Fact-checking ‘Video Game Becomes a “Billion Dollar Hero”‘
My boss brought my attention to this post by Mark Allan Roberts at the Pragmatic Marketing blog. Mark makes some interesting points, but I think he’d be better off applying his analysis to the Nintendo Wii rather than Guitar Hero. He doesn’t seem to be familiar with the history of the product and I think it has lead him to some wrong conclusions.
First, a potted history. In the late 90s, Konami release a series of coin-op arcade games in Japan, Guitar Freaks, which was an entry in their long-running Bemani series of arcade games (which also brought the world Dance Dance Revolution). As these were exclusively arcade games, and gaming arcades are now pretty much extinct outside of Japan, they never made any serious attempts to export them. I saw one once in the Trocedro in London, in about 2001 I think, but that’s the only time I’ve seen one over here.
Fast forward to 2005. Red Octane, a tiny hardware firm, was doing some business making Guitar Freaks controllers for importers but wanted more. They partnered with Harmonix, a games studio who had made some rhythm games for the PS2 (FreQuency and Amplitude) which were critically applauded but sold relatively poorly. Together, the firms produced the first Guitar Hero, then the sequel, which actually turned out to be not a video game at all but a small money printing device that started spewing $100 bills around the clock. Who knew?
Fast forward again to late 2006. Harmonix was acquired by MTV Networks, who saw in Guitar Hero a lucrative way for music promoters to access new markets. Red Octane was acquired by Activision, who promptly assigned another dev studio they own, Neversoft (creators of most of the Tony Hawks series of games) to produce Guitar Hero III. Meanwhile, Harmonix released Rock Band, putting the two former partners into competition which will continue throughout this year with the releases of Rock Band 2 and Guitar Hero World Tour.
So, now you can see the first issue I have with Mr Robert’s post is the numerous mentions he made to Activision identifying gaps in the market — in fact, Activision were not on the scene until Guitar Hero was a very well established franchise. However, this is a relatively minor mistake and not the main problem I have with the original article.
No, I think Mr Roberts has misidentified the target market for the early Guitar Hero releases. GH didn’t chase this “family friendly” demographic early on — in fact the two-player mode in GH1 is quite slim compared to later games, and the game is brutally hard from about halfway up the difficultly level solution. It’s true that Guitar Hero tapped into something elemental, but that wasn’t group gaming; it was rather anyone who has ever played air guitar with a tennis racket or even tapped out a rhythm on a car dashboard, which (in turns out) was quite a lot of people. The party games market grew naturally as the guitar shaped controller tends to encourage drunken showboating (not that I would ever do that of course, ahem), and as it grew the developers quickly expanded the two player modes. They added several extra game modes in Guitar Hero II and then further expanded Guitar Hero III to add bass guitar for player 2. The ultimate evolution of this is Rock Band and Guitar Hero World Tour, which allow four players (vocals, lead, bass, and drums) to play the entire song between them, and jolly good fun it is too.
Mr Robert’s analysis of a firm that ruthlessly identified a huge untapped demographic, in the form of families that play together, is much more accurately applied to the Nintendo Wii. It’s a cliche now to say this, but every aspect of the Wii, from the low price, the accessible games, the revolutionary controller (careful to resemble a TV remote rather than a typical button-strewn gamepad) and the advertising (always with the reverse angle shots from the TV to the players in a plain white room, always with more than one player, often with an entire family) was ruthlessly targeted to that demographic. In return, Nintendo have made a money printing monster, and good on them for it.
There is no doubt that of the big 3, Nintendo has more than gone out of their way to be kiddie friendly. It does seem to be a strategy that works well for them. Personally, I have never owned a Nintendo console. Even back in the day I chose the Sega Genesis over the Super NES.
That’s not meant to be a knock on Nintendo as they are responsible for creating some of the best game franchises such as Mario, Legend of Zelda, and Donkey Kong Everything to name a few. It’s just that they’re not my cup of tea.
Thank you for your comments and sharing the history.
I believe the reason why Guitar Hero and the Wii are such best sellers is they are both product resonators.
They connect to their buyers and users in such a strong way consumers just have to have them, and they “seem to sell themselves.” As business people, isn’t that what we all secretly want?
You may be right about the family friendly connection. All I know is what I lived in my home and how I watched my wife spend twice as much for a video game, so I asked her questions.
I have to disagree with your use of the word “ruthless “however. Why is it ruthless to study your customers, create intimate buyer personas so well that customer’s camp out in sleeping bags the night before the release to have the “opportunity” to spend their hard earned money?
I feel like you are saying I gave the leaders too much credit for being strategic, that they may have fallen into this billion dollar hit? Maybe. But having sold both companies at one time in my career I have to say Activision , and as you point out Nintendo have very smart teams culturally aligned to serve their markets….in my opinion.
The research we have done shows less than 10% of the hit products that become resonators were the result of luck. I believe both Nintendo and Activision have very smart teams focused on markets and not leaving their financial success to chance and luck. They both do too many things so right.
I believe Nintendo would be a fantastic blog about a product that is tuned in, and particularly the “experience” of it, and how now they are overcoming one of the last objections me as a parent has which is children and a lack of exercise. Brilliant connection to a market unresolved problem!
I have a great deal of respect for companies that understand their markets and are on missions to solve unresolved problems in exciting new ways. If you have other examples please send them my way.
Mark Allen Roberts
http://www.tunedinblog.com/
Mark,
Thanks for taking the time to write such a considered response.
Firstly, as to “ruthless”, mae culpa. You’re quite right that in commercial terms a less emotional phrase like “focussed” would be more appropriate. I think I’m a little sour at the moment as I have three dead out-of-warranty Nintendo consoles (two DSs and a Wii) and that spilled into my writing there!
I do genuinely believe that the family friendly thing with Guitar Hero was more accident than design, as opposed to the case of Nintendo where it was abosolutely by design. Take for example the latest TV ads here in the UK (at least; it may be different in the States) for Guitar Hero III. They show a very darkened room with two early-20s men playing Guitar Hero, then one of them opens his mouth and Slash from Guns and Roses climbs out, then resumes playing the game. Cut to slogan, “do you have a guitar hero in you?”. Tonally, the ad is pitched at… well, me, actually; twentysomething male gamers who like to play games with their friends.
Although I’m technically a few months past qualifying as a twentysomething any more, but enough about my troubles.
I do agree that Nintendo would make an excellent subject for a similar essay — I think their entire product was more explicitly engineered to address this need which you have correctly identified as largely unfulfilled by games products. Even going back to previous generations of Nintedo hardware, there were games such as Mario Party directly addressing that market. Another games series you might like to look into is Buzz, a quiz games series for the Playstation 2 which (as with the Wii) uses simplified controllers to make the game more accessible to a wider audience of non-gamers.
By the way Roger Ehrenberg writes a great financial blog, http://www.informationarbitrage.com/, which has covered the computer games market from an investor standpoint. You might find this interesting.
I really like your site layout. Props!