Sega ups the ante for its online gaming push

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Sega of America will back its online Dreamcast Network with a $135 million marketing budget designed to lure anyone with access to a phone line and a TV.

Sega's designs on the online gaming market solidified with its April 4 announcement of new interactive entertainment company, which will market Dreamcast.

Under a new business model, Sega offers a $200 rebate toward purchase of its Dreamcast console when consumers sign up for two years of Internet access through SegaNet, the company's Internet service provider that is set to debut Sept. 7. The ISP costs $21.95 per month, but with the rebate, the hardware is free.

Sega will leverage its online gaming strategy as a key point of differentiation in upcoming rounds of the videogame marketing wars. As part of a viral marketing maneuver, Sega sent analysts a postcard with an illustration of Sony Computer Entertainment of America's PlayStation 2 console, a maze and the headline: "Help the PlayStation 2 find its modem."


The line is a dig at the PlayStation 2, set to debut in the U.S. in the fall. PlayStation 2 does not come with a modem, while Sega's Dreamcast is sold with an integrated, 56K modem. Consumers can use Sony's console for online gaming, but first must add an external modem.

Sega's campaign for SegaNet breaks in mid-August via FCB Worldwide, San Francisco, with an anthem-style TV spot. The high-speed gaming network will offer 3D multiplayer games, tournaments, content and forums.

"It will be a salutation to the joy of online console gaming, showing consumers having a great time playing through the Internet via Dreamcast hardware," said Peter Moore, senior VP-marketing at Sega. "The concept tries to draw emotionally on the experience of videogaming and competition. Our overarching perspective is opponents are everywhere; if you have a TV and a telephone line, you're a potential opponent."

The "opponents are everywhere" campaign theme will debut next month at the interactive entertainment industry's Electronic Entertainment Expo trade show in Los Angeles. Sega's "It's Thinking" tagline will remain a linchpin. The launch spot will run nationally on cable networks such as ESPN, MTV and UPN, and on broadcast networks such as Fox. Print ads, freestanding inserts, outdoor, online and point-of-purchase also are planned. An updated logo and redesigned packaging debut at the trade show.

While it seeks to broaden its target audience, Sega will continue guerrilla marketing to retain hard-core gamers. The company opens its 10-month Mobile Assault Tour May 1, and expects to continue backing the Family Values Tour, a showcase for alternative music. Two new sponsorships commence this year for alternative music band Blink 182 and the 32-city OzzFest heavy metal tour.


Sega is a sponsor of MTV's Video Music Awards telecast Sept. 7 and the company's ties with the music network are expected to grow as both parties mull making Ulala, a character from Sega's Space Channel 5 game, a virtual newscaster on MTV. Should the sexy character become a digital diva or veejay, original content creation for the property could soon follow.

Sega has sold nearly 1.9 million Dreamcast consoles and expects to add another 4 million by March 31, 2001, the end of its fiscal year.

Mr. Moore said 200 game titles will be ready by the holiday selling season, 10 of which will receive national broadcast and cable TV support, as well as print and online advertising. He declined to specify spending. As of March, Sega commanded a 15% dollar share of the U.S. videogame system market, according to researcher PC Data. Nintendo's Game Boy Color led the category, with a 35.2% share. PlayStation is No. 2, with 26.5%, and Nintendo of America's N64 is No. 3, with 21.7%.

"The concept of going online through your videogame console still has to be explained to consumers, but gaming ultimately will be online," Mr. Moore said. "We believe that we will be the first mover in this space."

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