Four Branding Lessons From the Video Gaming Industry

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My parents made me a deal: They’d pay me a dollar every time I vacuumed the house. Not just one room, mind you, the whole place. The Atari 2600 cost about $125, before tax, which meant four full months of vacuuming. Vacuums were heavy back then, and we had a lot of carpet (it was the 1980s, after all). It was a big, thankless job. I jumped at the opportunity.

I kept our carpets spotless for 125 consecutive days—that’s four months of vacuuming, no breaks—and got my Atari 2600.

It was the best moment of my young life.

In June, I was reminded of my childhood triumph as I attended the Electronic Entertainment Expo (E3), the biggest video game convention in the world. Tucked in a quiet corner of the convention hall, far from the spectacle of today’s major publishers, was a museum-like display of Atari’s vintage products. My heart jumped at the sight of it.

Here are the most important lessons.

1. Position your brand as a “first”

Consumers remember first-mover brands, and they usually overlook the guy who comes in second. That has big implications for brand equity. As adept first movers, Uber and Apple, for example, were able to build awareness, trial, and loyalty; the guys who showed up second could not. (As a first-mover, Atari staked its claim so strongly that 10-year-olds vacuumed to death just to get one of its consoles.)

The first thing I look for when assessing a client’s brand is whether consumers consider it a category first. If they don’t, I look for ways the brand can position itself that way.

Here’s a great example: The music video game Guitar Hero, published by Activision, was the first guitar-based music game, and it obliterated sales records. Then came Rock Band, published by Electronic Arts. Rock Band didn’t position itself merely as a music game; instead, it portrayed itself as the first music game to let gamers play as a band, not just guitarists. That positioning helped it leapfrog past Guitar Hero. Despite later adding drums and a microphone, Guitar Hero couldn’t shake the guitar-only brand image that relegated it to second place.

2. Align your brand inside and out

Why did Atari fail despite being a category first? Part of the reason is because the company didn’t practice what its brand preaches. On the outside, the Atari brand stood for family fun and excitement, a new way memories could be made in the living room. But Atari didn’t treat all its employees like family. The company’s top game developers left Atari when management refused to give them public recognition and royalties, and they formed a game-development company called Activision. This sparked an explosion of third-party developers that flooded the market with games that fueled competition and eroded Atari’s brand.

A brand strategy is merely the face of a business strategy, and a business strategy is as much about keeping talent happy as it is about meeting consumer needs. Yet so often marketers and brand strategists focus on consumer brand perceptions and ignore employee perceptions.

I remember that happening to Zynga, a publisher that made games for Facebook. Zynga’s brand was about fun, but its staff was worked to death in a frenzied office environment. Staff stuck around long enough to see the company go public in 2011, hoping they could cash out. At the end of the first day of trading, the stock price fell about 85%. It wasn’t long before some of its best talent left to spawn what is today a much more robust mobile-games market.

3. Copycats are leading indicators of doom

Atari tried to grow its business by competing in the personal computer category. It wasn’t a stretch, when you think about it. A video game console is merely a stripped-down computer. But in the same way Atari owned the video game space, Apple owned the personal computer space at that time. Atari tried to make a dent with a long line of machines, but it simply could not beat Apple. Nobody could for many years.

In my work, I see a lot of brands trying to follow market leaders they shouldn’t try to compete with.

Perhaps the best example in the industry is Nintendo’s Mario franchise. The brand is 30 years old—and arguably the strongest gaming brand in existence. Many of my clients have tried to replicate it with their own cheeky cartoon character. They’ve hired me to unpack the reasons Mario is so successful. They ask me to test their concept with Mario fans. They try to create side characters with the same charm and wit as those in the Mario universe. It never works. Nintendo caught lightning in a bottle, and trying to replicate it is a waste of time.

Marketers can avoid wasted time by identifying the proliferation of copycats. If none can keep up with the market’s biggest player, then what makes you think your brand can? If you have a good answer, congratulations. But make sure you ask yourself the right questions, the hard questions, before trying to take on a beast.

4. Timing matters

In its heyday, Atari was the fastest-growing company in American history. Then, between 1983 and 1982, industry revenues fell from over $3 billion to $100 million—and Atari was a major casualty. Some reasons for Atari’s decline are described above. But perhaps the biggest reason was market saturation.

By 1983, a host of game consoles competed with Atari, and third-party developers like Activision made lots of games for them. This forced down prices and led to excess inventory, which made the once-sterling game industry an albatross among retailers. The business model that drove the gaming business fell apart.

It’s not often that an entire industry implodes, but I do see many clients try to break into a market that’s softening. I remember, for example, when the Nintendo Wii, Xbox 360, and PlayStation 3 came out in 2005-2006. The Wii outsold its competitors at launch because of its innovative motion controls, whose popularity surprised everybody. Xbox and PlayStation tried to replicate that experience with their own controls, but by that time enthusiasm for motion controls among consumers had waned.

I wouldn’t be surprised if the virtual reality market (the hottest thing in gaming right now) follows a similar pattern.

The encounter reminded me of some of the great lessons that Atari and the video game industry have taught me about building strong brands.I remember my first love: the Atari 2600, the first popular home video game system. It was 1982, I was 10 years old, and I was broke. I wanted one bad. I had to find a way to get one.

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Articles, Branding

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