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Microsoft aims at younger customers

Microsoft Corp. has a strategy to win over a whole new generation of consumers and its name is Fergie Fudgehog.
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

Microsoft Corp. has a strategy to win over a whole new generation of consumers and its name is Fergie Fudgehog.

The software company unveiled Fergie and several other children's animal characters yesterday with an entertainment concept called Viva Piñata, which Microsoft plans to turn into a Saturday morning cartoon show this fall and an Xbox 360 game by the holiday season, complete with marketing tie-ins that include toys and lunch boxes.

The software company wants to tap youthful consumers who so far have been shut out from Xbox titles such as the violent sci-fi action game Halo.

"We have to appeal [to people] beyond the core gaming audience," said Shane Kim, general manager of Microsoft Game Studios. "We need to prove to customers, to retailers, to the press and to third parties that we're serious about developing this audience."

The push raises concerns among children's advocates.

"What I see here is that the media companies are creating a pervasive, and in many ways ubiquitous, children's media culture," said Kathryn Montgomery, an American University professor who monitors children's digital media. Children will no longer just be interacting with characters on television but also online, in games, and through their cell phones and iPods, she said.

Microsoft has created the Viva Piñata line with children's entertainment and licensing firm 4Kids Entertainment, which licensed Pokémon and Teenage Mutant Ninja Turtles.

60 animal characters
The Xbox 360 game will feature more than 60 piñata animal characters who live on a garden island. The game allows players to customize the garden environment to attract, protect and interact with the characters, which include Franklin Fizzlybear, a fox named Paulie Pretztail and a donkey named Hudson Horstacio. Although the concept uses the traditionally Latin American candy-filled hanging container, executives said the characters will speak only English.

Gaming represents about 10 percent of Microsoft's total sales, but this concept could propel Microsoft well beyond gaming and into the children's entertainment business. If the show and the game succeed, Microsoft and 4Kids plan to market it throughout the retail universe. Microsoft has applied for nearly a dozen trademark registrations for every conceivable children's Viva Piñata item, from toy figures and party supplies to shampoo, pajamas, lunch boxes and bed linens.

Microsoft is venturing into turf traditionally dominated by rival Nintendo Inc., which tapped youth-market gold with its Pokémon and Yu-Gi-Oh games and product lines.

Kim said Microsoft did not have many options besides partnering with a firm that could create a new set of toy characters; most of the other well-known ones were already licensed to someone else. "A lot of license-holders have existing partnerships," Kim said. "We're not necessarily the number one partner because we're generally focused on the single platform."

Microsoft has billed the Xbox 360 as a family entertainment center and not just a game console. Its online features that allow players from anywhere to compete with others reflect an effort by Microsoft to push gaming away from the den for children and into the home computer in the kitchen or family room. But doing so means that the company had to offer more than shoot-'em-up games for men age 18 to 34.

"Historically, the gaming community has been the teenage geek guys to grown-up men. This is their effort to say, let's get outside of the traditional audience," said Gene Munster, managing director and senior research analyst at Piper Jaffray & Co. "Microsoft is pretty arrogant. The fact they are going outside for help to try and do that is encouraging. My basic take on it is, 'Why not?' "

In the $10.5 billion U.S. video game industry last year, 60 percent of unit sales went to children ages 17 and younger, according to NPD Group Inc. Microsoft's slice of the market, for Xbox 360, skews much older, with 30 percent of sales to that demographic, the research firm NPD Group said.

Production problems
Xbox 360, launched last holiday season, has been in chronic short supply at retailers, mostly because of production problems. The company could not ship the product to stores quickly enough, and many analysts said the high-powered graphics, price and types of games offered appeal too narrowly to the hard-core gaming audience.

Anita Frazier, toys and video game analyst with NPD Group, said Viva Piñata has potential. Animals historically do well with children, she said, and the industry needs new products. "In an industry so reliant on sequels, there's this feeling there needs to be more creativity and life breathed into the gaming industry," Frazier said. Plus, she said, "owning intellectual property as opposed to licensing is much more profitable."

Staff writer Caroline E. Mayer contributed to this report.