Gunning For Sales: Video Game P-O-P

Until recently, electronic entertainment industry marketers found that getting their P-O-P into stores was a relatively straightforward process. "A few years ago it was primarily just Sega and Nintendo producing P-O-P materials," says Karin Reid, associate director, merchandising at Sega of America Inc., Redwood City, Calif. "Now Sony and some of the third-party companies have gotten much more aggressive at retail and that's made the department very crowded, especially during the holiday season."For years, the industry targeted the hard-core gamer, 8- to 17-year-old males. As that group ages, more advanced titles are being developed, and sports and hobby programs are attracting a new audience of older men. What's more, new research indicates that girls are not as game-averse as previously thought, and gender-appropriate software is being developed.But with so many titles now crowding shelves, fewer quantities of individual titles can be stocked by the typical store. If a vendor can't secure an endcap or mass stacker, it will be difficult to make a half dozen boxes stand out in a sea of merchandise. "There's a tremendous battle for shelf space because there's a lot of product out there," says Eric Johnson, vice president of marketing at Activision Inc., Santa Monica, Calif. "Unless you have what is perceived to be a triple-A quality blockbuster title, it's very difficult to get that space."Meanwhile, the number of retail outlets is shrinking. The Washington D.C.-based Interactive Digital Software Association (IDSA) recently reported: "At best, the amount of shelf space devoted to merchandising interactive entertainment software has remained stagnant. But even if the retail acreage is the same, its ownership falls into fewer and fewer hands.""P-O-P is getting more and more important, but also more and more in the control of the specific retail chains," says Simon Jefferey, vice president of marketing at Virgin Interactive Entertainment Inc., Irvine, Calif. "It's becoming much more difficult and more expensive for third parties to do P-O-P effectively."But there's plenty of incentive to do it. The $15.5 billion interactive electronics industry encompasses game hardware and peripherals as well as entertainment, education and productivity software. There are three primary hardware systems: video console platforms created by three giants, Sega, Sony and Nintendo; handheld or cartridge-based systems; and personal computers. On the software side, a variety of companies ranging from independent developers to major media conglomerates chased the $3.7 billion spent on entertainment software in 1996. Current estimates project that figure to reach $8 billion by the year 2000.With those kinds of stakes, P-O-P placement now "requires more strategic planning," Reid says. "I think in the past, people have produced banners, posters, standees -- your traditional P-O-P materials -- with the hopes that everybody will take one or more of those elements. We're working more in partnership with the retailer in creating P-O-P rather than presenting them with [prepared] materials. It does add to the overall timeline, but we've found that by working with retailers, it's a better win/win situation for both sides."High HurdlesA recent IDSA report said that for software publishers, "getting their products in a position to travel those final 3.3 yards [to the consumer] has become almost as daunting as any part of the creative process."One reason is the rise of slotting fees. Steve Bergenholtz, marketing manager for software maker Utopia Technologies Inc., Plano, Texas, says his company would like to take an active role in promoting its merchandise at the shelf, if retailers would let him. But that, he says, would require stores to realize "they are in the retail business instead of the real estate business."Beverly Johnson, director of marketing for Cosmi Corp., agrees. "It seems like every retailer we deal with charges a larger percentage every year [for space]." Cosmi, based in Rancho Dominquez, Calif., makes budget PC software.But other marketers say retailers are right to turn down some P-O-P offerings. "A lot of companies have done P-O-P but haven't invested as heavily as they should have to make something that looks good in-store," says Activision's Johnson. "As a result, I think some of the retailers have been resistant about putting it up."Disney Interactive's Hope Neiman agrees, in part. "Retailers have dictated so much in terms of what works and what doesn't -- and some of the efforts are so costly, that I think it's sapping some of the creativity that people could bring to bear with their retailers." Neiman is vice president of marketing for the Glendale, Calif.-based company.Who Gets InRetailers tend to accept hardware and accessory P-O-P more readily, perhaps because the margins are higher and the competition somewhat lower. "We find retailers want P-O-P and we can't supply enough," says Tracey Williams, channel marketing manager for Game Products, a division of InterAct Accessories Inc., Baltimore, Md. InterAct makes Game Shark, a memory card that enhances console game play. "We're working on inventorying excess P-O-P so that when retailers call with special promotions, like a Super Saturday [event], we'll have basic P-O-P that we can ship out quickly."And the platform creators, Sony, Sega and Nintendo, seem to exist in a different world altogether, distributing outstanding P-O-P that retailers actually pay to acquire -- even if through co-op funds. The companies' sales muscle partly explains the positive reception, but their retailer-friendly approach also influences store decisions."We've shown our retail partners how critical P-O-P is, and at the end of the day, the choice is theirs," says Peter Main, executive vice president sales and marketing at Redmond, Wash.-based Nintendo of America Inc. "It's critical with P-O-S materials of this kind [some costing $2,000 per unit] that there be an equity partnership that ensures that it's watched over and taken care of -- not thrown in the pail with the next operations review of the planogram."If you go in on an ad hoc basis and say you want to hang graphics from the ceiling, you'll run into a whole series of problems. If you don't recognize that store's overall plan or the role of store operations, you'll end up with a list of why you can't [put P-O-P up.] If you work together, you'll find [store] people willing to do stuff on a 'can do' basis," Main concludes.Virgin's Jefferey agrees: "I think retailers appreciate the value of P-O-P, but they're very selective in the product that they want P-O-P [to support]." The big chains, especially, can afford to be choosy, he says. "A lot of stores have lost a lot of money in excess inventory in computer and video games in the last few years, so everyone is very cautious about what products they support."Sharing the LoadLinking up with a larger partner is another idea whose time has come to the electronic entertainment industry. Elizabeth Olson, director of marketing communications at Sound Source Interactive, says the majority of the Calabasas, Calif.-based company's point-of-sale efforts are tied to large entities such as DC Comics, Kellogg's and Burger King. The smaller "Mom and Pop" stores are particularly inclined to pick up such promotions, she says.John Scull, managing director of PF. Magic Inc., San Francisco, says that as a small company, the cost of placing P-O-P in stores has in the past effectively prevented him from producing the types of merchandising support he would have liked. "Now, for the launch of Dogz II and Catz II [virtual pet programs] we'll be teaming up with a large company called Mindscape [based in Novato, Calif.] They'll ... make sure we have the muscle and resources to properly merchandise and market the product at retail."Ubi Soft Entertainment, a French software maker with offices in San Francisco, promotes its Learn & Play guitar software with help from Epiphone Guitar Co. The software maker features an Epiphone guitar in its instructional video and packaging. In return Epiphone spotlights the software on hang tags attached to its guitars. Consumers receive one free song demo and a coupon for $10 off Ubi Soft instructional programs with the purchase of an Epiphone guitar. This arrangement gets Ubi Soft exposure in 1,700 music stores across the country.For Purple Moon, Mountain View, Calif., a new company with software titles targeting young girls, cross-promotion is crucial in reaching the right audience. "Girls typically aren't walking down the aisles of computer superstores," says Heidi Peiron, channel marketing manager. So Purple Moon puts its P-O-P in clothing departments, using apparel label Jonathan Martin as the vehicle. Beginning in September and running through December, hang tags on Jonathan Martin clothes and inserts in shoe boxes will herald a Purple Moon gift-with-purchase package. The materials promote the "Secret Paths in the Forest" CD-ROM.Packaging StrengthAnother way manufacturers know they can score point-of-purchase presence is on the package, and electronic entertainment marketers seem especially cognizant of the power of packaging."The P-O-S process starts with designing the box," says Gary Sousa, channel marketing manager at IBM Consumer Division Software, Somers, N.Y. The company, which includes Crayola Worldbook and Edmark brands, supports its children's educational software with shelf talkers and posters, but says Sousa, "the box compels [consumers] to pick [the product] up" and seek more information.The nature of electronic entertainment products are such that the packaging and P-O-P must also look "exciting and polished and like it's going to be a lot of fun," says Activision's Johnson. Marketers send this message with top-quality packaging featuring embossing, UV coatings, metallic inks, die cuts and foil stamps. This summer, British firm OmniMedia released "The Mystery of the Missing Princess CD-ROM," in an elaborate box. "The new package acts like its own P-O-P," says Richard Leitner, vice president of sales and marketing, based in Phoenix, Ariz. The box, which looks like a castle, serves as both the P-O-P, the package and a reusable toy. "There's a million restrictions [on P-O-P,] so you really have to get the package to do something," notes Leitner. "It has to become its own self-promoting item."Even with its sizable merchandising budget, Nintendo also "spends a lot of time on the most basic form of P-O-P -- the package," says Main. "We try to merchandise the package aggressively, understanding that this product is very susceptible to shrinkage, so there's a great propensity to want to lock it up. We try to bring the package out in a physical sense, whether that's a dummy package or a flip page display that lets you see the front and the back of the box."Sherry Heller, national account manager for SSI MacMillan Distribution, a division of MacMillan Publishing USA, Indianapolis, says her company is cradling a stuffed animal on the side of a children's CD-ROM box. By hanging "something on the package that they [the retailer] can't take off," she says, the brand assures at least some point-of-sale attention.Memory card maker Inter-Act recently revamped its Game Shark package in response to retailers' complaints that the box was too small to be noticed. New graphics update a larger box, the front cover of which opens like a book and secures with a hook-and-loop dot. The line's three different SKUs -- each appropriate to a different game platform -- are distinguished by a different main color on the box.Still, not everyone thinks packaging does as much as it could to educate shoppers. "We have to make the shopping experience easier," says Disney's Neiman. "When a relatively new consumer to the category comes into the store, it's very intimidating, and our packaging doesn't help."Experience Leads the WayCompanies on the fringe of the electronic entertainment market often are the most effective users of P-O-P. Children's toy makers Hasbro and Mattel, for example, are both experienced designers of P-O-P, so it's not surprising their efforts succeed in electronic stores, too. Jim Adams, vice president of sales for Hasbro Interactive, Beverly, Mass., says "displays are very expensive to do from a publisher's point of view, and they're very expensive to buy from a position standpoint in the stores." But that doesn't prevent Hasbro from producing mass stackers and dump bins, as well as collateral material, to promote games like Star Wars, Monopoly and Frogger.Mattel uses two-sided standees with headers to merchandise its Hot Wheels and Barbie PC software. The company blankets aisles in Barbie pink when new titles like "Barbie's Magic Hairstyler," "Ocean Discovery" or "Fashion Designer" debut.When new games or platforms come out, electronic entertainment vendors commonly take advantage of two separate opportunities for P-O-P -- pre-launch and launch. This fall, Red Orb Entertainment, a division of Broderbund Software, will pre-release Riven, the sequel to Myst, with floor graphics, shelf talkers and decals. "We want to support the retailers' efforts to [presell] a subscription program and build awareness," says Ted Simon, group marketing manager for the Novato, Calif.-based company. On delivery, participating retailers will carry freestanding, prepacked displays and additional P-O-P promoting the game. "We look to do a lot of merchandising with retailers who have more extensive store programs," says Simon.For its October release of Temujin, a game featuring full-motion video, Cary, N.C.-based Southpeak Interactive is planning both coming-soon posters and new-arrival P-O-P. "Getting into channels is very difficult when you're not established," says Surinda Roberson, national accounts manager. The company has secured endcaps at some major retailers by pairing the new title with an established one in its line. "We hope to do more joint programs with retailers in the future," she adds.Help is Key to PlacementDespite the fact that electronic entertainment marketers are used to negotiating with store operations for space, paying for real estate still doesn't guarantee its delivery. "Unless you have a retailing force, you can't command the attention of the store managers [long enough] to get P-O-P put up," charges MacMillan's Heller.In fact, electronic entertainment retailers may refuse to work with companies without the help of a merchandising go-between. "Toys 'R' Us requires the use of a merchandising company," says Diane Barton, marketing coordinator for Midway Home Entertainment Inc., Corsicana, Texas, adding that the service is well worth the average of $6 per store it costs to oversee P-O-P installation."We pay a lot for merchandising opportunities," says Nancy Van Natta, vice president of marketing/home division for Mindscape. "It's very competitive." To make sure store personnel effectively use the materials management accepts, Mindscape and others often hire outside merchandisers to oversee placement. Hasbro's Adams calls his merchandising staff of 500 his "secret weapon."Virgin maintains its own field salesforce to oversee retailer compliance, and also hires outside merchandisers from time to time. "It's all very well sending a bunch of P-O-P out to the head office," says Jeffery, "but we need to ensure that the store managers are fully supportive and behind it."

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