This one provided a bit more insight than the others
Best Regards,
Mad2
Copyright 1999 Pacific Press Ltd.
The Vancouver Sun
September 09, 1999, FINAL
SECTION: Networks; E1 / Front
LENGTH: 1236 words
HEADLINE: Sega's dream date: Dreamcast, with advance sales of 300,000 units, blasts its way on to the videogaming scene as an example of aggressive, new-economy thinking.
BYLINE: Katherine Monk
BODY:
Today's launch of Sega Dreamcast heralds more than the entry of a new game console into the fiercely competitive $7 billion US videogame industry.
Fuelled by a $100-million marketing campaign, the most powerful processor in the business and a built-in modem, Dreamcast's arrival makes Sega one of the first North American manufacturers to introduce aggressive new-economy thinking into an old-economy landscape.
Dismissing the cyclical nature of the videogame business by introducing their new console a year ahead of Sony and Nintendo's next-generation systems, Sega will stand alone.
From a traditional standpoint, the move would appear risky given that Sony and Nintendo dominate the market with installed hardware. However, one glance at Sega's pre-launch numbers reveal a different score.
Blasting out of the box with a record 300,000 units sold prior to today's launch, Dreamcast has already broken the previous pre-sale record of 100,000 units held by Sony's Playstation.
And with its resulting intake of an estimated $45 million US, San Francisco-based Sega has erased all previous records for entertainment industry first-day gross -- including the $28 million in 24 hours of The Phantom Menace.
These Dreamcast numbers should be a warning to traditional entertainment brokers in the movie and music industries who have typically waited for the consumer to come to them.
The old philosophy -- based on marquee marketing and cyclical release schedules -- was successful enough to produce exponential growth for almost 100 years, but things have changed.
Over the past two decades production and advertising costs have risen, margins have slimmed, profits have dropped and stock prices have levelled. Major studios countered this by trying to come up with popular formulas -- Arnold Schwarzenegger action movies, for example -- that would allow them to keep experimentation to a minimum while keeping the box office fires hot.
For a while this worked. But recently the entertainment landscape has has been undergoing radical change in the wake of ''new economy'' forces such as e-commerce, webcasting and grass-roots Internet publicity.
Take for instance, the shocking success of the $60, 000 feature The Blair Witch Project, which became the number one movie in Canada with one of the smallest advertising budgets of the season as a result of its unflagging Internet campaign.
The entertainment industry continues to make money, but it's the new sectors -- videogames and other wired commodities -- that account for its positive growth.
Experts predict the North American videogame market will eclipse domestic film box-office this year, making new economy thinking the key to long term survival and Sega's Dreamcast launch a well-timed case study in the mechanics of this economic paradigm shift.
''We've been trying to reach the consumer in a slightly different way with Dreamcast, '' says Chris Gilbert, senior vice president of sales for Sega of America.
''We've put approximately 6,000 consoles into Blockbuster locations so that people can try the new unit prior to launch, test it out and see how good the graphics are. This program is working well, '' says Gilbert, who spent the last few months travelling across North America, troubleshooting, securing orders and getting commitments for retail placement.
''Box stores, such as Wal-Mart are very crucial, since most of the product will move through their outlets,'' says Gilbert. ''I can't tell you offhand what percentage of sales they account for, but I know it's a huge chunk.
''For the first time in quite a while we're seeing a significant commitment from retailers in terms of space. They're giving more than we've seen before, which signals a certain faith in the product, and that it will sell-through and meet our targets -- right now my biggest worry is placement. Will the games be in the right spot? Will people see them?''
Gilbert is hoping to meet the target of a 400,000 unit sell-through in the first 30 days. He is optimistic, and new technology and new economy thinking is the backbone of Gilbert's plan to wipe competitors, Nintendo and Sony, off the map before they have a chance at releasing their next generation consoles sometime next year.
''We have a different pitch. In addition to offering the best gaming experience available on the market today. We are also offering convergence through the modem and our Internet capability.''
Gilbert points to games such as the realistic NFL 2K -- which looks like watching a football game on TV -- and the detailed three-dimensional universe in Sonic Adventure as glowing examples of Dreamcast's technological edge -- 128-bit architecture, built-in 56 modem, online gameplay and upgradeable components for a reasonable $299 Cdn.
Also, Sega is working on tie-in products, such as toys and TV shows to pump up the profile of its once ubiquitous mascot Sonic the Hedgehog.
Most importantly, however, Gilbert says the main difference between the launch of Dreamcast and its ill-fated predecessor Saturn, is the quality of the games, ensuring enough hardware is available to meet demand and guaranteeing the number of titles available at launch, which at last count was between 16 and 19.
''When Dreamcast was released in Japan last year, not all the games were ready. Also with the NEC plant problems there was a shortage of chips. We won't have those problems with the North American launch,'' says Gilbert, who watched the company take a $378-million loss in the wake of production problems last year.
Despite the high stakes, Gilbert, a former Reebok marketing executive, refuses to cringe in the face of his industry-dominant competitors Nintendo and Sony -- or old economy thinking.
''I believe its a tremendous opportunity to come out with the next-generation console first. It's a better system, and we have the games to support it. We're raising the bar for the entire industry,'' he says.
''The hard-core gamer (males between the ages of 14 to 25) is always looking for a superior experience and we can offer that. But we're also going after the secondary market with a different lineup of titles aimed at the older gamer, the female gamer, etc.''
In short, Gilbert is so confident in the new system he's watching for the competition to do something silly like release a next-gen console that's not quite ready just to keep up with the pack.
Gilbert isn't the only one, however, who is wearing his confidence on his lapel. Several chainstores across Canada -- including the Metrotown outlet of Electronics Boutique -- held midnight madness sales to capitalize on the hype last night.
More importantly, Sega itself has invested two years and several hundred million dollars in the development of Dreamcast.
The high-tech role-playing game, Shenmue -- in which gamers can explore thousands of areas in China and Japan while interacting with more than 500 digital characters -- cost Sega $30 million for development alone.
The $100 million North American advertising campaign, to be created by Pacific Data Images of California (the creators of the movie Antz) will begin its high profile assault on the airwaves tonight on the MTV Video Awards.
''It's a big investment,'' says Gilbert. ''The feature of Dreamcast is extremely important to the future of Sega itself.''
GRAPHIC: CP Color Photo: Sega's Dreamcast
LANGUAGE: ENGLISH
LOAD-DATE: September 9, 1999
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