Can Sony bring back from the dead one of the biggest flops ever in consumer electronics?
The flop was the MiniDisc, Sony's ambitious effort to persuade us all to swap our compact disks for an entirely new format: a cute little disk that records as well as plays.
Two years ago, Sony launched what is widely regarded as one of the biggest music promotion giveaways ever: 1.1 million MiniDiscs to subscribers of Rolling Stone, plus a huge magazine campaign. It didn't work. Today, the MiniDisc has all but disappeared in this country, the victim of poor marketing and overpricing.
A few weeks ago, however, Sony stubbornly began test-marketing its palm-sized recorder/players again, in Austin, Tex., and Rochester, N.Y., with a new campaign created by Lowe & Partners/SMS that asks: "Why Make a Copy of Your CD When You Can Make a Clone?"
"This time around, we've done our homework, and we've found out what's in consumers' heads," says Mark Viken, a senior Sony Electronics executive. "Our customer is 18 to 34 years old, buys 12 or more compact disks a year, and has a higher-than-national-average income." An estimated 3.5 million people fit that profile, he adds.
When Sony first introduced its MiniDisc player in December 1992, it anticipated a huge market for a portable machine that could play pre-recorded MiniDiscs ($549), and for one that also could record ($750). Sony, basking in the glow of its famed Walkman product, as well as the compact disk that it co-created with Philips Electronics N.V., was convinced that consumers would welcome a new, easy-to-carry digital format.
However, Sony mistakenly targeted its advertising and marketing efforts at the MTV generation, which couldn't afford MiniDisc players or recorders. And a second effort to re-launch the product in 1994 was widely regarded as unsuccessful, so much so that fewer than one million MiniDisc players/recorders have been sold in the U.S.
This time, however, Sony believes it will prevail, in part because it has completely revamped its advertising strategy. Instead of promoting the MiniDisc as a portable country cousin of the Walkman, Sony is offering a home-deck unit, together with a portable player and two blank cassettes, that it has priced at $599.
Sony also has slashed the prices of blank 74-minute MiniDiscs from $16.99 in 1992 to $9.99. In addition, Sony is offering a bundle of three blank MiniDiscs for $21.99, or only $7.33 a disk. That's about half of what a recorded compact disk costs.
"What we've found is that people prefer to do their recording at home," says Mr. Viken. "What this bundle does is enable people to make copies of their favorite music and then take those copies outside of the house."
The new Sony campaign includes extensive print, radio and television advertising in Austin and Rochester. In Austin, 140 MiniDisc TV spots are expected to air between July 8 and Aug. 18th on the local network affiliates, ESPN and TNT, during such shows as "Seinfeld" and Olympic Dream Team games. An estimated 444 radio ads will run on a variety of stations, while print ads will appear in the Austin-American Statesman.
A similar blitz is under way in Rochester, including print ads in the Rochester Democrat and Chronicle.
"Actually, it's doing very well," says Gregory Hunt, a sales associate at the Stereo Shop, a high-end consumer-electronics store based in Rochester. "It's the price point. For $599, they are getting the home recorder, which usually sells for $499, plus the portable player, which normally sells for $349. They're also getting five blank MiniDiscs, and we're giving them the Forrest Gump soundtrack on MD," he says.
Sony says one reason that it's re-positioning its MiniDisc system is because the product has been a strong seller in Japan. However, Paul Gluckman, managing editor of Audio Week, a newsletter that specializes in consumer electronics, says that Japanese consumers prefer small disks to tape. In this country, the tape market remains strong, and consumers aren't as intrigued by disks smaller than five inches in diameter.
"The MiniDisc's future in the U.S. in large part depends on Sony's ability to convince consumers here that they should do their home recording on a MiniDisc rather than a cassette," says Mr. Gluckman. "Whether it will work is an open question. They are making the pricing more competitive, which is certainly a step forward. And people largely are unhappy with tape as a format."
David Kessler, an account director at Lowe & Partners/SMS responsible for the MiniDisc campaign, says Sony is now planning to expand this fall into San Francisco, Chicago and Atlanta. The agency has created Sony's advertising since April 1995.
Sony is trying to give mouth-to-ear resuscitation to its much-maligned MiniDisc recorder in an attempt to lure more U.S. consumers. Whether this revival will actually work depends a great deal on how well Sony makes its pitch this summer in a pilot advertising campaign.
The MiniDisc recorder, most audio critics have concluded, is difficult to beat from the standpoint of portability and durability. So if Sony wants to recapture U.S. interest in it, the company should be promoting the format's convenient size and superior accessibility.
The MiniDisc recorder failed to catch America's fancy initially because consumers weren't sure what to do with it. Billed as the digital replacement for the Walkman portable cassette tape recorders, the MD format flunked that test because prerecorded software support was weak. Even today, there are only 750 MiniDisc prerecorded titles in the combined catalogs of Sony Music (Columbia), Capitol Records, Warner Brothers and affiliated sub-labels. The MiniDisc catalog is especially lean in classical and jazz fields.
So if the MiniDisc is not a Walkman tape machine, then where does it fit in the audio scheme of things? Consumers in Europe and Japan have had no problem figuring that out. The MiniDisc has won over thousands of consumers as a recording device. It offers music lovers a high-quality way to transfer one's LP and cassette collection to a digital format and to custom-design a music collection.
This summer, Sony is conducting a pilot MiniDisc advertising campaign in Rochester, NY, and Austin Texas, to promote the format's impressive digital recording capabilities. "Our experience and surveys have told us that when consumers are exposed in a hands-on way to the MiniDisc product, they become excited about its benefits and its advantages over audiocassettes," said Mark Zican, senior vice president of Sony's personal audio/video group.
Sony introduced the MiniDisc in 1994. The launch confused people because the audio press mistakenly perceived the MD as a smoke-and-mirrors replacement for the compact disc. That is, many electronic gadget writers, this one included, believed that Sony was trying to short-circuit development of a compact-disc recorder by producing one that wouldn't sound quite as good. Make no mistake, the MiniDisc doesn't sound as good as a compact disc, but it sounds infinitely better than an analog audiocassette. So, if Sony had marketed the product from the start as a successor to the audiocassette, then it could have avoided most of the media criticism that MD has received.
The second time around, though, might produce better results for the MiniDisc in the United States. For one thing, Sony isn't bragging this time that its little 2-1/2 inch disc, which is about one-forth the size of a regular CD, will replace anything. "We're promoting portability and the ease with which the format allows consumers to make digital copies of CD's, tapes and LP's," Zican said. By keeping the format breathing for the past year, Sony has modestly increased total unit sales to 1.3 million in 1995. It expects sales worldwide to reach 3.5 million in 1996, with most of those still taking place in Europe and Japan.
One of the problems facing Sony in reviving MD sales in the United States is the lack of interest in the format by other manufacturers. When MD was introduced, several companies cloned the Sony MiniDisc decks with recorders of their own design. But at the start of 1996, only Sony and Sanyo were selling MiniDisc recorders in America. Sony's 1996 MD line includes three portable models, two MD/CD combination models, four recording decks for the home, three MD players for the car and a novel MiniDisc recorder for business use (MZ-B3). Sony's status as the sole purveyor of this format may change quickly, though, because Kenwood, Sharp, JVC, Panasonic, Aiwa and other manufactures sell MiniDisc decks in Europe and Japan. And Sharp is considering bringing back a MiniDisc model this fall.
Price was a sales deterrent in the past, as most MiniDisc recorders in 1994 and 1995 were priced in the $600 to $900 range. Blank discs initially were $16.99 for a 74-minute disc and $13.99 for a 60-minute disc. Sony's third generation MiniDisc decks not only offer improved sound quality over earlier models, but the prices have come down as well. The entry-level playback-only models (MZ-E40 and MZ-E3), for example, both are available this summer at the suggested retail price of $199.95. The MZ-E3 has been discounted from a previous price of $349.95.
Sony is offering this summer a special bundle of MD goodies: an MDS-JE500 home MD recorder, plus the MZ-E40 portable playback deck and two 60-minute recordable MiniDiscs. The bundled price of $599 represents a discount of more than $250 over individual component pricing. Sony's blank recordable MiniDiscs also are being dramatically reduced to jump- start U.S. sales. The 74-minute discs (MDW-74A) now sell for $9.99, while the 60-minute discs (MDW-60A) will cost $8.49. And to further stimulate MD sales, Sony last month shipped to dealers a three- pack of 74-minute blank discs for $21.99 - bringing the per-unit price of the longer discs to $7.33 each.
Even the highly critical audio press is beginning to give the MiniDisc some overdue plaudits. Stereo Review's technical editor, David Ranada, wrote of Sony's MZ-R3 portable unit in February: "The sound quality of the MiniDisc system has received a bum rap. . . . Sonically, the MZ-R3 portable scored heavily over the best analog cassette I've ever heard."