BACKGROUND: By October 2007, Emotiv Systems Inc. had developed a mind reading device called EPOC, which had the ability to process brain signals in order to measure 30 different mental states. Founded in 2003 (with $1 million in startup money from four partners and $17 million in additional financing mainly from Technology Venture Partners and Epicure Capital Partners), the company's research and development team incorporated existing electroencephalography technologies to introduce a relatively inexpensive and effective cognitive and emotional recognition system. Management at Emotiv believed that video gaming applications represented a solid opportunity for the EPOC technology. EPOC would allow gaming users to move onscreen objects or support secondary features using their thought patterns.
With the product ready to launch, the company had to decide how to market EPOC. Emotiv wanted to launch the product in 12 to 14 months, in time for the 2008 holiday season. Although its new product was generating much interest across the gaming industry, it had yet to secure a partnership for the sale and marketing of EPOC with one of the three major video gaming consoles (Sony PlayStation3, Microsoft Xbox 360, and Nintendo Wii). The Nintendo Wii seemed like a perfect fit. The Wii was established to provide interactive movement games for casual users. Thought games seemed like the next natural step for Nintendo. In addition, Wii had a leading 42.1% share of the gaming market in the United States. Partnering with the leader would certainly give Emotiv more exposure. However, the Wii was not compatible with the EPOC system because it lacked the computational power the run the advanced EPOC system. It would also have made sense for Sony to jump on board with Emotiv, as it was attempting to turn around plummeting sales. However, poor interorganizational conflict within Sony slowed talks between the two companies. Sony's European division did offer Emotiv a contract for a dumped down version of EPOC, but that was never really a viable option for Emotiv (it would have hurt Emotiv's image and consumer perceptions of EOPC). Microsoft was highly interested, but did not want to be a first mover on the new technology. It wanted to wait for the EPOC to prove its popularity and worth.
To further add to Emotiv's problems, there were no games incorporating EPOC yet. It would be very expensive for Emotiv to produce games internally, and the Electronic Arts (the leading gaming manufacturer) had a wait-and-see approach similar to that of Microsoft. It was now time for Emotiv to make decisions on its marketing strategy. Should it wait until it locked in a major gaming partner to launch EPOC? Or should it launch in the PC gaming market? Emotiv also faced many questions related to the price, distribution, and promotion of EPOC. Their choice and the success of the marketing plan would affect the future profitability of the company.
RECOMMENDATION: My recommendation would be for Emotiv to initially enter to PC gaming market. Even though it was less lucrative than the console gaming market (only a fifth of the size) and continuing to lose market share, the PC market was easier to enter because games featuring EPOC would be relatively simple to produce. By merely releasing compatibility codes, independent users could easily build EPOC applications into new or existing games, representing a stark difference from the cumbersome game development process in the console market. The wide availability of titles would help promote adoption of the new technology and add to customers' perceived value of the product. Even if the company was able to immediately find a console partner, sales may be low due to a scarcity of games for EPOC.
I believe Emotiv should price EPOC at the highest price point advised by retailers, which was $399. Emotiv should create an exclusive product and brand. From its price to its distribution to its positioning...