DREAM WEAVERS – Sega’s strategy in launching Dreamcast was simple

It may not have been pretty, but Daniel Aquilar’s dive into a vat of mashed potatos paid off handsomely.

The 21-year-old traveled to Mann’s Chinese Theater in Los Angeles last November along with 500 other game enthusiasts, jumped into a vat containing 3,000 pounds of pulverized spuds, and beat out his rivals to find cards that spelled out “Sega Dreamcast.”

The young man claimed his prize, the yet-to-be-released Dreamcast video game system, this September from Sega of America senior vp-marketing Peter Moore, in a presentation at the manufacturer’s warehouse in Hayward, CA. Fittingly, the ceremony capped an eight-month marketing push captained by Moore that was designed to “dunk” as many gamers as possible.

“The consumer has to experience the product [to fuel word of mouth and] a sense of anticipation,” says Moore, a 44-year-old transplanted Liverpudlian who joined Sega Feb. 1 to drive the marketing campaign for Dreamcast’s launch. “There’s a great correlation in this industry between trying and buying.”

If a hardcore gamer were to grade Sega’s eight-month, $100-million marketing drive for the newest entry into the hard-charging video game industry, he might say that the eye candy was great, but that it was strong where it counted most in gaming and interactive qualities, too.

Sega took its highly anticipated game system right to the gamers, through trial at retailers, an unprecedented six-week rental program with the Hollywood Video chain, a partnership with IGN.com (the most popular Web site for gamers), and a Dreamcast Mobile Assault Tour led by vehicles resembling “Brink’s trucks from the year 2050,” Moore says.

A week before Sega officially launched Dreamcast on Sept. 9, it was already clear that Moore and his team had at least achieved their first objective: to build pre-sell orders to a volume “unlike anything anyone had ever seen before,” he says.

Gamers – many of whom have long considered Sega to be passe – apparently decided to buy after they tested such early game releases as Sonic Adventure (featuring Sega icon Sonic the Hedgehog). A week out from ground zero, 300,000-plus consumers had plunked down preorder fees of $25, setting the stage for a record day in retail entertainment annals. In comparison, Sony generated 100,000 preorders four years ago when it launched the Playstation system. Sega succeeded in winning support from most third-party software developers, and planned to have 18 Dreamcast-compatible games at launch, twice what Playstation had when it rolled out.

The launch proved to be a real blast: Nearly $100 million in Dreamcast systems and related software and peripherals sold in the first 24 hours.

Sega’s Dreamcast has about one year to build a significant following before rivals Sony and Nintendo introduce their next-generation hardware, expected out in 2000 and 2001, respectively. Though Dreamcast boasts a 128-bit engine that produces a dazzling new level of realism and speed, the system stumbled last year in its introduction in Japan, a land of video game fanatics.

“Many felt that the buzz around the Playstation II ate into the willingness of Japanese consumers to buy the Dreamcast,” says Curt Feldman, editor-in-chief of industry magazine Games Business, Brisbane, CA.

Buzz building

Sega engineered a relentless promotional blitz in the U.S. to meet its goals of selling one million units by Christmas and 500,000 more by March. The company started by hiring Moore away from Reebok International, where as senior vp-marketing he had focused on global soccer and rugby activities. Before Reebok, Moore worked his way up the ranks to president at Patrick USA, a subsidiary of the French sportswear company.

When he joined the San Francisco arm of Tokyo-based Sega Enterprises Ltd., Moore faced a high-stakes challenge: Sega’s viability as a company arguably rests on making the Dreamcast a viable third choice in the growing game market.

“I knew very little about the industry, apart from being the parent of a gamer. [Yet] we are addressing the same audience, 12-to 24-year-olds, as I did at Reebok,” he says.

In assembling a task force that would ultimately swell to 30 people, Moore personally conducted 80 interviews, hiring some with game backgrounds and others seasoned in promotions. He lured his two top lieutenants from Reebok in Boston: consumer promotions manager Heather Kashner and events marketing manager Kathleen Joyce.

Ad agency Foote, Cone & Belding, Chicago, had already established a product position for Sega “which we felt was very relevant,” says Moore. The brand embodies irreverence, defiance, the unexpected; it’s designed to be a product for passionate gamers. Teaser ads that began airing in early July introduced the Dreamcast tagline, “It’s thinking,” and the conceptual theme of man versus machine.

The teaser ads were followed in August with live-action “Apocalypse” spots that aired until the launch. High-end animator Pacific Data Images employed the Dreamcast hardware to create sequences featuring Sonic and a host of other Sega game characters.

“We had agreed on who we were. Now we needed to develop the tone of the [promotional] campaign that would be an extension of the creative,” Moore explains. Sega found a “focal point” for the launch back in February, when it learned that MTV would hold its annual MTV Music Awards ceremony on Sept. 9. “Once we got wind privately that they were considering that date, we looked again at the demographics” and saw a perfect fit, says Moore. Sega signed on as sponsor in March.

The awards show became the launch’s core event, and was supported by a major ad buy on MTV that began Sept. 9 and runs through first-quarter 2000. An online contest at sega.com gave away a trip to New York City to celebrate the Dreamcast launch and attend the show. “We received e-mail submissions in the six figures,” Moore boasts. Sega leveraged MTV’s celebrity cachet by presenting Dreamcast systems to all of the show’s featured performers.

Joy sticking

Moore’s crew had to project the tone and slant of the creative through the numerous events scheduled in the marketplace, which were designed to let consumers get their hands on the systems. “It almost becomes a carpet-bombing approach. Let no consumer not know that Sega Dreamcast is here,” he says.

Wilsonville, OR-based Hollywood Video stores began renting systems at 1,100 locations in July, in a reversal of typical industry practices that prohibit renting for six months after a launch. “This is a very dangerous [strategy] if the product is anything less than superlative,” admits Moore. Sega and Hollywood Video planned to glean feedback through exit interviews and direct-mail surveys. Sega also put game sampling-capable kiosks in hundreds of retail stores including Babbage’s, FAO Schwarz, Toys R Us, and Electronics Boutique outlets.

Sega took Dreamcast on the road in a Mad Max-style 22-week Mobile Assault Tour that kicked off in August. Gamers at 200 high-traffic locations in 39 cities compete on consoles lodged in all-terrain vehicles that disembark from the mother-ship assault vehicle. IGN serves as sponsor for the competitions, which will fly top scorers to Las Vegas to vie for a $15,000 prize.

Gamers follow the Assault tour’s progress and results of competitions at IGN.com, whose partnership with Sega is “a great example of mutual back scratching,” Moore says. IGN.com is one of the most visited sites on the Web, and its audience is video gamers. Owned by San Francisco-based Affiliation Networks, Inc., IGN.com will develop content for Sega’s Dreamcast Network, a planned online community where Sega envisions gamers playing each other via the 56K modems that were built into Dreamcast systems

In a parallel mobile event, Sega is presenting sponsor of the ironically titled Family Values Tour, a September-through-November alternative rock concert series featuring such unfamilial bands as Limp Bizkit and Method Man. “This is the tour of the fall and aimed squarely at our young male audience,” says Moore. Sega samples games at all concert venues.

Sega hopes a partnership with AT&T will open the door to online gaming through Dreamcast, since the consoles provide a much cheaper way to get online than computers do. But the service isn’t free. Dreamcast buyers will have to sign up for AT&T Worldnet service and pay monthly access fees. Moore says users can employ the keyboard AT&T provides for tasks such as e-mail and chat capabilities this year, until games for Internet play arrive next year.

The system’s ability to take users online could help build a fan base for Dreamcast, if Internet game-playing takes off. Some consumer surveys have shown that gamers aren’t obsessed with the notion of playing online. “Our goal is to be positioned to provide online gaming. The question is not if it becomes a reality, but when,” Moore asserts.

After handing Aquilar his new console last month, Moore had to coast-hop to New York City for last-minute satellite interviews with news stations across the country. Meanwhile, quirky celebrities such as Verne Troyer, who played Mini-Me in Austin Powers: The Spy Who Shagged Me, and WWF wrestler Sable hosted kick-off parties at stores in five top markets.

That’s the kind of relentless public relations push Sega needs if it’s going to break the grip that Sony and Nintendo have established on the industry.

This is more than a game.

Trent Reasons says he finds “another reality” through his Sony Playstation each weekend. He estimates that he devotes five or six hours each Saturday tackling his favorite games, which include GT Interactive’s Driver (a police officer must evade the baddies) and Infogames’s Bugs Bunny/Lost In Time (an adventurer meets Warner Bros. characters). “It’s transporting. The games become an extension of your imagination and fantasies,” says Reasons.

But not teen fantasies, in this case. Reasons is a 25-year-old professional who labors all week analyzing derivatives at Credit Suisse First Boston in New York City. “To some degree, I will probably always play. It’s acceptable. My older brother, who is 28, just bought a Playstation for the sports games,” he says.

Video games have reached beyond the core target of preteen and teen boys because of young adults like Reasons, who grew up with the technology in the 1980s. For them, it’s a viable entertainment alternative to movies, CDs, or books. Reasons says he cut his teeth at the age of seven on games like Boxing and Pong on the now-ancient Atari console.

For the first time last year, the majority of frequent game players – 57 percent – were over 18, and women comprised a record 31 percent of gamers, according to a study by the Interactive Digital Software Association, Washington, DC. The average player logged 42 hours of game time in 1998, compared with 26 hours in 1996, according to industry sources. The installed base jumped to 43 million households this year, up from 21 million last year, according to a study by Ziff Davis, New York City.

With the demographic base spreading out, console makers are casting wider marketing nets with tie-ins and events. Leading up to its Dreamcast launch, San Francisco-based Sega of America focused on game sampling at events that would capture the 12- to 24-year-old core target “in its element,” says promotion manager Heather Kashner. Sega plans to find packaged goods partners for tie-ins in 2000, she adds.

Sony Entertainment of America, Foster City, CA, positions its Playstation as a flat-out entertainment option, and has worked with Pepsi, General Mills, and, this fall, Nabisco. Its Playstation Touring Attraction visits football fans again at the NFL Super Bowl in January.

Teens are the target in Sony’s second holiday tie-in with Pizza Hut. Consumers this year get not one but two demo disks of upcoming titles by buying Stuffed Crust Pizza. In a new sweeps overlay, consumers who get a golden disk will win prizes. Ads in movie theaters and direct mail to hardcore users support.

Sony will push the market-leading Playstation (owned by one in every five households) with a record $150 million marketing budget next year, building the brand while biding time for the late-2000 arrival of Playstation II.

Redmond, WA-based Nintendo of America, Inc., meanwhile, found a holiday partner in Dr Pepper, which for the past three years has teamed with Walt Disney Co. feature films for its fourth-quarter campaigns. Hitting stores Nov. 1 and running through Dec. 31, the coupon-and-sweeps drive is built around the Nov. 22 launch of Nintendo’s Donkey Kong 64 game. Consumers use entry forms on two-liter bottles and 12 packs of 12-ounce cans to vie for a Panasonic home entertainment system including a Nintendo 64 console. An under-the-cap promo on 20-ounce bottles provides a shot at a grand prize as well. Dr Pepper planned a multi-million-dollar TV effort to support.

The soft drink tie-in follows a summer partnership between Nintendo’s Game Boy portable system and Tommy Hilfiger U.S.A. Consumers could win a limited-edition Game Boy with a Hilfiger logo. Hilfiger Boys departments at retail featured kiosks sampling new Nintendo games.

Get `em when they’re young. Keep `em for life.