 'neck and neck”, EuroGamer, BRANDWEEK., (2006). Game Plan Xbox, PS3~, Nintendo unleash new weapons to win console war. Brandweek. 47, 11-11. MATTHEWS, M. (2011). Analysis: Xbox 360 Capitalizes On Wii Contraction Through February In U.S., Gamasutra. MELANSON. D., (2009). Microsoft touts 30 million Xbox 360s sold, 20 million Xbox LIVE members. [Online] 28th May 2009. Available at: http://www.engadget.com/2009/05/28/microsoft-touts-30-million-xbox-360s-sold-20-million-xbox-live/ Accessed 1st April 2011 SONY COMPUTER ENTERTAINMENT, (2011) "Playstation2 Sales Reach 150 Million Units Worldwide. Sony Computer Entertainment. Press Release. February 14, 2011. Available at: http://www.scei.co.jp/corporate/release/110214_e.html Accessed 1st April 2011. MALSTROM, S. (2009), “Casual Gaming and the Birdman Fallacy”. Brand Management: Individual Project – Hand Held Device Industry [Name [IDs [Date [Course Number / Prof This assignment required a lot of researching in the two industries namely the game console industry and hand-held devices industry. I have researched on both the industries and have linked the dependence of the two on each other. Review journals on both the industries were researched upon along with academic literature studied from online libraries and text books. The competitiveness of the two industries were gauged and their dynamics were discussed which made it easier for the other group members to analyze their respective brands in the light of the industry. I have solely contributed to the report in the form of analyses on all the data and information on the hand-held devices and the game console industry. Since the technological breakthrough which this world experienced when the microchip was invented by Jack Kilby, there has been a revolution in every industry and every business environment has had an effect in its production techniques and operation methods (Zygmont, 2003). Similarly, the outcomes of these chips are personal computers, mobile phones, computer games etc. In the industry of video games, there have been many brands and companies which have exited and entered and the ‘console wars’ as we know it today, have always existed in the industry. From Atari competing against its imitational products to Play Station 3, struggling its way through competition, the industry never halts as the players keep on bringing innovations in the market via technological breakthroughs. The industry has seen players like Sega Genesis, Super Nintendo, NES and the Master System and fierce competition between Play Station 2, GameCube and Dreamcast which forced Sega out of the industry; there have always been competition and brand conflicts in the game console industry (PBS, 2009). The industry has quiet recently gone through a change where two of the major players have changed the dynamics of the target market and have brought in families and non-gamers as well (Malstrom, 2009). Sony for example is trying to make the market perceive its Play Station 3 as a hybrid brand which besides being used as a game console could also be used as a source of entertainment for the rest of the family because of its Blu-Ray technology (Veldre, 2003). Presently, there are three major players in the market namely Microsoft’s Xbox, Sony’s Play Station 3 and Nintendo’s Wii. Nintendo has been experimenting in the 3D technology market since 1980 and has brands in the hand-held devices category like Game Boy, Virtual Boy and Ultra-64 in the hand-held market. Besides this, the company also ventured into Nintendo GameCube which was the company’s second 3D venture. Game Boy Advanced SP followed these brands but the company eventually landed up with introducing the DS which has now being replaced with its newer version called 3DS. The company claims that on its first day of 3DS launch, it sold more units than all the previous game consoles sold on their first day in the company’s history (Thorsen, 2011). Nintendo caters to the hardcore gamer market like it does with its game consoles. Alongside 3DS, Sony has launched is second generation PSP in January which also has received a massive response as Sony’s officials have said so. Besides its current launch, Sony has also been involved in hand-held devices with PSPs since the year 2004. It has not been around long enough but then again, the brand Play Station has established strong brand equity with games like Final Fantasy IV, Metal Gear Solid etc. Unlike Nintendo, Sony aims the younger audience with its PSPs (Szecsei, 2010; . The hand-held market may seem irrelevant when it comes to the game-console industry. However, it is important to notice that all the major players who are competing amongst each other in the game console market, are also competing against each other in the hand-held market except Microsoft which is an indirect competitor through Apple’s iPhone. The market again was led by Nintendo’s DS with an enormous share of 70% in the year 2009. However, in Japan, the situation seems to be contrary as Sony was reported to sell more units of PSP than Nintendo could sell its DS (Japanese Market Report, 2008). As far as Apple is concerned, its iPhone is only limited to the markets of the United States and Europe however as the chart above shows, iPhone registered a growth of approximately 15% from the year 2008 to 2009. Nintendo lost on its DS to both Apple and PSP. That said, it can be said that for every iPhone or iPad which used Microsoft’s operating system, would automatically be exposed to its games. Also, an important aspect needs to be seen here which is that Nintendo is an exclusive company which specializes in games only whereas its competitors namely Sony, Microsoft and Apple, have separate business units called Sony Computer Entertainment, Xbox and iPhone, dedicated to focus on this market. This leaves them more powerful as Sony already has strong brand equity and can expend more finances in its marketing efforts. However, Nintendo being exclusively for games, would know exactly where the economies of scale lay and hence, have the advantage of pushing down its per unit costs and hence, provide higher value to its customers in terms of both price and quality. Brand wars have also been going on in the hand-held market as well. Sony has recently launched a new second-generation PSP in the market which was closely followed by Nintendo launching its 3DS in February 2011 (Nintendo, 2010). Apple now has to face stronger competition in the market and needs to expand into emerging markets of Russia, China and India. With the presence of all the players, namely Sony, Nintendo and Microsoft; in all the markets, both the up and down of the game console industry and the hand-held industry by targeting the younger audience, these players have solely been governing the market from all aspects (Malstrom, 2009). References MALSTROM, S. (2009), “Casual Gaming and the Birdman Fallacy”. ZYGMONT, J. (2003). Microchip: an idea, its genesis, and the revolution it created. Cambridge, MA, Perseus. THORSEN., T., (2011). 3DS sets sales record in US, 'no widespread issues' with portable. GameSpot. [Online] 29th March 2011. Available at: http://www.gamespot.com/news/6306261.html [Accessed 1st April 2011] SZECSEI., M., (2010). Sony to shift PSP target market. LazyGamer. [Online] 21st September 2010. Available at: http://www.lazygamer.net/sony-to-shift-psp-target-market/ [Accessed 1st April 2011] PBS. 2011, “The Video Game Revolution”, [Online] Available at: http://www.pbs.org/kcts/videogamerevolution/history/ [Accessed 31st March 2011] VELDRE., D., (2003). Playstation Warms Up. BandT.com. [Online] 27th November 2003. Available at: http://www.bandt.com.au/news/playstation-warms-up [Accessed 1st April 2011]  JAPANESE MARKET REPORT (2008). Market for Home Computing and Video Games. [Online] 9th January 2009. Available at: http://www.mcvuk.com/features/403/JAPANESE-2008-MARKET-REPORT [Accessed 1st April 2011] NINTENDO (2010). "Launch of New Portable Game Machine". Press release. Accessed 1st April 2011 Read More