U.S. retail sales of video games and hardware grew 6% to hit a heady $10.5 billion last year, but Nintendo figures the tally could be a lot higher. After all, so-called power gamers represent only 11% of the overall market, according to researcher Parks Associates, and other gaming segments largely have been ignored by marketers.
'There must be a ceiling'
"The power gamers are just so big, and even if you can get more money out of them now, there must be a ceiling," said Michael Cai, director-broadband and gaming at Parks. "There's tremendous potential in other gaming groups."
Nintendo believes so too, and is trying to lure everyone from little kids and tweens to adults and grandparents to come out and play with its hand-held Nintendo DS.
To reach the youngest group, it will pair with McDonald's in September to include character toys such as Mario and Donkey Kong inside Happy Meals and offer games to play at happymeal.com. For tween girls, it has struck a deal with the Limited Too retail chain to sell an exclusive pink DS package (including a handheld console, jeweled wrist strap and Super Princess Peach game). The promotion will be advertised only in stores and in the retailer's catalog.
To get to the older set, Nintendo has begun releasing a series of titles labeled "Touch Generations," games that require little experience to play. Retail boxes for games such as "Brain Age," "Nintendogs" and "True Swing Golf" already are labeled with a distinctive orange-and-black logo, and others, such as "Clubhouse Games," will be released this fall.
'Do something with your nothing'
The Touch Generations effort will be backed a multimedia ad campaign tagged "Do something with your nothing," created by Publicis Groupe's Leo Burnett Worldwide, Chicago, and slated to launch in October. Nintendo has not yet set the media plan, which will include TV and online. Taking the oldster notion even further, Nintendo will host a Grandparents Day (Sept. 9) "Brain Age" competition at the Nintendo World store in New York with prizes for the winner crowned Nintendo's Coolest Grandparent of the Year.
The overall effort "is our most direct departure in marketing to attract new people to gaming," said George Harrison, senior VP-marketing, Nintendo of America. "Even if we fight [Sony and Microsoft] to a draw, it's not a success for our company. ... We do believe we have to get to a different place in the industry."
Bringing new or lapsed players to the brand could make a big difference for Nintendo, which has sold 21 million DS devices since its introduction in fall 2004, just a bit ahead of Sony's successful PSP handheld, which came out a few months later and had shipped some 20 million units by the end of July.
It's not just sales but profits at stake. Mr. Cai said Parks has isolated three groups -- social, leisure and dormant gamers -- that make up 53% of the playing population but account for 56% of the revenue. Dormant gamers, or those who used to play more but have abandoned gaming for homework, jobs or child rearing, are a particularly attractive group, making up 25% of the audience. They also spend $1.50 on games for every hour they spend gaming each month, the most of any demographic.
Nintendo, more than most other video-game makers, has long tried to reach beyond the core 18-to-34 male profile, analysts said. And while it has had success with the playground set, adolescent boys in particular, plus anecdotal success with titles such as "Brain Age" and "Nintendogs," this fall's multipronged effort will be its most aggressive and targeted to date.
"Marketing to non-power gamers is a big challenge," Mr. Cai said. "You can't just advertise with GameStop. They're harder to find, and so you need to find synergistic partners and media to reach them effectively."
Mr. Harrison said marketing to a variety of demographics is necessary for Nintendo's success, particularly since the DS marketing efforts will help woo players to its next-generation Wii console, which will launch just before the holidays. "The success of Wii depends on the success of DS," he said. "The more people we can attract to DS, the more people who are likely to try Wii."