Ebook Sport and Corporate Nationalisms: Part 2

SEGA Dreamcast 9 SEGA Dreamcast: National Football Cultures and the New Europeanism Philip Rosson Commercial sponsorships have become an important element in most sports. This is certainly true in English football where, since the early 1980s, shirt and kit sponsorships have generated important revenues for clubs at all levels. Companies increasingly view sponsorships as an effective way to promote their corporate and/or product brands. This chapter presents a case study of SEGA Europe’s use of a football shirt sponsorship in the launch of its new video gaming console and brand (the Dreamcast) in the UK market. The sponsorship sought to capitalize on the popularity of football among the prime market segment for its product and to benefit from television and other media exposure. The case study outlines the circumstances that led SEGA Europe and Arsenal FC to partner with each other, as well as subsequent developments. It was prepared using secondary sources and interviews with key informants in football organizations, sports marketing firms, and football researchers.1 Introduction SEGA Enterprises, a Tokyo-based video game company, launched its new Dreamcast console in the Japanese market on November 27, 1998. North American and European introductions were planned for September 1999. SEGA expected that the Dreamcast console would challenge Sony’s PlayStation for market leadership. Management at SEGA’s European subsidiary was considering football shirt sponsorships as one element in its launch and market development plans. Why football? Because it was the number one sport in Europe and its fans’ demographics increasingly mirrored those for video gamers. In addition, television was broadcasting more and more football games – often on a pan-European basis – providing valuable exposure for companies and their brands. Therefore, football seemed ideally suited to communicating with those most 167 Sport and Corporate Nationalisms interested in buying the Dreamcast. This was particularly the case in the UK, where football was a national passion and video gaming was also a favorite pastime. Consequently, in late 1998 SEGA Europe management was giving active consideration to partnering with a top English football club. There was about a six-month window before a sponsorship deal would come into effect, and the Dreamcast launch was nine months away. In other words, there was some pressure for a decision to be made. London’s Arsenal FC was a logical football club for SEGA to consider as a sponsorship partner. Arsenal has had a long and rich history. Founded as the Royal Arsenal FC in Woolwich, Kent, in 1886, the club moved to its present location at Highbury in North London in 1913 (Soar and Tyler, 1989). It is one of a handful of English football teams that is well known and supported around the world and in the last decade, after Manchester United, has had the single best record of English clubs. In December 1998, it was announced that Japanese electronics giant JVC would end its long-standing shirt sponsorship with Arsenal, effective June 30, 1999. This meant that Arsenal would have to seek another shirt sponsor for the 1999–2000 season, which kicked-off in late August. The case study that follows examines SEGA and Arsenal in turn. The industry environment of each organization is described, then the shirt sponsorship factors are outlined, followed by details of the shirt sponsorship deal that was struck, as well as subsequent developments. A number of final comments bring the chapter to a close. The Video Gaming Industry In the late 1990s, three Japanese companies fought for dominance of the global video game industry. Despite its late entrance, Sony was the market leader. Nintendo and SEGA had at various times occupied the top spot but these long-standing rivals currently trailed in Sony’s wake. SEGA’s new entry – the Dreamcast video console – was launched in Japan late in 1998, and North American and European introductions were planned for September 1999. Nintendo was rumored to be launching a new product. As a result, both companies expected to gain substantial ground on Sony and its extremely successful PlayStation. However, Sony itself would be launching a new product – the PlayStation 2 – in 2000. Product and game technology, market timing, and marketing flair were all critical to company success in this industry. History The video game industry started in the 1980s and has gone through several cycles of boom and bust, with shakeouts of marginal companies and the arrival 168 SEGA Dreamcast of newcomers. The industry grew in the late 1980s when Nintendo and SEGA used sixteen-bit technology to develop much faster and more sophisticated games. A period of depressed sales occurred in the early 1990s when PC technology played leapfrog and drew users away from video game companies. In late 1994, video gaming broke back when Sony introduced its innovative PlayStation. This development changed the industry dramatically. The quality of images and sounds made possible by the technology meant that the industry was seen as selling something more than a toy. For the first time, large numbers of adult users were attracted to video gaming. Nintendo launched the N64 in 1997 in an attempt to regain some ground. In late 1998, all eyes were watching as the once preeminent SEGA launched its own innovative Dreamcast game system in Japan, based on 128-bit technology. The games industry is substantial. By the end of 1999, it was forecast that the installed base would number more than 100 million Sony PlayStations, Nintendo N64s, and SEGA Saturns and Dreamcasts globally. Household penetration levels were high and the value of industry sales (consoles and games) was about US$20 billion in 1999 (£12.2 billion)2 – larger than Hollywood box-office revenues for the first time (Business, 1999). SEGA Competitors Sony was the competitor to beat, dominating almost everywhere with market shares in the 60 percent to 70 percent range. The PlayStation had proven to be a star product for Sony. It was estimated that 50 million homes owned the gaming console in 1999, and that in the fourth quarter of 1998, it provided 16 percent of Sony’s sales and 44 percent of profits (Fulford, 1999). However, after four years of booming PlayStation sales, volumes were down (Sony warns, 1999). Sony was planning to introduce its PlayStation 2 to the Japanese market in time for Christmas 1999. Early reports suggested the new console would be a formidable competitor.Technically, the console would be able to outperform PCs and workstations and would be “backwards compatible”– old game libraries would not be made obsolete by the console. This was a benefit for users, software producers and resellers alike. Nintendo was second in most countries, accounting for much of the rest of the market. It entered video gaming in 1983 and the eight-bit Nintendo Entertainment System (NES) dominated the second-generation of consoles. Nintendo also pioneered hand-held games and still leads that market with the GameBoy. Its success with the NES made it slow to develop a successor and the sixteen-bit Super NES (and later N64) failed to meet profit expectations. Although it had not publicly announced plans for a successor to the N64, Nintendo was rumoured to be working on a console to be launched in Japan in time for the important Christmas 2000 holiday. 169 Sport and Corporate Nationalisms Convergence in entertainment Video gaming was fast becoming a “mainstream activity,” appealing to a more mature user. In the early 1990s, eight- to sixteen-year-old males primarily owned video consoles. Following the release of the PlayStation, consoles sold across a wider age range (eight to twenty-nine years), with the average owner being seventeen years old (Littlewood, 1999). The broadening in the appeal of video gaming meant that close parallels existed between the prime market segments for gaming products and football. Given the size and continued growth prospects, it was rumoured that Microsoft had designs on the US$15 billion (£9.1 billion) global video-game market. Another factor was the advanced graphics capabilities of the new consoles, which were seen as challenging the future of PC-gaming and, more broadly, interactive entertainment, including the Internet and digital TV. Microsoft could not allow these markets to move away from its domination (Ward and Chang, 1999). SEGA and the Dreamcast SEGA had seen its share of world markets slide dramatically since 1992. Its sixteen-bit MegaDrive console, launched in 1989 as the Genesis in North America, was the dominant third-generation gaming machine. However, SEGA was unable to make the transition to the next generation of player (using CD-ROM disks). The Saturn console, launched the same year as Sony’s PlayStation, never met corporate objectives (Schofield, 1999). Consequently, SEGA’s share had gone from about 50 percent in the early 1990s to stand at little more than 1 percent in the US market in 1998. In the UK, SEGA’s market share was in the 4 percent to 5 percent range. SEGA’s market decline created difficulties. Smaller volumes of business meant there was less interest on the part of software developers in producing games and less money for marketing and advertising. Because of lower spending, sales plunged further and so the spiral continued. These difficulties affected SEGA’s corporate performance. Gross sales fell from US$3.5 billion (£2.1 billion) in 1996, to US$2.5 billion (£1.6 billion) in the year ended March 1998 (Edwards, 1999). A New Start SEGA had what it believed would be a winning combination: the newest gaming console backed by an aggressive marketing strategy. SEGA was determined to win back a leadership position in the video game market. The Dreamcast was the first gaming system to be designed around 128-bit technology and, it was claimed, this enabled SEGA to offer a system that ran three times as fast as the latest arcade game and fifteen-times as fast as Sony’s PlayStation. 170 SEGA Dreamcast Launched in Japan late in 1998, the debut of Dreamcast in North America was set for September 9, 1999. The European launch was planned for September 23, 1999. Being first to market had proven important in the video game market and SEGA expected to have a lead of at least one-year over Sony and Nintendo with its “next generation” console. The Japanese launch had gone well, with 900,000 units sold by March 1999. The console was priced at the equivalent of US$250 (about £150). Initially, nine games were available for use on the console and SEGA had signed software licenses with fifty companies (Edwards, 1999). The president of SEGA Enterprises spoke of the Dreamcast capturing half the global market for gaming consoles. However, industry observers were skeptical that SEGA could achieve at this level, noting Sony’s dominance, SEGA’s lost momentum, and reduced interest by software developers as obstacles that lay in its way (Littlewood, 1999). European Plans In preparation for the European launch of the Dreamcast, London-based SEGA Europe made a number of management and organizational changes. The senior managers appointed had experience in the music and TV businesses. Others had backgrounds in video games, software and advertising. The plan was to centralize activities so as to take control of advertising and marketing. SEGA then set about planning the £50 million to £60 million marketing campaign to launch the Dreamcast in Europe. Two advertising agencies were signed to assist the company: Bartle Boyle Hegarty, to deal with brand advertising, and M&C Saatchi, which was to handle other activities, including sponsorship, direct and digital marketing, and sales promotion. Industry members knew that the Dreamcast launch would determine SEGA’s future in gaming. As one games analyst put it, “SEGA has to make this work; it has no contingency plans. It is heavily into debt to fund the marketing” (Littlewood, 1999). The company’s marketing approach was signaled when the European Marketing Director said “We are here to launch a brand [Dreamcast] first, a console second.” SEGA clearly wished to reverse the lingering view that the company and its brands were not “cool”. The key was to make Dreamcast “famous” by linking the brand with activities and personalities that are popular with, and appeal to youths and young adults. An early indicator of SEGA’s plans was provided by the March 1999 European-wide sponsorship of the premiere of the futuristic thriller film eXistenZ (Littlewood, 1999). Pan-European promotional plans also involved cinema advertisements at all venues showing the new Star Wars movie The Phantom Menace, to be followed by TV advertisements until Christmas. Because the Dreamcast console was the first 171 ... - tailieumienphi.vn