SEGA PLACES ITS FAITH IN MARKETING POWER

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Sega of America is banking on marketing, not just technology, to step up pressure on its rivals in the $6.5 billion videogame wars.

Sega this week will show up Nintendo of America with new high tech videogame add-ons at the summer Consumer Electronics Show in Chicago, as the industry rapidly moves toward faster, more sophisticated game systems.

Sega will preview the $149 Genesis 32X attachment, coming this fall and giving Sega's core 16-bit Genesis system unprecedented 32-bit speed. Also to be unveiled is the Sonic & Knuckles videogame software. It will ship in October and is expected to be a runaway hit.

But with faster new game systems cropping up from 3DO Co. and Sony Corp., Sega's future leadership is starting to hinge more on marketing than the technology advancements that helped it reach the No. 1 spot.

"As various videogame systems become faster than Sega, marketing is becoming the whole key to its future. Technology is important, but marketing is more crucial to maintaining its leadership," said Paul Jacobson, a videogame analyst with Kidder, Peabody & Co., New York.

No one understands this challenge better than Edward Volkwein, Sega's 52-year-old VP-marketing. As he sees it, Sega's job is to keep the company's image as edgy and youthful as possible while maintaining an ongoing "marketing dialogue" with its core users.

"As we begin a transition toward more sophisticated videogame hardware platforms, the key will be holding onto our audience and showing them how to come along with us," Mr. Volkwein said. "They won't get lost in the ongoing shuffle of technology if they get clear direction from us, through our marketing and merchandising of products."

Goodby, Silverstein & Partners, San Francisco, which handles Sega's estimated $30 million account, plays an integral role in this goal. So far, the agency has won admiration even from Nintendo for its quirky TV commercials targeting teens and young adults.

"Sega's ads are weird and offbeat, and as a result, they're extremely compelling with the teen-agers and young adults it targets," Mr. Jacobson said.

Mr. Volkwein said Sega marketing executives strive to maintain "an entrepreneurial spirit and a beginner's mind" in everything from videogame development to advertising.

"I'm not young, but I don't think of myself as a middle-aged guy, and neither is anyone else here limited by age or experience," he said.

The average age of Sega employees is about 28, and about half of the approximately 1,000 workers have been there less than a year.

"What used to be strictly video-games is merging with other types of media, but all of it is aimed at keeping in touch with our core audience," Mr. Volkwein said. "Our market is not just videogames but publishing, music and even film as we incorporate celebrities and rock stars into videogames."

Nintendo hasn't branched out beyond its core business and continues to target younger children and families; Sega made its mark by primarily going after teen males.

"Nintendo originally controlled the entire videogame industry, and they catered to families," Mr. Volkwein said. "We went after the whole market by keeping our edge very aggressive and pulling in teen-agers, knowing the younger kids would follow. They did."

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