Case analysis: Emotiv systems, inc.: it’s the thought that countBy:Group No: 11Yogesh GargSurendra Singh NegiAditya ManiVikas DahiyaTarun BehalNisarg Trivedi
Synopsis:• Emotiv systems- a San Francisco based company is launching the innovative Brain Computer Interface (BCI) technology which converts brain signals or emotions into digital form.• Emotiv had developed a headset using Electroencephalography (EEG) technology. It reads the brain signals of the person and is transmitted to the computer to convert into digital form.
Cont…• Tam Le and Nam Do are in dilemma of whether to launch the EPOC headset on PC Platform or to go about integrating EPOC with the console platform with one of the “big three” console makers.• They are also focusing on the marketing strategy to be adopted for quick adoption in either case.
Key Issues• Single platform v/s Multi-platform..??• Marketing (Pricing, Promotional, Distribution) strategy of EPOC.
Single Platform v/s Multi-platform• Console Market: – It is a huge market worldwide. – Its sales are projected to reach $40 billion in 2007 – In U.S., 40% of household had a console device. – The “big three” console makers – Microsoft (Xbox 360 console), Sony (PlayStation 3, or PS3) and Nintendo (Wii) – has the great brand equity.
Single platform v/s Multi-platformConsole Market:– Association with console makers may even help in boosting the adoption in PC gamers.– Trend in console gaming is booming (Guitar Hero & Wii System)
Single Platform v/s Multi-platform• PC Market: – Emotiv has to persuade only the game developers to create EPOC supported PC games. – As the PC games are compatible with Microsoft Windows operating system, Emotiv may have a greater control when EPOC is released. – No royalty to the console makers. – Emotiv to have higher profit margins – EPOC to come with premium pricing ($299)
Should Emotiv keep trying to convince major console makers toendorse its technology as part of their platform or is just being PCenabled sufficient for the launch?• Yes. Emotiv should first focus on the console makers with following assumption: – (There is a certainty with console makers before fall 2008, if not they should go with PC markets)• Now options available are: – Microsoft (Xbox 360) – Nintendo (Wii System) – Sony (PS 3)
Cont…• Why not Microsoft (Xbox 360)..?? – Favouring wait and watch approach – Result in delayed launching• Why not Nintendo (Wii System)..?? – Satisfied with the motion controller console – Lack in compatibility to support EPOC technology – Reluctant to adopt new technology due to phenomenal success of existing motion detection capabilities of console
Cont…• Why to go for Sony (PS3)..?? – Unexpected success of Wii (Nintendo) – Provide less features compared Nintendo – Have internal gaming division – Popularity with “guitar hero”
Marketing Strategy• Target Segment: Youth• Promotions: – Co-branding with console makers – Ads in game magazines (Wired) – Blogs – Game developing contest• Distribution Channel: Traditional channel against e-commerce
Marketing Strategy- PricingParameters Margins $199 $299Cost of prod. ($60/$110) ($60/$110)Retailer margin 35% ($69.65) ($ 104.65)Returns 10% of wholesale priceConsole Royalty 3%-5% - say 4% ($ 7.96) ($ 11.96)Game developer 2% ($ 3.98) ($ 5.98)Profit marginConsole model $ 57.41/$ 7.41 $ 116.41/$ 66.41PC model $ 65.37/$ 15.37 $ 128.37/$ 78.37