The Internet gives market researchers a massive space to mine consumers for opinion of a product. Lucky for inquisitive game companies, if there’s one thing that videogamers love more than playing videogames, it’s praising or utterly trashing games and consoles on Internet message boards. By reading through a few forum threads, you can get the general feel for product sentiment albeit in a small pocket of the Internet.
“In the videogame space, we find that gamers are fairly enthusiastic when they like a product,” says Alan Dean, BrandIntel VP of business innovation.
But if you didn’t notice, the Internet is a big place, and there are lots of people using it to comment on blogs and message boards.
That’s where BrandIntel comes in. The Toronto-based company released its “Top Video Game Console Report: Consumer Insight Monitor,” which claims that sentiment and purchase intent for the Nintendo Wii tops that of Xbox 360 and PlayStation 3.
BrandIntel’s scale rates purchase intent on a five-point scale. The Wii ranks in at over 3.5, the Xbox 360 just under 3.5 and PS3 intent is just above the 3.0 neutral mark. We’ll get to those scores in a moment.
Dean explains further how gamers are often ready to love or hate a videogame product; praising it to high heaven or mercilessly crucifying it. “If gamers like something, scores tend to be very high, over 4.0 in the games space… If [gamers] don’t like it, we tend to see scores that are around 1.0… this is fairly consistent over time,” says Dean.
Data taggers and emotional payloads
So how does BrandIntel aggregate Internet opinion about a videogame console? The firm monitors “Google-esque” amounts of search results across the Internet for consumer discussion forums using proprietary technology. Comments about a product need to have some kind of “emotional payload” to be considered, according to Dean. In order for a comment to be included in the final data, consumers can’t merely mention a console, but must attach some kind of sentiment. BrandIntel utilizes language processing that looks for clues that indicate that sentiment.
Once the technology gathers enough relevant data, a human workforce that Dean calls the “data taggers” actually reads through all of the comments that the technology identified. Then those web conversations are deconstructed and assigned codes that define the topic of console-related conversation: the feature set, graphics, gameplay, library, etc.
“In the videogame console report, we started out with 437,000 hits and through technology we sifted out the duplicates and the other stuff and we wind up with 106,000 web pages of interest,” Dean says. This was then whittled down to 2,000 consumer mentions related to next-gen consoles.
This sentiment is then quantified on the five-point scale. “The middle of the scale is three, which is neutral, where somebody doesn’t say whether something is good or bad. If somebody just says ‘well, I just saw a new ad for the Wii, and I understand that it already comes with a controller,’ That’d be tagged as neutral.”
The rules for quantifying sentiment seem fairly simple. An unqualified positive comment (merely “good”) is a 4/5 on the scale. However, comments like “extraordinary,” “excellent” and “this is the best console ever created” are all rated at a five, for example. Same goes for the negative end of the scale.
“It’s testing at times, but we don’t try and make the scale more than it is. It’s simply a rough and ready kind of guide.” Regardless, he claims the method is consistent.
Dean adds, “These numbers aren’t likely to change dramatically in say, the next two weeks” barring surprise developments such as, for example, a major PS3 price cut tomorrow or if Wiis begin exploding.
“Then all bets are off,” he says.
Are the results accurate? or The Wii as a McDonald’s burger
But is measuring purchase intent via Internet message boards really a good way of accurately testing the market waters? Anyone who frequents message boards knows that many are infested with fanboys whose opinions don’t necessarily reflect the overall market.
A separate analyst, Michael Pachter with Wedbush Morgan Securities, who wasn’t involved with the BrandIntel report says such studies of purchase intent are actually “quite useful and extremely accurate.”
“It’s great data for forecasting, provided that we make realistic assumptions about pricing and functionality in the future,” he says, wryly referring to the importance of one of the main aspects of his job, which is essentially trying to predict the industry’s future.
Pachter says that it’s not surprising that Wii purchase intent is higher than the other two, but he doesn’t believe it’s because Super Mario Galaxy is going to be totally sweet.
“Purchase intent for McDonald’s burgers is higher than purchase intent at Ruth’s Chris steakhouse,” he says analogously. “Of course, a burger costs 69 cents, and the average ticket at Ruth’s is $40, but who’s counting?
“In other words, price is the determining factor of consumer purchase intent. More people buy Fords than Porsches. Ask people which they would buy at the same price, and I’d bet that 99 percent pick Porsche. Ask them which they’d buy if the price was only 50 percent higher for a Porsche (instead of 400 percent), and the numbers would skew dramatically in favor of Porsche.
“At $249 with a game, the Wii is a bargain. Once the PS3 is $299 and the 360 is $249, the Wii will probably be $149, and purchase intent will shift. Once Blu-ray becomes the high definition movie standard, purchase intent will again shift,” Pachter states.
While Pachter says that price is the determining factor for purchase intent (at the same time likening the Wii to a McDonald’s hamburger), BrandIntel gaming analyst Gerrard Suyao says other factors play a large role as well.
“Wii is very much ahead of PS3,” Suyao says, citing Wii’s lower price point, intuitive control and a subsequent appeal to the casual gamer as reasons for its appeal.
“On top of that, games like Super Mario Galaxy and Super Smash Bros. are creating positive word of mouth.”
Suyao believes that the PS3, priced twice as much as the Wii, is closing in on a crucial time during which it needs to deliver on all its promises. “Everybody knows that PS3 has a lot of potential,” he says. “Its processors are very powerful. It’s just that Sony needs to lower the price to compete with the 360, even. I think PlayStation Home might be pretty critical…If that doesn’t follow through and meet expectations, I think that might be the end of the PlayStation—well, never say never, but online will be crucial, I think.”
Arguably even more interesting than the Wii is the more expensive Xbox 360, whose purchase intent remains competitive with the Wii despite Microsoft’s public admission of widespread design flaws in the hardware. Thanks in part to an extension of the Xbox 360’s warranty (which resulted in more than a $1 billion charge for Microsoft), consumers seem to have remained loyal.
“That’s pretty indicative about how strongly gamers feel about their intent to purchase no matter what happens to the console,” Suyao believes. “Those faulty consoles were a pretty big deal… but the intent to purchase didn’t waver too much.”
Dean adds that Xbox 360’s purchase intent is indicative of Microsoft “handling the situation effectively.” It’s also indicative of just how far a billion dollars can go.
BrandIntel believes the results of holiday sales will be quite revealing, and could help industry watchers map out more accurately where exactly this console war is going. But neither Sanyao or Dean are willing to place their bets on any console, even the Wii.
“Nintendo is really well positioned,” Dean admits. “They’re not competing on the same metrics as the other consoles. In effect, the gamble they took has paid off very handsomely for them.”
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