Brand Loyalty

Playdia, Casio Loopy, and  Amiga CD32  are the names of video game consoles. These game consoles might not be familiar because: Nintendo, PlayStation, and XBox–through great understanding of  brand loyalty–have ensconced themselves into the laypersons’ lexicon.

The goal of any product or service is to develop brand loyalty. Brand loyalty starts with a firm understanding of the product or service you wish to deliver, and then juxtaposing them with the competition.  This first step requires a company to take a honest introspective look at themselves. Once a company has taken this introspective look at their services, by way of an audit, they can start the nascent stages of developing brand loyalty.

Business strategist such as Fred Reichheld claim that by enhancing customer loyalty a company could see dramatic effects on profitability. Among the benefits from brand loyalty — specifically, longer tenure or staying as a customer for longer — was said to be lower sensitivity to price. This claim had not been empirically tested until recently.

Successful companies understand that, brand loyalty is built on customers’ perception of a product or services’ value,  level of trust, worthyness, and their level of satisfaction. All these elements  play an integral role in developing brand loyalty. A large part of the success Nintendo, PlayStation and Xbox have enjoyed is due in part to their understanding of formentoned elements.

LEGO: Success Made Simple

LEGO logo (Photo credit: Wikipedia)

LEGO, the popular toy company based out of Denmark, has been a staple to millions of people’s childhoods since its inception in the mid 20^th century. In 2003, however, the world’s top 5 toy producer was in a lot of financial trouble. Some blamed it on the fact that they were stretching their means to far to video game development and amusement park constructions, but the key issue was their supply chain management. Once it was made clear that this was the issue that was driving LEGO’s poor financial engine, they set out to fix this broken system, all while using the sales of their video games to push the company out of it’s difficult economic state.

 

Since then LEGO has experienced great success. From 2009-2011 LEGO increased its market share from 4.8% to 5.9% of the global toy market, making it the world’s fourth largest toy manufacturer. With profit numbers like $1 billion of product sold in the US alone and a net increase of profit around 69%, the question now has become what has made the recover of LEGO so successful while other toy companies are still struggling?

 

Well, after reading articles like the Economist’s “Bricks and Flicks” it is clear to me that the video game division of LEGO has been driving profits and increasing the enjoyment of the consumers. Over the past decade LEGO has developed a number of co-branded products with other companies like Lucas Films, Disney, and DC Comics. Through these licensing arrangements LEGO has created it’s classic toy building products along with video games like “Star Wars LEGO”. By doing this LEGO has given its customers the ability to enjoy their products in both the real and virtual worlds, which increases the overall value of the product and experiences as a whole.

 

What really has made the difference though, was the chosen time for each of the products release. Last years “LEGO Batman 2” was released just after the box office hit “The Dark Knight Rises” and after 2012 was wrapped up, it was #9 on the top 10 selling games of that year. With simple gameplay and family friendly story telling the video games in the LEGO world have caught the attention of almost every one in the industry. The game designs are built in a world entirely built by LEGOs with characters designed straight from the LEGO character roster available to consumers in the classic LEGO plastic forms. With all of these designs out there it has made the game easier to make given that concrete designs are already available to the developers. With all this design time taken care of, LEGO has had more time to focus on story lines and puzzles that keep every new LEGO game more enjoyable than the previous one.

 

With the summer of 2013 slowly creeping in we can expect another line up of big movies at the box office and once again we can expect LEGO to plan ahead for their summer release of  “LEGO Marvel Super Heroes”. Having had experience with the DC Comic Universe, LEGO now will be testing the waters with the other comic book giant, Marvel Comics. This summer Marvel will be releasing a new Wolverine installment, Iron Man 3, and Thor 2: Dark World, and what do you know all the Marvel characters in these movies will be playable characters in LEGO Marvel Super Heroes!!! As we can now see LEGO has set out on its mission once again to expand the consumers experience with the characters we have grown to love. Expanding on the experience we get from watching our favorite characters at the box office to enjoying the family friendly toy products and giving consumers the ability to play as these character in a familiar virtual world, LEGO has set out to broaden the experience for consumers, all while increasing the value of their brand and generating positive financials.

 

I leave you now with a video of how the LEGO development team addresses the issue of doing justice to the Marvel brand and how they create a new LEGO video game that expands the user experience from previous LEGO titles. Enjoy!

 

2K Sports: Sole Control of the Virtual Basketball Market

Ever since 2006, when 2K sports first released its NBA licensed basketball game “NBA 2K6”, it has delivered a quality product to consumers that eventually pushed past industry leaders, like EA sport’s “NBA Live” franchise completely out of the market. NBA 2K13 earned its spot in 2012 as the #6 highest selling game of 2012, and with 2K13 still breaking sales records  as we speak it has been through internal quality of product, business practices, and development that has earned 2K sports the now lone top spot in a highly profitable industry.

Over the years 2K sports has aligned a range of celebrities that have actually gone into 2K sports studios to capture their very own basketball skills. Musicians like ?uest Love(the Roots), Phife Dawg (A Tribe Called Quest), and the one and only Justin Bieber have graced the 2K sports studios presence and were then included as bonus playable celebrity characters in game content. Not only does this increase the value of the product to the consumers it also increase the value to the musicians that have not only provided their songs for the soundtrack, but also their virtual likeness. To those musicians that have helped create the product they now can enjoy playing as themselves, which I’m sure gives 2K sports a valuable bargaining chip during music licensing negotiations.

Not only did 2K sports include these celebrity teams this year, but they also signed on Jay-Z as producer for the games soundtrack. With his wide musical knowledge he was able to craft a 19-track list that has a wide variety of music beyond Jay-Z and genres common hip-hop music them.

10 tracks from the 19 track soundtrack shows the diversity in music:

• Jay-Z: “Pump It Up Freestyle”
• Santogold: “Shove It”
• Justice: “Stress”
• Phoenix: “1901”
• Kanye West (featuring Young Jeezy): “Amazing”
• Too Short: “Blow the Whistle”
• U2: “Elevation”
• Jay-Z (featuring Kanye West): “The Bounce”
• Eric B. & Rakim: “I Ain’t No Joke”
• Diddy (featuring Notorious B.I.G., Busta Rhymes): “Victory”

A commercial that aired before the release of NBA 2K13 is listed below:

A recent Vibe article actually goes into detail of all the things we can be thankful to Jay-Z for, which made 2K13 the best virtual basketball experience to date. What stood out most in my mind was the fact that he final got the entire 1992 USA Dream Team to sign on board to license there images and likeness. Using his Star Power Jay-Z was able to reach out to long time hold outs like Charles Barkley and convincing them that if they could agree on lower compensations then 2K sports could afford to include all the necessary players for the ultimate experience. This sacrifice finally gave users the ability to join in on the question of “Who would win if the 1992 team were to face off against the 2012 team?” and argument that Kobe Bryant sparked during the 2012 London Olympic Games.

The excitement of NBA 2K13 has even made users create their own videos like this one to finally settle the debate:

When it comes down to it if you have played NBA 2K13, you realize that it is the development and countless hours they spend in the motion capturing studios that really makes it a quality brand, so much so that consumers haven’t settled for less. This has caused other titles like EA sports long time running title NBA Live to scrap its efforts in recent years, while focusing on other titles.  Either way it seems that 2K sports has found a perfect system that continues to please consumers and create record breaking profits.

I leave you now with an entertaining video of Shaquille O’Neil in the 2K sports motion-capturing studio for NBA 2K7. Enjoy!

“Make Love Not WarCraft” & Celebrity Marketing

In 2006, Blizzard Entertainment, the game development company responsible for titles like Starcraft, Warcraft and Diablo, helped create an episode in South Park’s 10^th season called “Make Love Not WarCraft”. Unlike most South Park episodes this episode used in game animations from Blizzard’s mass multiplayer online role playing game (MMORPG) “World of WarCraft”. Nearly half of this episode was actually shot within one of Blizzards active serves, all while other players were still playing the game. During the episode the South Park kids were set out to level up their characters to challenge a player that was such a high level that “he could be the end of the World…of WarCraft”.

 

The episode is quite hilarious and is a very good example of a cobranded product that was made for the benefit of both South Park and Blizzard Entertainment. Shortly after its airing in 2007, the episode won the “Prime Time Emmy Award for Outstanding Animated Program”, which became the shows second Emmy Award at that time. What the creators of South Park, University of Colorado graduates Trey Parker and Matt Stone, found surprising was that Blizzard was on board to help make the episode. This is because much of the episode hints at the fact that the better and more powerful one’s character is in the World of WarCraft the more likely they are to having “no life”. Over the course of the episode as the South Park kids characters become higher levels the fatter and more grotesque they appear. This sight does not really shed a good light on WoW players, but in the sense that any press is good press it achieved its goal of increased exposer for Blizzard’s game and shortly after WoW became the highest grossing game in the history of games with over 10 million subscribed users.

South Park has a history of being highly offensive and much of that has attributed to its success over the years, but when other companies are given the chance to cobrand a product with a company like South Park most would pass it up, as not to offend their already loyal fan base. So what Blizzard did here was a major gamble and as we have seen over the years it paid off with dividends. When South Park finally released its season 10 on DVD the cover had images from the “Make Love Not Warcraft Episode”, as well as, a trial game disc for consumers who had yet to experience the World of Warcraft.

Since then WoW has dropped in popularity, but still currently maintains over 10 million subscribers. With a fee of around $15 dollars a month per user this means that Blizzard brings in around $150 million in revenue every month just from subscriptions alone. To maintain these numbers Blizzard has implemented a marketing campaign using a wide range of celebrities to reach out to the many generations of its users, including celebrities like Jean Claude Van Damme, Ozzy Osbourne, Mr. T, Chuck Norris and most recently Aubrey Plaza. With each of these celebrities reaching the height of their popularity in a different decade Blizzard has been able to diversify its exposer to its target consumers.

My favorite among these commercials is the one with Chuck Norris because it focuses its message with the recent Chuck Norris facts that have immortalized him to a younger generation that might not have realized his first screen appearance was fighting legendary kung fu master Bruce Lee in 1972. Clever commercials like this one have helped maintain WoW’s popularity over the years and kept the money rolling in for what is the most profitable game in the history of video games.

Digital Distribution Sales

Within the most recent years the video game industry has changed dramatically in a positive direction. Just nine years after Valve’s Steam, a digital distribution, rights, management, multiplayer and communications platform, and eight years after iTunes started selling video games, digital distribution has become the preferred method of delivery for fame developed across the world. Not only is digital distribution cheaper then shipping physical game discs to stores such as Game Stop and Best Buy but it’s easier accessible for the consumer.

However, physical game disc are stilling bringing in the majority of revenue, but at the rate which digital sales continue to grow and the world becomes more technologically savvy, it won’t be much longer till digital sells surpass retail distribution sales.

Just this year at a GDC Panel, gaming industry analysts from iResearch and NPD Group presented important data about not just the United States digital sales growth but worldwide, explaining and demonstrating the speed at which digital sales are increases within the industry of video games. They also explained that in Europe and North America, there was as much of a 33 percent increase in sales across mobile, mobile, and consoles.

According to the GDC, iResearch and NPD Group, $14.8 billion dollars was spend on games in the United States, and an entire 40 percent of that, $5.9 billon dollars, was spent on digital game content. Breaking down the financials, digitally distributed games generated about $2.2 billion dollars, there are social games, which generated just $544 million dollars, and mobiles games, found on your smart phones generated $2.1 billon dollars. There were also more than $1 billion dollars generated by subscriptions to games like World of Warcraft and Xbox Live included within the above breakdown. So while digital sales continued to grow within 2012, gaming subscription revenue did as well, about 13 percent.

Liam Callahan, “who is an industry analyst for Video and PC Games at NPD.  Besides producing day-to-day analysis for clients and developing presentations, Liam is primarily responsible for the Games Market Dynamics reports which quantify consumer spending activities beyond new physical purchases at retail.” Callahan states there are interesting difference between world markets, specifically the United States and the rest of the world. While the increase in digital sales is contributed to the boom of the smartphone, gaming tablet, and much of Apple devices, it’s only the United States market that entirely prefers these device overall. For example, French video games still prefer gaming machines such as Nintendo 3DS, and United Kingdom games still choose consoles over the newly technologically advance tablets and smart phones.

In conclusion, these groups continuing to work together and provide awareness in the growing trend of digital sales will not only help the United States but the rest of the world.