Sega of America, Inc. & Take-Two Interactive Software, Inc.

views updated

Sega of America, Inc. & Take-Two Interactive Software, Inc.

Contact information for Sega of America, Inc.:
650 Townsend St., Ste. 650
San Francisco, California 94103-4908
USA
Telephone: (415) 701-6000
Web site: www.sega.com

Contact information for Take-Two Interactive
Software, Inc.
622 Broadway
New York, New York 10012
USA
Telephone: (646) 536-2842
Web site: www.take2games.com

BETA-7 CAMPAIGN

OVERVIEW

When Electronic Arts (EA) held the position as the world's largest independent video game publisher in 2003, a bilateral effort was made by Take-Two Interactive Software and Sega of America to overtake EA's number one selling football game with their own ESPN NFL 2K5. Created by Take-Two and distributed by Sega, the football game could be played on two video game consoles, Xbox and PlayStation. Besides gaining ground on Madden NFL 2005 (EA's football game), ESPN NFL 2K5 sold at the unusually low price of $19.99 and was also marketed with an unprecedented campaign titled "Beta-7."

Portland-based Wieden+Kennedy named the "Beta-7" campaign after a fictitious game tester who, W+K claimed, once tested games for Sega. W+K hired an actor to play the Beta-7 character, who supposedly became so traumatized while testing ESPN NFL 2K5 that he suffered frequent blackouts and uncontrollably tackled bystanders. Crusading fiercely against Sega, the Beta-7 character posted an anti-Sega website and blog in an attempt to prevent the game's release. Other fictional game testers created by W+K surfaced to support Beta-7's claims, while Sega pretended to refute the game's malefic effects. Speculation fanned across the Internet, with gamers attempting to decipher Beta-7's authenticity.

The four-month-long campaign helped Sega and Take-Two surpass the sales forecast of ESPN NFL 2K5 by 20 percent. Although "Beta-7" assisted Sega's immediate need in 2004, EA retaliated in 2005 by purchasing exclusive five-year rights to NFL logos and player names and 15-year rights to ESPN's programming and personalities. By capitalizing on the gaming community's need for current team content, EA would monopolize all football video games, according to analysts, for the next five years.

HISTORICAL CONTEXT

Sega's ongoing hot-or-cold video game success began in the late 1970s groundbreaking console game hits like Turbo, Frogger, and Zaxxon followed by a lackluster string of arcade games. In the latter part of the 1980s, Sega had hits like Out Run and After Burner. The games' success spurred Sega to develop its first home console, the Sega Master System, a U.S. commercial flop. Determined to capture some of the Nintendo Entertainment System's (NES's) market, Sega released its second home console, Sega Genesis, which Sega promoted as being "far superior to the NES." Within the home console market, Sega Genesis was Sega's only commercial success throughout the 1990s. The company developed the Sega Saturn to compete with PlayStation in 1995 and then the 128-bit Sega Dreamcast in 1998. Both consoles yielded meager sales, forcing Sega to focus primarily on software game development.

Take-Two was founded in 1993 by Ryan Brant, who was chairman for the company until litigation forced him to step down in 2004. Grand Theft Auto: San Andreas, a game launched under Take-Two's subsidiary Rockstar Games, was the top-selling video game for 2004. To counter EA's five-year NFL rights procurement, Take-Two purchased its own two-year license to use Major League Baseball team likenesses, a harsh blow to EA's successful MVP Baseball.

As one video game industry source told the Delaney Report in 2005, "Like a lot of other video-game marketers, advertising has become formulaic. A lot of the videogame advertising now looks like movie theatrical trailers, 30 seconds of game play. Advertising is visible, but it's not very compelling and it has no edge." Sega and Take-Two wanted W+K to create a campaign that stepped outside of traditional video game advertising and generated its own buzz within the gaming community.

TARGET MARKET

Ty Montague, a creative director for W+K, told the Financial Times, "The campaign worked because its target audience of video-game enthusiasts was hip enough to get the jokes but playful enough to keep on reading what Beta-7 wrote." The campaign was aimed toward the broadening age of video game players—or gamers, as they were called—which was quickly diversifying at the time of launch. In 2005 an Entertainment Software Association survey showed that the average gamer's age was 30, while the average game purchaser was 37 years old. "Computer games aren't relegated to 12-year-old boys who are playing in their parents' basement," Dan Hewitt of the Entertainment Software Association told the Arkansas Democrat Gazette.

"Beta-7" did not specifically target demographics within the gaming community as much as two subgroups: gamers susceptible to Internet hoaxes and gamers impervious to them. Conflicting believability between these two subgroups spurred the campaign's success across the Internet. "Gamers are predisposed to stories that they can actually participate in," Montague explained to Advertising Age's Creativity. "It's also important to remember that it's only a hoax in retrospect. While the experience unfolded the goal was to make it feel plausible, at least to part of the target. We also wanted some people to dismiss it immediately. It was the argument between those two groups that powered the campaign."

After the event some judges for the 2004 Grand Clio explained that their partial impetus for awarding "Beta-7" the Grand Clio was because of the campaign's ability to successfully target gamers. Nick Brien, Grand Clio judge and CEO of Arc Worldwide Chicago, told Creative Review, "The gaming community is highly cynical and media savvy, they don't want to be marketed to. The campaign really was an experience and the agency went out of their way to completely fuse content and contact thinking and pulled it off brilliantly. They never forgot about the gamer."

IT'S NOT ONLY YOUNG BOYS

According to statistics released by Entertainment Software Association in 2005, 74 percent of U.S. heads of households were game players. Surprisingly enough women over the age of 18 represented a greater portion of the game-playing population than boys ages 6 to 17. To further debunk the assumption that all gamers are young boys, the average age of a game player was 30, while the average age of a game buyer was 37.

COMPETITION

EA, despite criticism for producing fairly mediocre games, sold more video games than any other competitor in 2004. From 1995 to 2005 EA relied on San Francisco-based See Advertising to market most of its titles. In 2004 EA's best-selling Madden NFL 2005, the third highest-selling video game of the year, was seriously threatened by Sega and Take-Two's ESPN NFL 2K5. To reduce future competition EA signed an exclusive five-year license (to begin in 2006) with the NFL, giving EA exclusivity on using NFL stadiums, players, teams, and colors in its games. EA also signed a 15-year private contract with ESPN to exclusive use of ESPN's name, programming, and personalities, just like Sega and Take-Two had done previously with ESPN NFL 2K5. Recognizing the advantage that "Beta-7" gave ESPN NFL 2K5, EA also ended its 10-year contract with See Advertising and signed all marketing over to W+K in 2005.

Microsoft's Halo 2, designed exclusively for Xbox, was the second highest-selling video game of 2004. Halo 2 launched with its "I Love Bees" campaign, created by Microsoft's Elan Lee and Steven Spielberg. "I Love Bees" utilized normal, educational websites about bees and through manipulation made them appear hijacked by an artificial intelligence. The campaign required participants to work collectively and answer random pay phone calls, which eventually revealed the involvement of artificial intelligence.

Many analysts judged a video game's success by the quantity purchased by America's second-largest video game retailer, Electronics Boutique Holdings Corp. (EB). Despite Take-Two's release of Grand Theft Auto: San Andreas, the top-selling game of 2004, the company accounted for only 7 percent of EB's games at the start of 2005. With 31 games to its name, EA accounted for 14 percent of EB's games in 2004, according to Warren's Consumer Electronics Daily. Nintendo came in second with 12 percent, followed by Microsoft at 10.3 percent. The future of ESPN NFL 2K5 was not hindered so much by the competition's advertisement but by EA's savvy NFL and ESPN licensing agreements.

MARKETING STRATEGY

Beta-7, a fictional former game tester, surfaced on www.Beta-7.com during the summer of 2003. W+K, Haxan Films (producers of The Blair Witch Project), and Chelsea Pictures cast actors to play parts for the campaign's four-month duration. Each actor, including Jim Gunshanan (who played Beta-7), replied to blogs, sent E-mails, left voice mails, posted messages on independent gaming sites, and even conducted interviews with the gaming press to authenticate Beta-7's existence.

The website served as the campaign's hub. Beta-7 claimed to have suffered so much duress from testing the football game that he regularly blacked out and tackled people. To prove it Beta-7 set up cameras at the beach and at an office where he delivered mail that hilariously showed him exhibiting "symptoms." Throughout the website Beta-7 ceaselessly called out for ESPN NFL 2K5 testers who also suffered from the same conditions to come forward and testify on his website. He claimed too that Sega was threatening to shut him up. The "threats" grew so malevolent that Sega eventually razed his tiny, frumpy apartment. Photos to prove it were published on the website. At one point Beta-7 even mailed unauthorized, prereleased versions of the game to gamers so they could experience the effects themselves.

Authenticity became a major constituent of the campaign. Instead of making them in-house, W+K paid a Kinko's clerk to design Beta-7's flyers (warning of the psychological trauma inflicted by the game), which were passed around San Francisco. The project's art director, Robert Rasmussen, told Adweek, "It was more work than any project I'd done before. It was eight hours a day for four months while we were doing a million other jobs at the same time. You never knew if things were going to work. We were taking a lot of chances."

To fuel the conspiracy W+K had Sega play Beta-7's antagonist. Immediately after Beta-7 mailed unauthorized games, Sega sent letters demanding them back. On ESPN W+K broke an ESPN NFL 2K5 spot starring Tracy Morgan. At the commercial's end Sega posted a disclaimer saying that excessive playing of the game would not lead to violent or erratic behavior.

The gaming community's debate over the legitimacy of Beta-7 became integral to the campaign's success. "The idea for the campaign was to create an experience for gamers that would cause them to debate its accuracy," Montague told the Financial Times. "We never said it was true or not true." In the "FAQ" section of www.Beta-7.com, the fictional youth wrote, "I don't work for Sega, or anyone for that matter. This is not a marketing campaign, it is a campaign to make a deceitful and dangerous corporation be held accountable for its actions. I'm sure Sega would like you to believe it's a marketing campaign or a hoax, because then they will not have to take responsibility for what they have done."

OUTCOME

"Beta-7" yielded substantial success with ESPN NFL 2K5 sales and struck a positive chord within the advertising industry. W+K earned a Yahoo! Big Idea Chair and Silver at the Andy Awards, a Gold Pencil at both the One Show and the One Show Interactive, a gold medal from the Art Directors Club, and a Grand Clio. Others in the advertising industry were outraged by the disingenuousness of "Beta-7." Gary Ruskin, director of Commercial Alert, told the Oregonian that "Beta-7" was "deeply sleazy and part of the creep of advertising into every nook and cranny of our lives and culture." W+K shrugged off the condemnation, stating that the actual "engine of the campaign" was the contention between praise and criticism, between belief and disbelief.

Quantifying the campaign's effectiveness outside the advertising community was more difficult. Steve Raab, senior vice president of marketing for Sega's ESPN Videogames, told Adweek, "I think it's really tough to tie it back to the ultimate objective, which is sales and getting people to sample the games. Other measurements, however, what kind of traffic Web sites are getting, how much time people are spending with this, those are very successful. The average person who checked out 'Beta-7' during its first month or two spent more than 10 hours on the site." According to Creative Review, www.Beta-7.com received 2.25 million hits by August 2004.

According to Sega even though the game's launch came inadvertently after Madden NFL 2005, sales of ESPN NFL 2K5 exceeded projection by 20 percent. The game was the fourth highest-selling video game for 2004. Unfortunately, with the gamer's demand for current sports game content, ESPN NFL 2K5 was crushed under EA's five-year exclusive license agreement with the NFL and 15-year procurement of ESPN content.