Sony plays big league

THE 1990s have not been easy for the video games industry. After rapid growth and huge profits in the late 1980s, both Sega and Nintendo issued profit warnings in April, blaming sluggish European sales. Now Sony hopes to reverse the fortunes of the lacklustre games market with the launch of PlayStation - a video games console that the company claims will drive consumer demand into the new century.

Last week, Sony unveiled plans for a pounds 20m marketing campaign to support PlayStation's UK launch. It is adopting an aggressive strategy for its drive into the games market: pricing PlayStation at pounds 299 - pounds 100 less than rival games company Sega's latest Saturn system, which was launched last month. And no wonder. With development costs exceeding pounds 300m, PlayStation is arguably one of Sony's biggest gambles to date.

Despite the company's numerous successes, its history is dotted with technically advanced products that foundered along the way, and industry analysts say the company is now in need of a new hit. This is why Ray Maguire, managing director of Sony Computer Entertainment in the UK, describes PlayStation as "our most important launch since the Walkman".

"Interactive technology is the next logical step for Sony Corporation," he explains. "We already have a wealth of distrib- ution experience - which will be the key to future development." PlayStation is an advanced CD-based games console that is designed to fully exploit Sony's prominence in both consumer electronics and entertainment.

Mr Maguire claims the video games market is typified by consumer confusion and obsolete technology. Business is cyclical: consumers' interest peaks and plummets as they await the next generation of games consoles and increasingly sophisticated games software. There is consumer boredom because there is low creative risk: "Product innovation has gone out of the market."

The PlayStation is being positioned as a "fourth-generation" games console. Processing power is the key: previous 4-bit, 8-bit and 16-bit games consoles allowed only limited 2-D animation. But the latest 32-bit consoles, such as PlayStation, are much more powerful, allowing 3-D animation with picture quality closer to video standards. CDs are cheaper to produce and store more information than older games systems, which use cartridges.

"We want to turn video games into a mainstream product by bringing other people into the market," says Simon Jobling, marketing director at Sony Computer Entertainment. PlayStation is being aimed at a broad market: aged between 10 and 50, ranging from those discovering video games to those who last played Space Invaders 15 years ago. "Many older people have just not come back into the market - previous consoles were just not sophisticated enough," Mr Jobling says.

This sets a tall order for Sony's advertising agency, Simons Palm- er. "The tone of the campaign will have the broadest appeal," Mr Jobling says. "Previous Sega campaigns featured fast-moving graphics, Nintendo's had a celebrity - each severely limits the people with whom you can effectively communicate," he argues.

So Simons Palmer has devised a detailed strategy to target specific groups of consumers under the umbrella theme of power - the power of the PlayStation and the empowerment its use gives the player. A national print advertising campaign began in the specialist press last week, featuring an exploding head. A national television and cinema campaign will follow. Between now and then, promotions and roadshows across the UK will induce up to 150,000 people to try PlayStation before launch.

Relationships with retailers are critical, Mr Jobling says. "Lack of information in the past has certainly hampered retailers' sales." Other games manufacturers have obliged shops to overstock product, he claims. "Cartridge technology, with its longer lead times, affects the power of retailers to keep close control of stocks."

Sony pledges to change all that. It has invested in a retail staff training scheme to ensure sales staff and customers are properly informed. And in-store promotions will flag new games in the pipeline up to six months in advance. "It's about customer relations, offering added value rather than simply looking at how to get another pounds 50 off the shopper," Mr Jobling says.

Sony can expect a tough ride from Sega and Nintendo. Each is developing new products. Sega launches a pounds 3.5m advertising campaign for the Saturn next week, and Nintendo is expected to launch its new-generation Ultra 64 system next year.