Simon Jeffery is the president of Sega of America. He joined the U.S. arm of the Japanese publisher, famous for games such as Sonic the Hedgehog, in 2005 to recruit U.S. and European game developers to work with Sega on both original games and to Westernize its portfolio. Before joining Sega, Jeffery was the president of LucasArts from 2000 to 2003. We spoke about how the Japanese company is doing at its “Westernization” strategy and its moves into new areas such as iPhone games and the Nintendo Wii.
VB: How is Sega doing?
SJ: We’re having a great year. We’re the No. 6 publisher in the U.S. year to date. We doubled our market share from a year ago. There has always been quite a gap in the top 5 market share. We’re in the 5 percent range now. That’s been extremely positive for us. We have great hopes for the rest of the year with Sonic coming on the Nintendo DS and Samba de Amigo for the Wii, we’re improving with quality as well.
VB: What got you to the better market share?
SJ: A lot of it is sales from our catalog. One thing we suffered from for a while was that we didn’t have catalog that turned over. That gives games more legs. We’ve had a lot of releases in the first part of the year, such as “Condemned 2,” “Viking,” “Sega Superstars Tennis.” They didn’t sell huge numbers but significant enough to increase our share. “Iron Man” and “The Incredible Hulk” have also done good numbers, thanks to the movies.
VB: How do you look at things like iPhone games and Facebook games?
SJ: The social networking area is challenging for game companies. As soon as EA focuses on Facebook, the kids will move on. Look at how fast MySpace came and went in the U.S. That space needs to mature. We will play in it but won’t over-invest. We have the No. 1 application on the iPhone. We made a bet early on and have a great relationship with Apple. We use that to our advantage. Super Monkey Ball is No. 1 and it’s an extremely high profit-margin business. It’s likely it will do a million units.
VB: Will the iPhone become a real game platform alongside the consoles?
SJ: I think the iPhone and all of the ones that copy it will absolutely be a new platform. We’re investing in a forward-looking mobile games group. The point isn’t just to get Sonic on as many handsets as possible. Direct consumer delivery is where it’s going, as Apple has proven. We’re in a really good position and see it as a viable platform.
VB: I assume you’re happy with the Nintendo Wii. Your “Mario and Sonics at the Olympics” has done very well.
SJ: We are very happy. Mario and Sonic will sell more than 7 million units by the end of the year. The Olympics will help. We are happy with our relationship with Nintendo. We’ve shown that we can be successful on their platform. Read the rest of this entry »
Hardcore gamers threw a fit when Nintendo didn’t talk much about hardcore games at its E3 press conference in Los Angeles. But the company has bigger fish to fry, as its choice of executives suggests. Cammie Dunaway joined Nintendo of America in November 2007 as executive vice president of sales and marketing. She led off the Nintendo press conference at E3 with a chat about breaking her wrist while snowboarding and a demo of the Shaun White snowboarding game for the Nintendo Wii coming from Ubisoft. Before joining Nintendo, she was chief marketing officer for Yahoo. Here’s an interview with Dunaway from the recent E3 show.
VB: How is Nintendo working out for you?
CD: It’s going well. It’s fun for me because it’s the first time that I’ve been here (for Nintendo). It’s quite different from how it’s been in the past. I was here at E3 with Yahoo Games four years ago. But it was still the big, wild, craziness.
VB: How did you interpret the pricing moves by the competitors? At first, Sony was at $600 and the Wii was at $249. Do you feel now that the spread is smaller, with them at $399, that you have to lower your price? CD: No, we really don’t. For us, it’s the what is the right value proposition to put in front of consumers. Even now, with our capacity increases that we’ve seen, the Wii still stays on the shelf a matter of hours at most retailers.
VB: Pricing is unlike any other generation. The initial price has never held up so long. The demand has never held up this long. Do you simply say that the price should be the same as long as it is selling? CD: It’s a whole new paradigm. The old life cycle thinking doesn’t really apply. Price is one piece of the equation, but only one piece. What has made the Wii the fastest selling console of all time is the unique interface. You have written about that yourself. It’s so fun for people at all levels of experience.
VB: In some ways, by keeping your price high, you defeat one of the ambitions you have to expand the gaming market. If the price were more accessible to larger numbers of people, you would broaden the market more easily. CD: I think $249 is a pretty accessible price point.
VB: It’s a good price but it’s higher than you would expect in a normal generation. By now, you would expect to have to cut your introductory price.
CD: That’s exactly the point. This is a new paradigm. It doesn’t follow the old rules. New people are discovering Nintendo every day. We saw with Wii sports that a lot of traditional gamers bought the system and new people in the household were using it. We saw with Wii Fit that there are whole new audiences coming in. Wii Music will continue that trend. As long as there are new audiences discovering the product, we’ll be satisfied with the pricing equation. Read the rest of this entry »
LOS ANGELES — I just came back from the “Rock Band 2″ party at the E3 video game show. Inside the Orpheum theater, The Who belted out 40-year-old songs to the delight of the crowd of game executives and journalists. The event was the most exciting so far in a dull conference that has proved, in most respects, to be a shadow of its former glory.
As lead singer Roger Daltrey exhorted the crowd to belt out words “It’s only teen age wasteland!” from “Baba O’Riley,” it occurred to me, like words flashing across a giant karaoke screen in front of my face, that music has made video games bigger than ever.
It’s an obvious trend, arguably one of the most significant forces driving video games into mainstream culture. It started a few years ago with “Guitar Hero” and is now a juggernaut force that is taking hold throughout the industry. The momentum behind this trend is growing, and continues to contribute to a broadening interest in video games. The Entertainment Software Association reports that 65 percent of American households now play video games, and of last year’s top 15 games, five were music games.
Sure, there are pulse-pounding shooting games like “Gears of War 2″ and “Resistance 2″ at E3. But it’s easier than ever to say that music has stolen the show. The halls of the Los Angeles convention center are ringing with music games from every major publisher. The Rock Band 2 game coming this fall is the joint product of Harmonix, MTV Games, and Electronic Arts. It will go up against Activision-Blizzard’s “Guitar Hero World Tour.” Both games involve players using faux instruments which make it easy for just about anyone to play a guitar or the drums in an effort to match the chords and beats of familiar songs, like those from The Who.
While Napster and the iPod have crushed CD sales, which were long ago surpassed by video game sales, the enjoyment of live or recorded music has never been more popular, as evidenced by shows such as “American Idol” and the record concert sell-outs of Disney artists Hannah Montana and The Jonas Brothers. With music-pirating rampant, the music industry has looked to license its music to game companies, who have a proven model for making old songs popular and introducing new artists in the games. Pete Townshend, the guitarist and singer for The Who, joked during the concert, “It’s all about merchandising, isn’t it? That’s why we’re here.”
In turn, music is a universal language and thus it’s an important way for game companies to get their games in front of kids, women, and non-gamers. Moreover, it allows game companies to charge more for their product. The original Guitar Hero, for instance, debuted in 2005 on the PlayStation 2 with a plastic guitar and it sold for $99, compared to the typical $50 price for games at the time. Last year the third version debuted and this year it even made it to the handheld Nintendo DS. Rock Band came with a guitar, microphone and drum set. It debuted last year on three different consoles at $169 (plus a modified version for the PS 2 at $99). You can download your favorite songs to play in the game; EA said more than 15 million songs have been downloaded. The game was so successful that Konami, a pioneer of music games, sued its creators for infringing on its musical controller-related patents.
The popularity of music games has propelled the industry forward in the midst of a recession. Sales are growing rapidly this year. Last year, U.S. game software sales were $9.5 billion; compare that to just $2.6 billion in 1996. And while violent games expose generation gaps between kids and parents, music games are getting every member of the family on the couch together. That fact was acknowledged by Rick Perry, the governor of Texas, who gave a keynote speech at E3.
At E3, the latest trend in music games materialized Monday morning as Microsoft joined the fray with a karaoke game dubbed “Lips,” where you sing into a motion-sensitive microphone. The singer Duffy (who the heck is she?) came to belt out one of her tunes in the game.
Then Microsoft dropped a big bomb on its rival Sony. It announced that Rock Band 2 would be an exclusive for the Xbox 360. Exclusives are a big deal for console makers, and the original Rock Band has sold millions of units worldwide. Shu Yoshida, head of worldwide game development at Sony, told me in an interview, “Rock Band hurt.” But he said the popularity of music games has driven Sony’s own SingStar series of music sing-along games. The trend is everywhere. Disney has been making games for the past few years based on licenses from its properties like “High School Musical.” The games haven’t been particularly good, but they have sold millions to gamers such as young girls. Sega, meanwhile, will make a game based on its “Samba de Amigo” music franchise for the Wii.
Activision-Blizzard spent 25 minutes of its Tuesday night press conference talking about Guitar Hero World Tour, which will allow players to record their own original music and share it with others. It is adding features to the game to make it a true simulation of performance music; at one point, the developer said that the synthesizer could make something like 85 unique sounds.
But Nintendo, whose Wii console is the most popular, might have had the best idea of the show. Taking note of the growing complexity of the “battle of the band” games, Nintendo has been developing Wii Music for several years in an attempt to make a completely accessible music game.
Cammie Dunaway, head of Nintendo’s U.S. sales and marketing, said that simplicity is the driving force behind the game, which is being spearheaded by Nintendo’s chief game designer, Shigeru Miyamoto. I tried it out. You basically can hold the Wii controller and wave it around in the air as if you were playing an instrument. I used it to play a violin and a set of steel drums. It really gives new meaning to the phrase “air guitar,” as the movements are wirelessly broadcast to the Wii and then transferred into the animated graphics on the screen. The music includes easy titles like “Twinkle, Twinkle, Little Star,” and there is no way for gamers to “fail out” of a song by hitting the wrong notes. I have never played a musical instrument seriously in my life. I enjoyed Rock Band and Guitar Hero, as did my kids. But we dropped those games fairly early, after the novelty wore off, because we just kept failing to get the chords right.
Nintendo has made a game that is much easier for the non-musician to enjoy. There is very little built-in competition in the Nintendo product and it is really more a tool for free-form play. It’s likely to appeal to young gamers, but Dunaway notes that Nintendo has done the best job at expanding gaming to new audiences. There are two distinct strategies. Rock Band and Guitar Hero are in a kind of arms race to add new songs and new features. Nintendo, which will debut Wii Music with a mere 50 songs, could very well make musicians out of the rest of us. And that could be one of the gaming industry’s biggest victories as it seeks to become an ubiquitous form of entertainment.
“Nintendo’s execution on this is amazing,” said Joseph Olin, president of the game developer group, the Academy of Interactive Arts and Sciences. “It is just what the market needs at this point to drive us toward new users who would never otherwise pick up a controller.”
The Yokne’am, Israel company said it plans to launch a low-cost gesture-recognition camera for game purposes in 2009. And it has hired a well-known video game veteran as its general manager for the North American market. Charles Bellfield, the new hire, has worked at a variety of video game companies in the past 15 years.
3DV is one of a number of companies that want to make it much easier to control games. It has refined a sophisticated camera, the ZCam, that can detect the gestures a person is making and translates those gestures into controls for a video game. You can thus stand in front of a game machine with the camera, wave your arms about, and control everything in the game.
The idea riffs off the motion sensor in the Nintendo Wii but takes it to a much more precise control through simple gestures. You could, for instance, turn up the volume in a game by making a thumbs-up sign. Or you could drive in a racing game by holding out your hands as if you were gripping a steering wheel. I demoed an early version where I was able to fly a plane in a game by putting my hand up in the air and using it as an imaginary joystick.
The 11-year-old 3DV has been making the cameras for years and still sells a $250,000 version for broadcasters who use it insert images into TV shows in real time. The company refined the technology and took out the costs so that it can apply it to the consumer market. By the end of this year, the company will be mass producing the consumer ZCam cameras and it will launch with games in 2009, Bellfield said in an interview.
I knew Bellfield as the die-hard spokesman for Sega, as that company’s Dreamcast video game console business was sinking. Bellfield didn’t tolerate anyone feeling sorry for poor old Sega. More recently, Bellfield did stints as a marketing executive for game companies Capcom and Codemasters. Think of him as the P.T. Barnum of video games. He will be joined by 3DV’s vice president of interactive entertainment, Rich Flier.
Bellfield said 3DV can come in as a differentiator for video game companies. Innovative ideas such as musical-instrument games “Guitar Hero” and “Rock Band” allow their makers to charge $99 and $169 respectively for their unique games. He said that at a time when low-end Flash games are becoming a commodity and high-end games are becoming increasingly expensive to make, developers should turn to novel approaches to gaming to set themselves apart.
Bellfield said the device will run across a variety of platforms and plugs into a universal serial bus (USB) port on any computer or game device. It will be about the same size as a webcam. Bellfield said the company is talking to a variety of developers and publishers. Those game makers are thinking of either enhancing existing games, such as making shooting games better, or creating new categories of games.
Traditionally, gaming peripherals don’t sell that well. But the Guitar Hero, Rock Band and the Wii itself have turned that notion upside down.
“It’s hard to launch something new, but what we have here is a more disruptive technology,” Bellfield said. “You touch nothing, but you can control everything.”
Demonstrations like those by 3DV have spurred the imagination, but they have also drawn out the competition. Another Israeli competitor claiming to have the best 3-D gesture control system is Prime Sense in Tel Aviv. Other rivals include Softkinetic, XTR, Oblong Industries, Canesta, ThinkOptics and GestureTek. We’ve written about 3DV and these others here and here.
Clearly, not all of these companies are going to survive and they’re going to have live through a long gestation before their products see the light of day. The ultimate blessing would be if a game console maker adopts the newfangled controllers, but the next console systems aren’t going to be out until 2010. Meanwhile, there is a rumor that Microsoft will join the motion-sensor control party with a new controller next week at the E3 show.
Apple’s first guest on stage today at the WWDC conference is Ethan Einhorn from Sega to talk about an iPhone game: Super Monkey Ball. He says Sega created four stages from scratch in a few weeks. Now it’s cleared through 110 stages.
The game uses the iPhone as a kind of slate with tilt control. You move the iPhone horizontally, up and down, to control a rolling ball. You knock things down and roll the ball into holes etc. It takes advantage of the phone’s accelerometer, which measures which way the iPhone is facing. It will be available through Apple’s upcoming App Store for the iPhone for $9.99. It’s just like a the old console versions of the game. Tilt!
Other new apps being added: eBay, Typepad blogging, Loopt friend locating, Associated Press news reports (native for the iPhone). Another game from Pangea Software is Enigmo, a physics based game that uses the touch feature on the iPhone. You can use it to scroll and move things around through 50 different levels. The game is able to show thousands of little balls flowing around, making full use of the iPhone’s CPU. Cro Mag Rally is the second game, a 3-D rally racing game. Both games will cost $9.99 each at the App Store.
Simon Jeffery is the president of Sega of America. He joined the U.S. arm of the Japanese publisher, famous for games such as Sonic the Hedgehog, in 2005 to recruit U.S. and European game developers to work with Sega on both original games and to Westernize its portfolio. Before joining Sega, Jeffery was the president of LucasArts from 2000 to 2003. We spoke about how the Japanese company is doing at its “Westernization” strategy and its moves into new areas such as iPhone games and the Nintendo Wii.
VB: What got you to the better market share?
VB: Will the iPhone become a real game platform alongside the consoles?
