toplines; Hard-Core Games

American Demographics, Dec, 1999 by Jennifer Lach

Don't feel bad if you didn't hear about Sega Enterprises' new video-game console, Dreamcast, before it launched in September. If you're not a guy between the ages of 12 and 24 who plays video games, you weren't supposed to. "Our aim from day one was to reconnect with our core consumer audience," says Charles Bellfield, Sega's director of marketing communications. "In this industry, the ROI on going after a broader market is not as appealing as being very focused on a targeted demographic."

Sega's approach seems to be working. Preorders for Dreamcast hit 300,000 and within 12 days of the console's debut, the maker reported that it had sold 512,000 of the $200 units, surpassing its own projections. By year's end, Bellfield expects to sell between 1.5 million to 1.75 million units, 50 percent more than anticipated. To be sure, Sega faced an uphill battle in bringing Dreamcast to market. In recent years, the company has lost market share to Sony PlayStation and Nintendo 64. Today, roughly 38 million U.S. households own a video-game console, says Kevin Hause, video game analyst at International Data Corp., and half of those gaming households are on PlayStation.

And a growing number of gamers invest significant time and money into their hobby.The new "Electronic Gaming Segmentation Study" by Polk Verity, a division of the Detroit-based Polk Company, finds that 43 percent of gamers can be considered hard-core. That's up from 17 percent in 1997, the last time the segmentation study was conducted. The hard-core segment plays both video and PC games more than four times a week and spent more than $100 on games in the past six months. Nearly 50 percent of the group has played games over the Internet.

Right behind hard-core gamers are high-tech gamers, who account for 25 percent of the consumer market. They're more selective in their purchases, says David Larson, vice president of market research at Polk Verity, and tend to be in their late 20s, professionals with higher incomes. "In two years, you'll see the hard-core and high-tech segments fuse," Larson adds. "There are fewer and fewer discriminating factors between them." Rounding out the market are the traditional moderate segment (20 percent of gamers) who prefer video games to PC games and console enthusiasts (12 percent of gamers), mainly younger consumers who spend the least money on games.

Sega started its $100 million marketing and advertising campaign for Dreamcast last May. First, several cryptic ads appeared in enthusiast magazines. One ad featured a pair of eyes with the Dreamcast swirl logo centered in each. The only copy, says Bellfield, was "sega.com." Roughly 100,000 consumers downloaded artwork from the first wave of ads at sega.com, and soon the Dreamcast swirl was showing up as a screen saver on computers across the country. "Our research told us that our consumers wanted to be a part of this product," says Bellfield. "They didn't want to be sold to. They wanted to go to school and show their friends these ads." Phase two hit at the end of June, when Sega used MTV to blitz its audience with more than 960 15-second spots, all without showing the Dreamcast console or game footage. Again, only "sega.com" flashed across the screen. Traffic to the Web site soared: More than 5 million hits a day were recorded during this period (up from 1 million prior to airing the spots on MTV), and more than 300,000 people registered for more information about Dreamcast, says Bellfield. Phase three consisted of longer, more in-depth commercials that aired from the end of July to Dreamcast's debut on September 9. Now the Sega campaign is in phase four, with animated commercials airing on ESPN, the UPN network, and during shows such as The Simpsons and Monday Night Football. Phase five kicks in after the holidays, says Bellfield, when the advertising will focus more heavily on the games that can be played on Dreamcast.

But don't expect Sega to pursue mainstream consumers, as Sony has done lately in its marketing of PlayStation, or to court the littlest consumers, as with Nintendo's repositioning of Nintendo 64. "Sega will not take the mainstream path," Bellfield says emphatically. "We want to be the video gaming company to our core audience. Our consumers think Sony is the dark side, the behemoth. To have the will of our consumer on our side is a very powerful campaign tool to have."

For more information about Polk Verity's gamer segmentation study, contact David Larson at (303) 298-5194.