Jul 16, 2008

Mktg - Wii Did it

Wii Did it!
June 20, 2008
-By Kenneth HeinDespite what you’ve heard about the dumbing down of America, entertainment is getting more complex. In order to jump into the latest season of Lost or 24, for instance, you have to watch about 60 hours of shows and bear in mind that a plot may hinge on an obscure scene from the first season.Movies like Memento and Pulp Fiction also require work on the part of the viewer, who must assemble the movies in their head, like a puzzle, to account for a nonlinear narrative.But nowhere is this complexity more evident than in the world of videogames. The much lauded Halo 3, for instance, has a back story similar in size to the Star Wars saga and sports 34,000-plus lines of combat dialogue. Entities like The Sims seem less like games than alternate lives that are as richly realized as a novel.There’s a corollary to this, however. The flip side of the phenomenon is that people also want their entertainment in smaller, simpler portions. ITunes, for instance, has led to the growth of the single over the album. YouTube and mobile platforms have forced Saturday Night Live and Comedy Central to shoot for three-minute lengths for sketch comedy.So when Nintendo mulled the latest round in its battle against Microsoft and Sony, it had a choice: Simple or complex? Nintendo chose simple. Simple was good.In the fall of 2006, Nintendo’s Wii was thought to be an also-ran to the real gaming console battle between Microsoft’s Xbox 360 and Sony’s PlayStation 3. By comparison, Nintendo's Wii was considered to have cruder graphics and a more basic selection of games than the other two. Nintendo, many thought, would merely peddle its Mario and Zelda games to its core audience: young kids.That thinking was proved false. By August, Nintendo had sold four million Wii units, versus six million for Microsoft’s Xbox 360 (which had a year’s head start) and more than doubled the U.S. sales of PS3, per NPD, Port Washington, N.Y. In April, Nintendo reported that its sales for the previous fiscal year hit $8.1 billion, a 90% jump over the previous year. Net income also rose 130% to $1.5 billion.Meanwhile, market researcher IDC, Framingham, Mass., predicts Wii will be the bestselling console in 2008, and Merrill Lynch forecasts that 30% of U.S. homes will have a Wii by 2011. Not everyone agrees: Yuta Sakurai, an analyst at Nomura Securities in Tokyo, expects Sony to sell 71 million PS3 units by 2011, versus 40 million for the Wii. But analysts concur that Wii has legs. “Despite what people say, ‘Oh, it's a novelty, PS3 and Xbox 360 will come back as the true gaming consoles,’ Nintendo seems to be holding them off,” said Paul Jackson, principal analyst at Forrester Research, Cambridge, Mass.This was precisely the ass-kicking that Reginald Fils-Aime (pronounced FEES-oe-MEY), president and COO of Nintendo of America, prophesied. Those in the industry know Fils-Aime as brash and competitive, and may recall his introduction at the 2004 E3 gaming conference in Los Angeles: “My name is Reggie. I’m about kickin' ass. I’m about takin’ names. And this company is about makin’ games.”

That was a shock to many who viewed Nintendo as a conservative company, but Fils-Aime knew “he had lightning in bottle” with Wii and wasn’t afraid to brag about it to the press, analysts and consumers. One half cheerleader for the brand, one half bully to the competition, he has become, arguably, as much a public figurehead for Nintendo as Mario,Donkey Kong and (his favorite) Link from the Zelda franchise.The role came naturally to Fils-Aime, who is driven to beat the competition, no matter whom they are, said those who know him. “He's a larger-than-life character. The bloggers love him because he's prone to outbursts [about the competition],” said Jackson. They have likened him to Bruce Lee and Chuck Norris and one agency exec refers to him as the “Reggie-nator.”Fils-Aime is often spied practicing his Wii Sports Tennis swing, as he’s talking on the phone in his office, so he can maintain his near undefeated streak when demonstrating his beloved product. “It’s different from the Nintendo deferential of the past, where the mindset was: ‘It's not polite or proper to bash your competition too overtly,’” added Jackson.But this is a new Nintendo. A Nintendo that is not only armed with the best-selling Nintendo DS handheld console launched in 2004, but also the “killer app” in Wii.To make Wii a success in America, Fils-Aime drew on a humble realization: As he entered his mid-40s (he’s 46 now), he had to admit the multilayered Xbox and PlayStation games were a bit offputting.“I was finding the new controllers too tough to handle. The games weren't accessible or interesting to me . . . I was prototypical of the consumer we were trying to get back into gaming.”Of course, he wasn’t the only one at Nintendo who saw an untapped market. CEO Saturu Iwata has told analysts that he believes that by creating ever-more complex games, the industry had been alienating lapsed- and non-gamers. Working adults have little time for epic competitions, and mastering complicated controllers can make some long for the days of the Atari 2600.Iwata learned a lesson from Nintendo DS which features simpler controls. Its Nintendogs game, that let users train their cyberpooches and enter them in competitions, proved to be a huge hit that—rare for a videogame—strongly skewed female. Iwata wanted to insure that Wii appealed to not only kids, but also moms who are the ultimate gatekeepers for many purchase decisions.

Wii was built on such insights. Its wand-like controller contains motion sensors that translate physical movement into on-screen action, particularly games like Wii Sports Tennis and Bowling. The controller, the focal point of Nintendo’s marketing outreach, resembles a standard remote control, but can, for example, be swung like a tennis racket and emulate the action with surprising fidelity. Wii also was priced at $250, versus $600 for a PlayStation 3. (This summer, Sony cut the price by $100 to $500. A Microsoft Xbox 360 cut also is expected.) Wii games are also generally about $10 less than Microsoft or Sony titles. But price alone can’t explain Wii’s appeal.“I attribute Wii's success to one overriding factor: It is fun to play. With this whole console transition, Nintendo has had one clear message [that they are fun for all ages] and they’ve been consistent with it,” said Anita Frazier, NPD industry analyst for toys and videogames.“There is a need for the industry to expand its audience and to do that, you have to show that videogames can be fun, and not hard to pick up and play. The Wii and its remote has done that beautifully, and now you have multiple family members playing it.”That didn’t happen by accident. Fils-Aime challenged all of his agencies to work together to come up with a strategy that let everyone, young and old, know that the intuitive remote was unlike anything ever before in the category. Ad agency Leo Burnett, Chicago, public relations agency GolinHarris, Los Angeles, A-Squared, Los Angeles (viral ambassador program), and U.S. Concepts, New York (mall tour), were brought together with the Nintendo team to come up with a new way to bring Wii to market. “He basically challenged us to rethink not only what we do, but how we do it,” said George Harrison, Nintendo’s svp-marketing who is stepping down at year’s end.

For starters, Nintendo threw Tupperware Party-like events aimed at multigenerational families, wooed alpha moms with parties at luxury suites replete with champagne and cookies. Nintend also left mysterious voicemails for a select few hard core gaming influencers that revealed clandestine locations where they could try Wii for the first time. More than 2,000 such gamers had the chance to play. As Nintendo’s Viral Ambassadors program began to build buzz,last fall the company launched its $200 million “Wii would like to play” advertising blitz from Leo Burnett. Set to the Yoshida Brothers’ catchy song “Kodo (Inside the Sun Remix),” the TV campaign stars two Japanese gentlemen going door-to-door, like encyclopedia salesmen showing off their product.Said Fils-Aime: “We liked the concept of opening up your door,being handed a remote for a gaming system and the all of a sudden everyone in the household is having fun.”Yes, that means everyone in the household, including Grandma. Nintendo’s pr eagerly promoted the story of elderly residents at Erickson Retirement Communities in Chicago holding Wii baseball and bowling tournaments. “All of the stories about people at retirement homes playing it are a marketer’s dream,” said Forrester Research’s Jackson.Wii parties, as well as Wii competitions at local bars, have surfaced as well. Nintendo has even partnered with Norwegian Cruise Lines to bring Wii competitions to the high seas. Players can assemble in its ships’ ballrooms to play one another in their favorite game. “One of the best visuals is seeing a group of people on a cruise ship in their 20s, all the way up, gathered around playing Wii bowling,” said Fils-Aime. “I don’t think anyone could havepredicted that.”The fanatic fever has spread online too in expected and unexpected ways. The “How Wii Play” MySpace page had nearly two million page views at press time and almost half-a-million unique visitors.The gaming console has also helped spawn a new category: Exergaming. Nintendo may even have its own Jared Fogel in Philadelphia’s Mickey DeLorenzo, who created a Web site showing off his own Wii Sports weight-loss program, which he credits with helping him lose nine pounds.Miis, characters you can create using the Wii, have also taken on a life of their own. Following the launch, Wii players started out just using Miis to play games as themselves, but that quickly evolved into customizing Miis to look like celebrities, the creation of unlicensed Mii merchandise and the launch of Web sites where fans can trade and post their Mii characters. “Miis have become a cultural phenomenon,” said NPD’s Frazier. Popular Mii sites include Miiplaza.net (share Miis, find friends),famousmii.com (step-by-step guide to creating celebrity Miis) and mmrcloud.com/Nintendo-tshirts-head-p-171.html (to get your Mii on a tee). Not to mention, a recent search on YouTube for Mii resulted in more than 6,000videos.“We were hoping the Miis would become a cultural phenomenon and that there would be events like the virtual tennis open right there in Rockefeller Center [see sidebar] . . .We had to create a vision that would allow for that to happen,” said Fils-Aime.“I’ve been involved in some big, audacious ideas and we needed some big, audacious ideas at Nintendo,” added Fils-Aime, who formerly held marketing titles at Procter & Gamble,Pizza Hut, VH1 and Guinness.Wii and its all-inclusive message (reflected even by the product’s name) was this huge idea. By August, Nintendo sold 400,000 units, which was roughly the same sell-through as Xbox 360(268,000) and Sony PS3 (131,000) combined, per NPD. And, Wii shortages are expected to continue throughout the holiday season as Nintendo struggles to keep up with demand.Fils-Aime couldn’t be more thrilled about Wii’s success. After all, he loves to win. Harrison recalls E3 2006 when he and Nintendo lead designer Shigeru “The Spielberg of videogames” Miyamoto were defeated by Fils-Aime’ Wii Sports Tennis. “Somehow the two of us lost . . . Reggie is a pretty avid gamer and competitor, no matter what.”

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