Sony acts to fight off Nintendo power-play

When Sony launched its PlayStation games system in September 1995 it had the market to itself. And, because of delays at Nintendo in introducing its faster N64 system, it has pretty much remained so since.

Sega had been producing its Saturn games consoles since May 1995 but they are cartridge-based and expensive. PlayStation games are on CD, which makes them cheaper and easier to develop quickly. In advertising terms Sony also dominated, spending 4m in 1996, outspending Sega by two to one and a launchless Nintendo by more than eight to one.

But news that PlayStation is to strike a sponsorship deal for a terrestrial television programme – coinciding finally with the arrival of the N64 on March 1 – shows just how seriously Sony is taking the threat from Nintendo (MW February 7). Last week it mapped out details of its marketing strategy for the coming year, which will mean a hefty increase on 1996’s 15m budget.

But it plays down the significance of any programme sponsorship. A spokesman says: “It’s nothing new, we have been looking for the past few months. Besides, we have been running sponsorships since we launched in this country.”

The delay in brokering a deal is blamed on not being able to find an appropriate programme – expected to come from areas like music, fashion and adventure sports.

Sony admits that Nintendo will take market share when it launches. By March 1, PlayStation will be an old machine, and in an industry where image is as important as the quality of gameplay, obsolescence equals death.

Computer Trade Weekly editor Stuart Dinsey says: “There is nobody with a stronger brand than Nintendo, but some people haven’t heard of PlayStation. Sony knows it faces formidable competition.”

So how can Sony keep ahead of Nintendo? Marketing, especially advertising, are options but the first signs of what looks like an aggressive stance on price can already be seen. Last week the Platinum range – best-selling games from the past sold at the knockdown price of 19.99 – was launched. The industry has greeted this seemingly simple idea with open arms.

One software manufacturer says: “It is a very astute move indeed. Only the past hits will be published and they really are great games.”

The Platinum range will be supported by a 1m TV, press and radio advertising campaign through Simons Palmer Clemmow Johnson which breaks at the end of the month. Last month the agency was sold to Omnicom-owned TBWA (MW January 24), which has led to speculation that a client conflict with TBWA’s Virgin Interactive, the games arm, could destabilise the relationship. This is something Sony cannot afford at a time when it is about to face fresh competition from Nintendo.

Alex Fitzgibbons, communications manager for THE Games, which distributes Nintendo in the UK, says: “The fact that it has launched this range shows that it is very nervous about our coming to the market.” He also claims that PlayStation is being sold with a bundle of five games for 269 at Dixons and Toys R Us which, “has already devalued the software”, he claims.

Price will be one of Sony’s greatest strengths with its games costing between 35 and 45 compared with N64 games, which will be priced between 50 and 60. Most industry watchers predict that Sony will drop the price of its consoles by up to 50 before the end of the year, to as low as 149.

Nintendo, which has always said it will launch N64 at 249, is now also expected to drop the price to 199. An apparent admission of defeat, even before launch. Fitzgibbons vehemently denies the price will be cut.

Sony will also make great play of its range of 150 games titles, as Nintendo will launch with only three or four titles. And is trying to appeal to the hardcore game player – traditionally the domain of Sega – with the launch of Yarose. This is a link-up to a PC which allows people to develop their own games for the PlayStation.

But sponsorship remains central to Sony’s strategy. It has been a high-profile above-the-line advertiser, but it is through sponsorship that it has built its “cool” image.

To reinforce this image, PlayStation is sponsoring London’s first skateboard park, which opens in April, with a 20,000 investment. It is also about to sign a co-sponsorship deal for a mountain bike team in conjunction with Animal clothing. And its sponsorship of an international sky surfer – someone who jumps from a plane with a parachute and surfs to the ground on a board – will continue.

It is this mix of extreme sports, club “cool” and fashion which has given PlayStation its niche as the game for the older player. But it is all small beer in comparison with a television deal.

Sony admits the average age of a PlayStation player is falling. At launch it was 23 and now it is about 19. This is starting to bring it into closer competition with Nintendo by encroaching upon the traditional teenage market. If the average age falls much more, PlayStation will be competing directly with Nintendo and will lose its niche.

Sony remains bullish. It says that by the end of the year it will have at least doubled console sales to 1.5 million. According to the latest figures from Sony (and it is extremely difficult to obtain independent sales figures) 750,000 systems have been sold in the UK to date.

In the spirit of the pre-fight boxing press conference, Nintendo counter claims: “1996 was the year of the PlayStation. 1997 will be the year of the N64.” But Sony will not let go without a struggle.