Wii U's Rough Marketing

The Wii U television advertising has begun, at least in the UK. The ad above (or, as they say across the pond, the 'advert')  is the first effort.

I felt like I was watching an infomercial; I kept waiting for the "act now and you get an extra controller free!" part. The controller apparently can reveal things that are hidden; perhaps it can find the excitement in the commercial, because I sure couldn't find it. The ability for someone to watch the TV while I play a game... that's really a major reason to buy this console?

It actually made games look like more work. I can't just look at the screen and press buttons, I have to hold the controller just so, while keeping my attention on the big screen, and then rapidly brush my hand across the top of the Gamepad to fire the ninja stars, while aiming at the onscreen target. Great, way to break me out of the sense I'm immersed in the game. Or I have to hold up the Gamepad and wave it all over the room to find stuff; my arms are going to get tired if I have to do that for hours. Fortunately I think the battery in the Gamepad only lasts for a couple of hours, so I guess that solves that little problem.

I think the Wii U has a rough marketing road ahead of it. The Wii was a smash hit, for two main reasons: It had a new controller and interface that was so easy to use Grandma could do it, and it was half the price of the competing consoles (PS3 and Xbox 360). Compare that to the Wii U: It's more expensive than the PS3 and the Xbox 360, the graphics aren't any better, and the controller is even more complicated. Hand the Gamepad to Grandma and see what she says... how many buttons are on this thing? Which screen do you look at when? Switching attention back and forth between the TV and the Gamepad not only breaks you out of the game's immersion, it's going to cause a headache.

I think fanboys will buy the initial units, but I think the sales curve will resemble the 3DS: Initial big sell-in, then it sits for months until Nintendo drops the price dramatically and some software that's really interesting finally comes out.

Slick Marketing

In a world where marketing is no longer cut and dried, creative marketing can be a valuable tool for breaking through. This video showcases some clever event marketing turned viral video for the upcoming Bond film Skyfall, as well as Coke Zero. People were looking for some tickets to a showing of the movie, and found they had to work to get them. The result is a video that nearly everyone will enjoy watching.

Why is it effective? It's compelling enough that you want to show it to friends. The clever use of the Bond theme with a variety of nearby musicians, the obstacles, and even the final challenge -- all were amusing and very well executed.

The whole event took place in a Belgian transit center, and obviously it required a lot of planning to set up, as well as no small expense. What does Skyfall get out of it? LOts of exposure if enough people pass around the video. Will views translate into people watching the movie? Perhaps, but at least they've increased awareness of the movie release. Measuring that precisely will be difficult, of course.

How can this be replicated? I think the major lesson here is to be creative. Of course they had a good-sized budget to work with, but much can be done with some friends and a lot of creative thinking. 

Microsoft Surface To Submerge

Microsoft has finally announced the pricing of the Surface with Windows RT tablet: it starts at $499, without the keyboard cover. Oh, you wanted the keyboard cover? $599. $499 gets you a 10.6", 1366 x 768 screen, Tegra T30 chip with 2 GB of system RAM and 32 GB of storage. What's wrong with this picture? It's up against the iPad at the same price point, with a far higher resolution screen and an unmatched library of apps.

Microsoft needed to get a solid hardware base in order to attract app developers, and there's really only two ways to do that in a marketplace where Apple has around 75% market share. Either you make a stunningly better device at the same price, or you deliver a pretty good device at a much lower price. Microsoft's Surface, while a nicely designed piece of hardware, is not clearly superior to the iPad (and is arguably weaker, with a screen of far less resolution and a slower processor). Microsoft really needed to bite the bullet and price the base model tablet at $299 or less.

Lose money on every unit? Are you crazy? Like a fox. That's exactly how Microsoft made a bundle on the Xbox 360; they were willing to lose hundreds of dollars on each unit sold for years. Now they're raking in huge profits, because every game developer is supporting their platform. Why? Because there's a huge installed base now. The same strategy could work for the Surface, but now we can see that Microsoft is not planning to lose a billion or two selling Surface tablets at a loss.

Microsoft must be counting on the inherent fan appeal of Windows (huh?), and of course the spill-over effect of the incredibly successful Windows Phone (if only) to drive Surface tablet sales. Really. Of course, the elegant, crystalline clear naming strategy (Surface for Windows RT... and don't confuse that with Surface for Windows Pro, because thought they have a similar interface they don't run the same software.... unless it's been written that way... and make sure you buy the right one!) and compelling marketing (TV ads showing people dancing will of course make people want to buy this tablet) means that Microsoft won't have to resort to anything as crass as bribing people to buy their tablets.

Uh huh.

Let's not forget about the gaming possibilities.. Wait, I guess Microsoft did, because I see no mention of gaming anywhere in their PR. Who cares, it's only the largest app category on mobile devices. Besides, gamers wouldn't be buying tablets this expensive just to game on anyway. See? Problem solved!

It's kind of sad, really. Microsoft used to have some tech savvy, and some mojo. They are trying; the hardware design of the Surface looks interesting, and the Windows 'Metro' interface (which for some reason can't be called that any more, and there is no other name... more marketing genius) has won kudos. That's all not enough. Apple and Google own the mobile device marketplace, and nobody is going to buy Microsoft devices or software unless it offers a serious advantage. Which it doesn't. So now you have price... and fortunately Microsoft has over $40 billion in the bank, which it could use to lower the hardware price to make it irresistible. An iPad competitor at the same price? Meh. An iPad competitor at $199? Then you've got a chance at some serious market share.

Apparently, though, Microsoft has decided it doesn't need that. Maybe they think, like Nintendo, that they can always lower the price later if they need to. By the time they figure that out, though, the world will have judged their platform, found it wanting, and moved on. As will the developers.

Meanwhile, Apple is about to announce the iPad Mini, and will probably sell as many as they can make for months. It'll be hundreds less than a Surface, and it will have a zillion apps for it right away. Oh, and by an amazing coincidence, Apple has scheduled their unveiling just 3 days before Microsoft launches the Surface.

Surface who?

Wii U's Problem

Nintendo finally announced the Wii U last week, and they came in at the high end of price expectations. Instead of one SKU, Nintendo announced two: A Basic set with 8 GB of storage and a GamePad controller for $299, and a Deluxe set with 32 GB of storage, and a copy of NintendoLand in addition to the GamePad controller, along with a charging cradle for the controller, for $349. I think Nintendo expects to sell mostly the Deluxe set, and the Basic set is there just so they can say "the Wii U starts at $299." Both versions will be available November 18th in the US, and preorders are already being taken. Shortages may well be the case initially; cynics might suspect Nintendo of manipulating the supply precisely to create shortages in order to generate a greater desire to possess the console.

Nintendo spent a big chunk of its presentation showing off Nintendo TVii, a unified interface on the GamePad controller for finding and playing video from various services (like Netflix and Hulu), and controlling your Tivo (assuming you have one). Pretty nifty, actually, though not sufficient to buy a Wii U all by itself. Still, it brings the Wii U into rough parity with the Xbox 360 and PS3 as far as entertainment options go, and even one-ups them (along with Apple TV and Google TV) in some respects.

They also announced more details about the software lineup, and said there will be more than 50 titles available by March, calling it the best software "launch" lineup in Nintendo's history (a rather loose definition of "launch," giving it a whole 5 months). The biggie was Activision announcing the latest Call of Duty title, Black Ops II, will be coming out for the Wii U along with all the other platforms.

My concern is basically with the longer term for the Wii U. I grant that hard-core fans will rush to get one, and Nintendo would have been leaving money on the table to price the console lower. Supplies may well be limited, as Nintendo is not know for being able to manage high-quantity manufacturing well. (Though that would seem to be so much easier these days; again, cynics might suspect Nintendo will keep quantities limited through the holidays to maintain an image of a "hot seller" and so propel some more third-party publisher support.) Still, $349 is a high price to pay for a console that has no apparent graphic advantage over the Xbox 360 and the PS3. None of the titles that have been shown so far that appear on other consoles looked different in any way on the Wii U. Not any worse, like they would on the Wii; but not any better. Nintendo would certainly have been touting a clear graphic advantage if one existed. So I think it's safe to say that the Wii U, graphically, is on par with the 360 and PS3.

So here's the problem I see: Is there any compelling reason for a 360 or PS3 owner to drop $350 on a Wii U? None that I see. If you're a Call of Duty fan, the Wii U version offers no compelling advantage, so you'll just buy CoD for your existing console. New console buyers will be looking at Xbox 360 and PS3 bundles that are cheaper than a Wii U, and a much better value; the game lineup will be much better on the older consoles, with lots of inexpensive options, too. The Wii U may have a game play advantage with the GamePad someday -- but right now that's largely theoretical. A few of the games shown use the GamePad, but it's not clear the concept will be hugely popular. It may end up like 3D on the 3DS; initially Nintendo marketed it as the key reason to buy the console, and now it's hardly even mentioned.

My guess is that Nintendo will do well over Christmas with "limited" supplies, but that sales will fall off a cliff sometime early next year, and then a price cut will be in order. Microsoft and Sony have plenty of ability to drop prices and pile on freebies, so they will keep the pressure up on Nintendo. The Wii U is not really a next-gen console; it's competitive with this generation, it's just that Nintendo is about 5 years behind. They will need to get the price down as much as they can, as quickly as they can, to keep momentum going.

Even then I'm not sure it will work. Tablets are gaining in performance and falling rapidly in price, and they will become a key game platform for the future. The general consumer audience (non-core gamers) will be weighing the value of tablets against the value of consoles when they think about purchases for the household, and I think consoles will increasingly come up short.

Microsoft and Sony have some tough decisions to make about their next console offerings. If they boost performance by 5x to 10x over the current consoles, the hardware will likely cost $500. How can they offer a good value at the price? Or will they have to eat losses of hundreds of dollars per unit to achieve any kind of market share? Will there even be a large enough hard-core audience to pay for ever-increasing development costs on big-budget titles?

Microsoft Surface: Killer Game Machine?

Before you laugh at the idea of Microsoft getting any traction in the marketplace with their Surface tablets, consider the following:

Halo 4 is headed to the Surface tablet. Microsoft Entertainment head Don Mattrick confirmed this at the GamesBeat conference in July: "Speaking during a panel at VentureBeat’s GamesBeat 2012 conference, Microsoft exec Don Mattrick mentioned that the upcoming first-person shooter Halo 4 will work with Surface. VentureBeat reporter John Koetsier confirmed this with Mattrick after the panel."

The Surface Tablet may retail for $199. Yes, the hot rumor making the rounds is that the base Windows RT Surface tablet, with 32 GB of RAM, a Tegra 3 chip, and a 1280 x 720 10.6 screen, and a keyboard, may retail for an astounding $199. How? Well, Microsoft could be prepared to take a loss on every one in order to gain market share and make it up later on software sales; they did this successfully with the Xbox, remember. Or Microsoft could make the price $199 with a contract for (say) Xbox Live or Microsoft Office or SkyDrive or some combination of services.

The Surface tablet will also come with a keyboard, which makes up to some degree for the lack of tactile controls (a joystick and buttons); after all, the FPS did arise on PCs with a keyboard and mouse as the controllers.

We could have a truly epic battle for the wallets of consumers this holiday, if Microsoft really takes aim at the $200 market with a 10.6" tablet. They could even cannibalize their own 360 sales. I'd have to think consoles, and especially the 3DS and the PS Vita, would be the big losers in this scenario. Even mighty Apple could feel the pinch both at the low end (the forthcoming iPad Mini would look a lot less alluring) and at the high end (if Microsoft pulled a similar trick with the Surface Pro and undercut the iPad).

The biggest losers would be Microsoft's erstwhile hardware partners, like HP, Dell, Asus and others, who would see any chance for them to sell Windows tablets vaporize. Microsoft would also lose revenue from that, but they may just figure that ultimately they'll make more from having a strong share of the tablet market as a hardware manufacturer.

Start getting the popcorn ready; this may be the best entertainment available until The Hobbit hits the screens in December.

Battle Royale For The Holiday

It's shaping up to be one of the most competitive holiday seasons ever for the game business. The aging Xbox 360 and PS3 have been seeing fading sales numbers for the past several years, and at this point only price cuts are likely to make a big difference in their sales picture. Complicating this is the new Wii U, which will be coming this fall (though the date and price are still unknown as of this writing). Microsoft and Sony will probably try to undercut the Wii U pricing, and certainly bundle in extra value in software and other items.

Meanwhile, the flank assault of the mobile market is adding some serious firepower. Google's Nexus 7 tablet is a hit at $200, and Amazon will probably introduce a new, spiffier Kindle Fire next week at the same price point. Apple is rumored to be introducing an iPad Mini at around the same form factor in the $250 price range. So, powerful gaming tablets will be available for around $250 this holiday, with extensive marketing budgets to make sure everybody knows it. Those will be aiming squarely at the dollars parents might otherwise spend on consoles.

Don't forget there's a new iPhone coming out next month, which will likely suck a lot of money out of market for gadgets. Plus some dedicated gaming tablets (Android based) that may have wide distribution. Oh, and Nintendo is still selling the 3DS and Sony is still trying to move the PS Vita. And all of these things are hovering in the same price range.

They're not all going to succeed in having a terrific sales season. I think Sony and Microsoft could take a real beating if they don't lower their prices substantially. Nintendo could be in for a rough time if the price the Wii U at $299 or even $279. I'm sure Apple and Google and Amazon will do fine, though.

Just to make matters worse, many high-profile software titles will be competing for consumer dollars, too. And like last year, they will be competing against each other for ever-scarcer consumer dollars. Nobody is going to buy all of the hot games all at once, even if they want them; they can only really play one game thoroughly at a time. Somebody's gonna be disappointed in their sales picture.

Overall I expect the year will finish down over last year's sales, once again in the double digits despite the Wii U and PS Vita.

Nintendo vs. Apple PR Battle

You can find the original image here.

File this under Marketing Mistakes: Nintendo has scheduled a big press event in New York City for September 13, where they will (apparently) reveal the Wii U's pricing and availability date for the US. They'll also be showing off software and allowing hands-on time, and Reggie Fils-Aime will be headlining the event. Sounds great, right? Build some excitement for the Wii U launch, get the attention of the mass media, get big coverage of Nintendo's exciting new technology coming out later this year (probably November). What could possibly go wrong?

Try this: Apple is going to have a big announcement on September 12, according to rumors leaked to all the major publications. They will be announcing the new iPhone, and quite probably the brand-new iPad Mini (or whatever they call it), a smaller iPad with a price point rumored to be as low as $249 for starters. And maybe even an Apple TV (or iTV).

Yes, the day before Nintendo's big press whoop-te-do, Apple is holding their major press event for the next iPhone and the new iPad Mini. So who do you think will get all the media attention, especially the mass media outlets on TV, print, and online? Yeah, that's right. The company with the products that sell in the hundreds of millions. Which is not Nintendo. Epic Fail.

Just to really rub it in, the rumored price point of the iPad Mini is $249 for the low end model, and the Wii U may be priced at $299, or perhaps $249 if they are being aggressive. So Apple's device may be the same price point as the Wii U, and look like the Wii U gamepad controller... only Apple's device can go anywhere and still function. I could not have created a better scenario to stomp Nintendo's press announcement flat. There will probably be head-to-head comparisons between the devices, and Nintendo won't exactly win those. If Nintendo even gets mentioned in the PR flurry, the pictures of people standing in line at stores to get the hardware. Does anyone expect people to be standing in line, or camping overnight, for Wii U? Yeah, I didn't think so. Oh, and the Wii U won't be arriving for (probably) a month or two after Apple's devices... which will make the Wii U rollout old news by the time anyone can actually buy one.

Certainly Nintendo is not going to have the most-talked about new tech product this Christmas... not even close. The Wii U is going to have to succeed based on its pricing and software lineup, and Nintendo's marketing spend. I'm expecting not a terrific launch for them; I expect a fairly mediocre rollout, especially if Sony and Microsoft have some strong moves (price cuts? bundles?) for the holiday. The Wii U may look better next year sometime if they can get to a reasonable price point (like $199) and have some gotta-have-it software like a new HD Zelda, or a Mario title that actually does something interesting with the gamepad controller (unlike the Mario title they showed, which looks exactly like the original Mario gameplay).

My long-term guess is that the Wii U will never find the audience that the Wii did, not on that scale. I think Bing Gordon is right; Nintendo is headed towards being a software publisher, it will just take them a long time to figure that out. They'll have to have their noses rubbed in bad financials for years first.