When news hit the street that Visual Concepts' upcoming iteration of its highly regarded football franchise, ESPN NFL, would hit retailers with a never-before-seen price of just $19.99, the industry blinked. Never before had a triple-A sports sim come on the market with a price tag no higher than the latest Cruise Ship Tycoon game or Carmen Sandiego title.
The game's new copublisher, Take-Two, is intent on giving the franchise long-dwarfed by Electronic Arts' Madden Football series a running start at retail. When it comes to gameplay, the two titles invariably score close--most always in a photo finish. Last year, GameSpot gave the two titles review scores that differed on the PS2 by just a single tenth of a percentage point. On the Xbox, the difference was two tenths of a percentage point.
But in the sales category, Madden has been the clear winner--consistently trouncing the ESPN-branded product.
This year, Take-Two and developer Visual Concepts hope to level the playing field by offering ESPN NFL 2K5 at the price of $19.99. We asked Take-Two president Paul Eibeler and Visual Concepts' marketing boss Steve Raab to explain the move.
Paul Eibeler: We think that we can use some value pricing to establish the brand. Once the hardcore gamer or avid sports fan touches the product and realizes the quality, we believe well be in better shape to be a formidable player in the sports category.
GS: But dropping the price that low is pretty harsh medicine.
PE: Because the competition is so strong, we have to use everything thats out there--product first, then branding, then marketing dollars, and then value pricing.
GS: And how much are you going to rely on price to carry the message and how much will you rely on marketing?
PE: We think price is important at the point of purchase. And were really competing on product first. We have a great spokesperson for the game in Terrell Owens, and were working on spokespeople for the other sports games. Weve been working very closely with Visual Concepts on all the positioning of the print and TV ads. Youll see them shortly were very excited about them.
GS: How do you not let a lower price affect the game's production values?
PE: Were not going to let the product quality of the game be sacrificed or suffer in any way. We have a very strong competitor, so were doing other things around that great product. Well continue to invest and the Visual Concept guys are very committed to making it the best product in the industry. The only way to compete is to compete with great product.
GS: From your perspective, what does value pricing telegraph to the consumer? What does your research tell you?
PE: Our research tells us that were up against an established competitor. Pricing is used in every other industry to get people to buy something they normally wouldnt buy. Were always using value pricing because, first, we know we have a great product, and second, were supporting that product with a full marketing and print campaign--were not just using pricing alone. We also think that at this point in the cycle there is a lot of casual gamers that will expand the sports category, and that the value pricing is probably going to be more important, or just as important, to that casual gamer.
GS: Are you worried about gamers dismissing the game based on price alone?
PE: If we didnt have the quality of the product, and we didnt have the support of all the editors writing about the product, I probably would be. In this industry, since a lot of [success] is driven by word of mouth--which comes from magazines and the Web sites--and [since] the product stands on its own, no, were not worried.
GS: What happens when the next-gen consoles appear? Does pricing remain the same or do you bump it back?
PE: Once the average sports fan, or even the casual sports fan, has the great gaming experience--and has played this game for many hours, and talks about it, and realizes the whole gaming experience--I think we will have the ability to move the pricing up.
GS: Back on par with the competition?
PE: We think theres that opportunity, yes.
GS: It sounds like you are aggressive in terms of selling into a market that may not be familiar with a Madden product, for example. What portion of sales are you looking to come from buyers new to the sports sim genre, and what portion are you looking to steal from the Madden camp?
PE: Weve taken it from the standpoint that Madden is a great brand. People that have purchased hardware last year, or are planning to purchase hardware this year or next year, are more casual gamers. Theres no reason that we cant get them into sports. At this point in the cycle, one way to bring them in would be with price.
GS: And the Madden devotees?
PE: We think theres a lot of people who are avid sports fans who are loyal to the brand, but especially that avid, hardcore gamer will, [based on price] pick this game up in addition to other sports games that theyve bought.
GS: How do you think the folks on the Madden team are responding to this?
PE: Well, theyre great competitors. They have a great product, theyve enjoyed tremendous market share, they do all the things right. I dont know how they think, I just know how we think and we have a tremendous amount of respect for them, but we think its a big market and we want a small piece of it.
GS: Thanks, Paul. Steve, does bringing in Take-Two as copublisher of your games suggest that Visual Concepts wasn't entirely pleased with what it got from Sega in terms of distribution and support?
Steve Raab: I don't think that's accurate. I think that over the years Visual Concepts has had a lot of success working with Sega. I don't know that it's a move because we're unhappy with something. I think we're always trying to find the best situation to give us the best chance for success.
GS: What are you looking for from the Take-Two organization?
SR: The most obvious point to me is the breadth and depth of their sales force. They have the ability to be in every viable account with great relationships, great real estate. They know the market, and they can really provide tremendous coverage for our games.
GS: How did you determine the new price?
SR: When you make a decision like this, it's part of a bigger strategy a ton of thought goes into it. But the question really was: What was that price point that made sense financially in our models, but really, really would drive trial? And I suppose there you could argue is it $29, is it $39? But when you really study it like we studied it, we felt like $19.99 was that point.
GS: You dont feel that lower price implies lower quality?
SR: Well, there's a difference between value and budget. You know value is how much you're getting for your money. Budget is all about price. Anybody who saw our games at E3, or has been part of the previews or reviews, I think answers a lot of that question, which is: There's nothing in the game that suggests that we're willing to deliver, or expect to deliver, anything less than we've always been striving to deliver. This strategy is not to deliver less for less. This is about delivering the best game at a great price.
GS: But how do you get past that first $19.99 hiccup?
SR: The great thing about this industry is that you have a really passionate core fan base. The word of mouth, what you see online, what you see in the forums, will support that. The best thing that can happen for us is for the product to get out on the shelf. Anybody who's even thinking that $19.99 implies lesser game [that thought] will be dispelled as soon as it comes out, even before it hits the shelves.
GS: How does lower pricing affect production of the game?
SR: There's no impact on the R&D budget. This isn't about us cutting costs to accommodate a lower price point. This is about us making a huge investment in what we believe is a great game, getting it into more people's hands, and growing the size of the markets. From a top-line standpoint, this isn't about cutting costs and managing your bottom line by cutting costs. It's a longer-term strategy. I don't think anybody's looking at this as a 2K5 box strategy. This is part of a longer-term commitment on our part.
GS: Any fear of alienating the hardcore sports fan?
SR: The hardcore gamer has actually always been our advocate. They really appreciate and understand what's in our games. And if you look at the forums now, and the buzz that's been going on, well, no, it's not a concern of ours because those gamers seem to understand that great price is still going to translate into the best game.
GS: Does deciding on that price so late in the release cycle present any problems?
SR: In some respects, making the move late obviously causes some challenges, but in other respects, it gave [us] the opportunity for enough information about the game to be out there.
GS: What markets are you trying to attract with the new price point?
SR: We want the sports gamer who's already playing, and maybe playing somebody else's game. I don't think the expectation is that he's necessarily going to switch. But he'll certainly try ours.
GS: How does the absence of NFL Fever and NFL GameDay on the shelf work to your advantage?
SR: There are a lot of sports fans out there who have bought titles that are no longer publishing this year. We expect they'll try the game. And then we think there's a whole group of people who maybe haven't been buying a particular sports title, by any of the publishers. And the opportunity for them to get such a highly rated game for a really affordable price, and bring them into the category, [it will] ultimately grow the category.
GS: And how do you think the competition's going to respond, particularly the Madden team?
SR: Honestly, can't say I've thought a ton about it. Our focus is the success of our games, and how we provide that incredible value to consumers. I don't think this is necessarily about taking market share from somebody else. We're obviously looking for what we believe is going to be strong growth, but we also think that it's strong growth that's making the pie bigger. And that becomes a win for everybody.
GS: Do you want to talk about any of your marketing plans with this product? How it might it differ due to the price?
SR: You'll see significant exposure across TV and print and online. You'll also see us doing some nontraditional marketing, whether it's projections on buildings in major markets, [or] some very interesting event marketing programs. We've got some really interesting things we've never done with ESPN before.
GS: What's planned with ESPN?
SR: We've [already] created a customized anchor position inside Sports Center that uses ESPN video games, graphics, and presentations to show what's coming up on the ESPN network. That's six nights a week on ESPN.
GS: Any consideration of going lower than your current price point?
SR: How cheap are you?! Just get 20 bucks out!