BRAND HEALTH CHECK: Sega - Will new arrivals mean 'game over' for Sega? With PlayStation2 and next year's planned launches of the X-box from Microsoft and Nintendo's Gamecube, Sega's marketing must refocus

It's a long time since Sega's glory days of the early-90s, when a blue hedgehog called Sonic was driving sales of its MegaDrive console and the only competition was an Italian plumber called Mario.

It's a long time since Sega's glory days of the early-90s, when a blue hedgehog called Sonic was driving sales of its MegaDrive console and the only competition was an Italian plumber called Mario.

Since then, the video games market has changed beyond recognition. Sony introduced its PlayStation and has sold 70 million to date, relegating Sega to a distant rival - although it has made up some ground with its Dreamcast. Sega's earlier Saturn console was badly received and criticism was heaped on its poor games support and reliance on old technology. Dreamcast was meant to make up for it.

Despite delays, Sega's new box rolled out in Europe last October amid much fanfare, a pounds 60m marketing push through WCRS and a raft of football shirt sponsorships.

It has since switched its ad business from WCRS to Bartle Bogle Hegarty and parted company with European marketing director Giles Thomas. But Sega has shifted about 300,000 consoles in the UK and claims it will meet its first-year European sales forecasts of one million consoles.

Last week, it named former Coke man Jeremy Stern as Thomas' replacement, and said it plans to focus on direct marketing. It has cut the price of its console to pounds 149 and is readying a raft of new games.

But it may not be enough. Sony is expected to roll out its PlayStation2 in Europe in November and despite press criticism of the pounds 299 price tag, industry analysts predict a big success. Nintendo last month announced plans to launch its Gamecube in October 2001 and Microsoft has pledged a whopping dollars 500m (pounds 330m) backing for its X-Box, also due to launch in autumn 2001.

We asked two industry ex-perts how Sega is faring. Andy Mee, a former European marketing director at Sega, is marketing director of games retailer Gameplay. Geoff Glendenning, a former head of marketing at PlayStation UK, is managing director of youth marketing specialist Third Planet.



VITAL SIGNS

Market share %                    1995     1996    1997    1998     1999

Sony PlayStation                    76       75      61      75       77

Nintendo (N64/Super NES/NES)       n/a      n/a      32      20       11

Sega (Saturn/Dreamcast)             24       25       7       6       12

Source: Mintel.





DIAGNOSIS - ANDY MEE

Despite countless statements to the contrary, Sega has shown its inability throughout the Dreamcast's lifecycle to put into practice the lessons learned from the demise of the Saturn console.

Sega remains excellent at developing barnstorming games titles, but in the hardware market, it is still somewhat lacking. Faced with fast-approaching, high-calibre competition, it is now cutting the Dreamcast's price. But the overall perception is of too little, too late.

With the launch of PlayStation 2, which is spec-for-spec a far superior offering, and up against the sheer financial marketing muscle behind Microsoft's X-Box, Sega's (not altogether staggering) market share is set to be wiped out.

Most of Dreamcast's failure to establish itself as a credible proposition with any longevity can be attributed to the lack of strength of its launch titles; this, coupled with weak follow-up titles and decreasing third-party support could spell Sega's kiss of death.



DIAGNOSIS - GEOFF GLENDENNING

Sega has failed to generate the necessary hype to establish a long-term market position. Its high-profile ads and football shirt sponsorship succeeded in creating brand awareness, but it failed to say anything about the games.

Sega spent too long taking on agencies when the UK team could have been getting import machines out to key opinion-formers. The UK team was only put in place a few months before launch.

Another major problem is its positioning. A strategy to position itself as a sociable global gaming machine would have been spot-on, but it didn't have a single game you could play with a Eurobuddy.

It changed its PR agency and advertising was moved from WCRS to BBH, which created a new campaign based on European male stereotypes, which was a great concept. Sadly, the execution simply wasn't funny. The new campaign finally hailed the release of a game to support the proposition, but the reality was very disappointing.



TREATMENT

MEE'S MODIFICATIONS

- Unleash the potential of its fantastic games - stop proprietary platform publishing and go cross-platform: resurrect Sega PC.

- Promote the mother brand to both industry and consumers.

- Use cross-platform publishing to capitalise on rivals' marketing activities - and budgets!

- Define character strategy. Is Sonic a brand mascot or a video games character?



GLENDENNING'S GAMEPLAN

- Give it one last push with the price drop at Christmas.

- Do as much sampling as possible to maximise awareness of the best games on offer.

- Get the right associations with key endorsement from opinion-formers (not paid for).

- If this fails, drop future hardware plans, phase out the Dreamcast and aim to become a top software developer/publisher.



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