Halo 3 : Heroic Marketing€¦ · story. This is a tale of Halo 3 – the biggest entertainment...

MSI-GMP-2011 29 January, 2011

Halo 3: Heroic Marketing

How does a video game shatter all-time records set by the biggest of Hollywood movies? How do

you take a video game of hardcore loyalists to a mainstream audience? This is the tale of such

astounding feats and how to achieve them. This is the tale of strategizing and implementing a

marketing plan by using creative as well as media forces across numerous channels to tell an epic

story. This is a tale of Halo 3 – the biggest entertainment launch of all time.

Halo 3 was a first-person shooter video game developed by Bungie exclusively for Xbox 360. The

game was the third title in the Halo franchise and concludes the story arc that began in Halo: Combat

Evolved and continued in Halo 2. The game was released on September 25, 2007 in Australia, Brazil,

India, New Zealand, North America, and Singapore; September 26, 2007 in Europe; and September

27, 2007 in Japan.

On the day before its official release, 4.2 million units of Halo 3 were in retail outlets. The game

grossed $300 million in sales in the first week alone. By the first week of January, 2008 it sold over 8

million copies. In addition, more than 1.7 million copies were pre-ordered in the United States,

making it the fastest pre-selling game in history.1

The Xbox 360 title beat previous U.S. sales records set by blockbuster openings for entertainment

events such as the release of the movie Spider-Man 3 and the book Harry Potter and the Deathly

Hallows.[1] (Exhibit 3) Halo 3‘s launch was even cited as a primary reason for the failure of the Ben

Stiller movie, The Heartbreak Kid, which opened at the box office on the same weekend.2

1 Microsoft News Center, Oct 4, 2007

http://www.microsoft.com/presspass/press/2007/oct07/10-04halo3firstweekpr.mspx 2 David Davies “U@PLAY: Movie flop blamed on Halo 3 release” San Antonio Express-News, Oct 19, 2007

Sudeep Kumar, student of the XLRI GMP 2011 batch, prepared this case for the course Marketing Strategy &

Implementation. This case study is meant as the basis for class discussion and understanding the field of study rather

than to illustrate either effective or ineffective handling of an administrative situation.

The case makers have tried their best to provide the sources of the information provided but do not owe any

responsibility towards the accuracy of information provided by the sources. The material is not protected by copyright

but please request permission to reproduce this case study for academic purposes by dropping me an email

[email protected]

http://www.microsoft.com/presspass/press/2007/oct07/10-04halo3firstweekpr.mspx

mailto:[email protected]

Halo 3 : Heroic Marketing

XLRI Jamshedpur – GMP 2011 Page 1

Challenges

The Halo franchise had gathered a hardcore fan following over the years due to the success of two

prior games of the Halo franchise – Halo: Combat Evolved and Halo 2. The loyal fans affectionately

called themselves Halo Nation. Around 11 million people had already purchased one or both of the

first two installments. This meant that third time around repeat sales from the existing fan base could

not be expected to be very high.

The Halo team was faced with two main challenges:

1. Attract an audience beyond the Halo Nation for Halo 3: To achieve target sales, they could

not depend only on the loyal fans – their calculations showing that Halo Nation would

account for not more than 75% of the target sales. This meant getting people who didn‘t care

about Halo, didn‘t play Halo to buy Halo 3. The led to the second objective:

2. Make a big-bang launch and make Halo 3 a truly cultural phenomenon: The hit-factory

nature of video game industry meant that the biggest kill happens in the first few weeks

which would be a major chunk of sales.

Xbox 360 and the console wars

Gaming consoles have become very prominent in today‘s world. They are prime means of

entertainment. Nearly half of all US homes own one game-playing machine, and a quarter own

more than three. According to leading consumer and retail information provider, The NPD Group,

U.S. sales of video games, which includes portable and console hardware, software and accessories,

generated revenues of $12.5 billion in 2006. Of this, an estimated $8 billion belongs to PC and

console games industry.

Nintendo, Sony and Microsoft are the key players in the industry. In 2007-08, Microsoft had Xbox

360 and Xbox consoles. Sony offered PlayStation 3, PlayStation 2, & PSP (handheld). Nintendo offered

Wii and DS (handheld). Wii, with its revolutionary controller, was the undisputed leader while the

second spot was closely fought by Xbox 360, PlayStation 3 and PlayStation 2 (refer Exhibit 6 for

market shares). Each of the consoles had options of playing multiplayer games online by subscribing

to those features provided by their respective console makers.

Video game selection remains the most important factor when shopping for consoles followed by

pricing and ease of use. Thus, each of the console makers publishes exclusive games for their

consoles to promote console sales. Other major publishers are Electronic Arts, Activision and

Ubisoft.

Considering the importance of game titles, an important tool is the tie ratio. The software tie ratio

tells us how many games were sold for every console purchased. Put another way, the hardware to

software tie ratio shows how many games a system owner buys on average. A system's tie ratio is



Total Software Unit Sales divided by Total Console Unit Sales. (See Exhibit 5 for Tie Ratio of

different consoles).

According to ESA statistics, the average game player is 33 years old and has been playing games for

12 years. Many of the industry‘s first-generation gamers (who had begun playing games in their

teens) are now in their 30s and 40s but were still actively playing games. At the same time, new

players are being introduced to gaming at increasingly young age. As a result, the market is growing

with each successive generation.

Marketing of Video Games

The video game industry has become highly competitive. Vast majority of console games are lucky

to sell 500,000 copies. Most titles never break even, and even the more successful ones have a

lifecycle of about six months. The "hit-based" console game business means that the industry churns

out a lot of products each year. It also means that a lot of marketing is done up front in the first four

to six months.

The importance of gaming has moved beyond the marketplace to become a mainstream social

phenomenon. As videogame companies love to point out, the cost of a game/entertainment hour is

the lowest of all entertainment alternatives--except, perhaps, reading a book. This meant that video

games are competing with the entertainment dollars of other avenues like watching a movie or even

reading a book.

Video game development costs above $5 million. The average marketing budget for bigger titles is

also above $5 million. Some go to the extent to say that ―with zero marketing a game will achieve

precisely zero sales.‖ The most effective marketing tool for a video game is word of mouth due to

the behavior of the demographic. Another important thing to understand is that apart from the

traditional media, the Internet is a very powerful tool in marketing a video game. And creativity

tended to be the crucial element of the marketing mix.

Industry experts estimate that Microsoft spent $55 million on the development of Halo 3 and

another $10 million on the Believe campaign as part of the marketing.

Bungie and Microsoft Game Studios

Bungie is an American video game development company founded in 1991. Microsoft acquired

Bungie in 2000, and their then-current project, the first-person shooter Halo: Combat Evolved, was

repurposed into a launch title for Microsoft's new Xbox console. Halo went on to become the Xbox's

"killer application", selling millions of copies and spawning a billion dollar franchise. In October

2007, days after the release of Halo 3, Microsoft and Bungie announced that Bungie was splitting off

from its parent and becoming a privately-held Limited Liability Company named Bungie LLC.



Microsoft Game Studios is a brand owned by Microsoft and introduced in 2002 to represent the

company as a video game publisher, coinciding with the launch of the Xbox. Games published by

Microsoft under the MGS label are typically released for the Microsoft Windows, Xbox or Xbox 360

platforms exclusively. Microsoft applies this branding to all of its published titles including those

developed by third-party game studios.

About Halo 3

Over its nine levels, Halo 3's campaign concludes the storyline of the Halo trilogy. The campaign

can be played through alone, with two-players on one Xbox 360, or played cooperatively with up to

three other players locally or via Xbox Live or System Link. The game features vehicles, weapons,

and gameplay not present in previous titles of the series, as well as the addition of saved gameplay

films, file sharing, and the Forge map editor—a utility which allows the player to perform

modifications to multiplayer levels.

Halo 3, like its predecessors, is set in the fictional Halo universe between 26th century humanity, led

by the United Nations Space Command, taking place during the year 2552 and finishing in 2553.

According to the backstory, humans developed faster-than-light travel and colonized dozens of

planets before encountering the alien Covenant in 2525. The Covenant declares humanity an affront

to their gods and began destroying human colonies by "glassing"—bombarding the planet with a

barrage of plasma, turning its surface into glass. Despite efforts to keep the Covenant from finding

Earth, a Covenant fleet discovers humanity's homeworld during Halo 2. By the beginning of Halo 3,

the Covenant have arrived in full force on Earth, with most human resistance crushed.

The titular 'Halo' refers to massive ringworlds several hundred kilometers in diameter that are

scattered across the galaxy. These rings were constructed thousands of years ago by an enigmatic

race known as the Forerunners as a weapon of last resort against the parasitic alien species known as

the Flood. In Halo: Combat Evolved, a small human ship fleeing the Covenant stumbled upon one of

these ringworlds, Installation 04. The humans manage to destroy the ring, stopping the Flood once

again; the Covenant, unaware of the destructive nature of the rings, attempt to fire another ring

during Halo 2 in order to fulfill their religious prophecy.

Halo 3's protagonist is the Master Chief, a cybernetically enhanced supersoldier who is one of the

last surviving members of the SPARTAN Project, and one of humanity's greatest warriors. The

Chief fights alongside the Arbiter, a disgraced Elite commander whose race breaks free from the

Covenant.

Halo 3 begins with the Master Chief entering Earth's atmosphere and crashing to the ground in

eastern Africa, where he is found by Sgt. Major Johnson and the Arbiter. In essence, it portrays the

efforts of the human race to resist destruction at the hands of alien forces.

3 Bungie “Ancillary: Halo Story Timeline” http://halosm.bungie.org/story/halostory.timeline.html

http://halosm.bungie.org/story/halostory.timeline.html



Marketing Halo 3: The Strategy & Implementation

Given the intricacies of the video gaming industry, video game marketing and history of Halo‘s

success, the challenge and the response can be summed up in two statements of the marketing team:

“We were asked to get those people who didn‟t care about Halo; who didn‟t play Halo; or who didn‟t know

about Halo, to buy Halo 3 – a futuristic humans versus aliens science fiction video game. So, we changed the

question from „how do you market a video game?‟ to „how to you honor a hero?‟”

Master Chief as hero4

Chris Lee, global group product manager, took up the thread of how the marketing for Halo 3 was

designed to humanize the game's lead character, Master Chief, and bring in a wider audience than

the adrenaline-soaked core gamers the series resonates best with.

According to Lee, "The marketing statement was really based around Master Chief. We did some

research, and found out that people thought of Master Chief the same way they think of Robocop

and the Terminator, a killing machine... we had to humanize him to reach a broader audience."

Noting that 2006-07 was filled with political, celebrity, and athletic scandals, the creative team

working on the ads reasoned that "there was an opportunity to elevate the status of Master Chief to a

hero." This was accomplished with a variety of ads which show "veterans" of the sci-fi war depicted

in Halo 3 recollecting their fictional memories of Master Chief's battlefield heroism.

Said Lee of the core gamer dilemma, "The challenge we had, and it was identified early on – we

didn‘t have an awareness problem, people knew it was coming out. It was a perception problem...

we wanted to invite people into the console and into Xbox 360 and to play Halo 3 as a mass-market

entertainment product." His advice? "You should find another way to do the message for your

audience." The strategy was clear right from the start: using the launch to create a platform for the

game to take off towards success. However, there had to be a build up to the launch.

While most major game titles begin their campaigns weeks before the launch to build the buzz, Halo

3 differs greatly. A full 16 months before the game‘s launch, Halo 3 was officially announced via a

cinematic trailer rendered in real-time, shown at Microsoft‘s press conference at E3 5 on May 9,

2006.6 The trailer is set in the dry plains of Africa, with the ruins of a space elevator and other

damage visible. The Master Chief is slowly revealed walking through smoke and dust, occasionally

obscured by distorted images of the artificial intelligence character Cortana transmitting a message

composed of portions of the character's lines in the Cortana Letters. The distorted voice of Cortana

was a deliberate clue to the character's predicament in Halo 3. (Exhibit 8)

4 Nutt, Christian “Analysis: Microsoft on the secrets of marketing Halo 3” Gamasutra, Apr 11, 2008 5 E3 (Electronic Entertainment Expo) is an annual trade show for the computer and video games industry

presented by the Entertainment Software Association (ESA) 6 Ocampo, Jason "E3 06: Halo 3 announced, plot details revealed" Gamespot May 9, 2006



What followed can be classified into five phases of the Halo 3 marketing program. (Depicted in

Exhibit 1)

Phase 1: Starry Night

During Monday Night Football on December 4, 2006, Microsoft hit 7.9 million households (and 1.8

million of its target 18-34 audience) with an eerie spot featuring Master Chief grabbing his helmet

and jumping into the fray. Tag: "Finish the fight."

It showed Master Chief recalling his childhood in the heat of battle. "That really put a human face

on Master Chief," said Lee. "We aired this one time on Monday Night Football one time, nine

months in advance of the launch of the game... It was very expensive... [but] as soon as it was

broadcast it was made available on the web... people watched it once on TV and then again and

again, tens of millions of times," Lee revealed.

The style of the ad itself was designed to not be jarring to the TV-watching audience, eschewing

game graphics for real actors and lifelike CG. However, it worked on another level, as it introduced

new gameplay concepts to a watchful core gamer audience – such as Master Chief's use of the

Bubble Shield, a new defensive item introduced in Halo 3.

The spot, dubbed "Starry Night", was seen by 7.9 million viewers in its broadcast and watched more

than 3.5 million times on YouTube by September 2007.7

Phase 2: The Beta

In April 2007, Bungie announced that fans could win a chance to try out the multiplayer component

of Halo 3 from May 16 to June 6 (later extended to June 10). Players could enter the beta in several

ways:

Those who signed up on Halo3.com website following the Starry Night commercial

The first few thousand players to register after playing three hours of Halo 2 on Xbox Live

Those who purchased specially marked copies of the Xbox title Crackdown

According to Jerret West, global group product manager, "We had a massive beta, and a lot of

people were talking about whether this made sense at all for a game of our magnitude." However,

the beta wasn't necessarily about testing the game's technology, from West's perspective. "We

wanted to drive preorders. For Halo, it's all about day one."

Allowing users into the beta created "a psychological investment" in the game, according to West.

"The idea was basically to make the beta launch huge and let the tastemakers make the launch for

you... to really drive it beyond the gaming press." Thanks to the beta, "we saw a spike of preorders

25% week over week," West revealed.8

7 Hartley, Matt "The play's the thing" The Globe and Mail Sep 22, 2007 8 Nutt, Christian “Analysis: Microsoft on the secrets of marketing Halo 3” Gamasutra, Apr 11, 2008



In other words, as per Brandweek: Before the beta expired on June 10, 820,000 participants spent

more than 12 million hours of playing online. Using its saved films feature, where you can capture

snippets of gameplay and download it, more than 350 terabytes of Halo 3 data was downloaded

from Xbox Live (which is the equivalent of 82 million music downloads).

Phase 3: Project Iris

A component of Halo 3's marketing was an alternate reality game or ARG called Iris. Alternate

Reality Games, which involve cross-media gameplay and player participation, had been previously

used for the promotion of Halo 2 in the form of the influential and award-winning I Love Bees.

Soon after the Halo 3 public beta ended, a user named "AdjutantReflex" appeared in the official

Halo 3 forums on Bungie.net and began posting ‗secretive‘ to send fans on a quest to know more

about Halo. This was followed up with a fake ad planted in media circulars, to seek out clues via an

online/offline scavenger hunt to unlock new information about Halo 3 and its back-story.

As per a Microsoft spokesperson: "Iris is a spiral campaign designed to take gamers on an incredible

journey through the Halo Universe. Led by an 'unknown' hand, users will discover bits of previously

unknown information about the Halos, the Flood, the Forerunners, and the true origins behind the

Halo trilogy. It's designed to give us more information on how the great conflict all began, as we

build up to the climactic conclusion of the series on 26th September.‖

By August 9, 2007, about 47 days before the launch, over 1 million Halo 3 titles were already sold in

pre-orders in North America alone.

Phase 4: Promotional Partner Activity

Much like movie franchises look to secure key category partners, so did Halo 3. Microsoft

collaborated with other companies to produce Halo-themed merchandise and promotions at retailers

and vendors. Various games, action figures, collectible toys, collectible miniature games were

released in September.

Microsoft lined up a veritable army of marketing partners:

Pontiac, which committed $5 million in media to the game's launch

Pepsi, which created a variant of Mountain Dew called Game Fuel especially themed for

Halo 3

7-Eleven sold the Slurpee version of the drink

Burger King used Halo designs and characters on food wrappings

Other partners included Game Stop, Samsung, Doritos and Comcast

In addition, Halo 3 was the official sponsor of the Projekt Revolution tour that year, featuring

popular groups like Linkin Park and My Chemical Romance which enjoyed huge fan

following with the same category that was Halo‘s audience.



Phase 5: Believe

Beginning September 11, 2007, the estimated $10 million-plus Believe campaign was the grand finale

to the five-pronged attack that Microsoft had launched a year back. This carefully orchestrated

onslaught intended to elevate Master Chief to epic levels of a real hero thereby making casual fans

interested and core fans rabid. In their own words:

“Speaking to Halo fans they told us that Master Chief was a heroic figure, and the story of this hero was the

main reason they wanted to play this game. Master Chief represents the very tenets of a hero – bravery, sacrifice,

duty, and selflessness. These themes are consistent with the qualities of real heroes, and classic storytelling

throughout history – they are universal and timeless themes that speak to all of us. Instead of telling people about

the action they were going to experience, like most video games, we needed to emotionally engage them is this

potentially epic story that they could come and play a part in themselves.”

The creative task was then to make people believe in Master Chief as a hero, and believe it in a

respectful and reverential way – as they did for real heroes of history. This meant taking the story out

of the virtual world into the real world. Also, it meant taking the story to the whole world.

A week before the Believe campaign, Microsoft re-ran Starry Night ads. Followed by ads

that dramatically introduced the audience to the diorama featuring the John 117 monument,

hand crafted version of a historic battle in which Master Chief heroically led his troops to

victory.

The effort centered on an immaculately constructed diorama9 depicting the great battles of

lead character Master Chief. (Exhibit 9)

The Believe website allowed visitors to pan the length of the massive diorama over 1,200

square feet (110 m2) in size and over twelve feet tall, with handcrafted human and Covenant

figures represented at one-twelfth scale10

With this as a backdrop, warriors that did battle with the game's hero provide testimonials to

his greatness.

Statues were erected in honor of Master Chief (Exhibit 10)

Murals were painted and street plaques were dotted around Europe commemorating

fictional battleground sites (Exhibit 10)

In the UK, a war photography exhibition was held in cinemas

All of the work came from the same core concept, but was brought to life in very different ways in an

experiential nature so that consumers could engage and spend time with Believe. Not only did the

campaign embrace multiple touch points, it expanded them across the globe in non-repetitive

manner.

9 Diorama is a three-dimensional full-size or miniature model, sometimes enclosed in a glass showcase

for a museum, usually used to represent historic events 10

Aditham, Kiran "The Diorama Deconstructed; Modeling mayhem". Creativity, Oct 1, 2007



The Grand Finale

With the notion of Master Chief as hero now firmly entrenched, and a legion of consumers ready to

Believe, what followed was a massive PR frenzy to drive an awareness push just before the launch.

Some of the highlights were (Exhibit 11):

More than 10,000 retail stores in the United States held midnight launch parties for Halo's

release, in addition to other locations around the globe

The BFI IMAX Theater in London was devoted to Halo 3

Celebrity film-style premiere parties were held and streamed over Xbox Live

All the major newspapers and magazines from New York Times to The Sun covered the

launch and devoted several column inches during the pre-launch hype

The Result The marketing team at Microsoft was able to achieve both the objectives. Halo 3 had gone

mainstream and broken all the records by creating a true cultural phenomenon. The game made

$170 million in US sales on the first day of release, generating more money in 24 hours than any

other American entertainment property up to that point. It would make an additional $130 million

by week's end and sell 3.3 million units by the end of the month. By 2008, Halo 3 had sold 4.8

million units in the United States for a total of 8.1 million units worldwide, making it one of the

best-selling game of 2007 in the United States. (Exhibit 2 and Exhibit 4)

Critics across the mainstream and specialist press appreciated Halo 3 as a game and the marketing

strategy also went on to win several awards for creativity and strategy. (Exhibit 7)

"Halo 3 embodies our vision for the future of entertainment, where some of the world's greatest creative minds

will deliver a new generation of interactive storytelling." – Bill Gates



Exhibit 1 The Halo 3 Marketing Timeline

04 Dec. 06 25 Sep. 07

May 07 - Jun 07

Beta Testing

04 Dec. 06

Starry Night Aired

Jun 07 - Aug 07

Iris ARG

11 Sep, 2007 - 25 Sep, 2007

Believe Campaign09 Aug. 07

1 million pre-order sales

Source: Compiled by case writers

Exhibit 2 Top Selling titles in 2007 (Americas)

Source: VGChartz www.vgchartz.com

Exhibit 3 Top grossers – Opening Weekends (until 2007)

Rank Title Opening Date

1 Spider-Man 3 $ 151 m May 2007

2 Pirates of the Caribbean: Dead Man's Chest $ 136 m July 2006

3 Spider-Man $ 115 m May 2002

4 Star Wars: Episode III - Revenge of the Sith $ 109 m May 2005

5 Shrek 2 $ 108 m May 2004 Source: IMDB www.imdb.com

http://www.vgchartz.com/

http://www.imdb.com/



Exhibit 4 Weekly Halo 3 sales


Exhibit 5 Tie Ratio for Consoles (Data up until 2010)






Exhibit 6 Console Sales (no of units)





Exhibit 7 Reception of Halo 3 (Reviews)

Aggregate/Review scores

Aggregator/Publisher Score

GameRankings 93%

Metacritic 94%

1UP.com A+

Edge 10/10

Electronic Gaming Monthly 10, 10, 9/10

Eurogamer 10/10

Famitsu 37/40

Game Informer 9.75/10

GameSpot 9.5/10

IGN 9.5/10

X-Play

Official Xbox Magazine 10/10

Source: Wikipedia

Exhibit 8 Master Chief, Xbox 360 console and the Halo 3 logo



Exhibit 9 Believe Campaign: The Halo 3 Diorama

Exhibit 10 Believe Campaign: Master Chief murals, statues and plaques across the world



Exhibit 11 Believe Campaign: (a) Movie style premiere for Halo 3

(b) PR event at NASDAQ (c) Promotions at retail outlets

(d) Movie style poster (e) Promotions at the London IMAX theater on launch eve

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