Emotiv Case Study

Name: Animesh Biyani

PGID: 61710155

Section: C
Date: 12th Jun 2016

Emotiv should pursue the console platform for the following reasons:

Revenues: Console video games revenues in 2007 were $6.6 billion and that of the PC games was just
$0.9 billion. And the sales of console video games are expected to increase ($8.9 billion), while the sales
of PC games are expected to shrink ($0.7 billion).
Market Share: PC games are played mainly by the hard-core gamers whereas console games are played
by both hard-core and casual gamers. Therefore, by pursuing the console platform Emotiv can target
both these customer segments leading to a greater market share.
Guitar Hero: The success of console games like Guitar Hero which used an accessory (instead of the
usual joystick control) shows that there is a huge market for the accessory based console games.
Co-branding: Even though the margins are higher if Emotiv targets PC platform, the demand for
accessory based PC game cannot be predicted. Consoles have captured a greater market share, and cobranding with the consoles will definitely create greater demand for EPOC.

Pricing and Channel with console makers:

Pricing: Going by the conservative forecasts from Exhibit 11, sales would not reach 1 million in 3 years,
hence cost of production will remain at $110. And since current EEG systems sold at $10,000 it would
not be difficult to make a case for a price of $299. Also, given that the consumers consider $199 to be
too expensive, pricing at $299 will allow Emotiv to capture a greater market share rather than pricing it
at $399. And, going by the unit contribution shown below, Emotiv should price the EPOC at $299.
Retail Price
Retailer Margin (35%)
Market Development Funds (7%)
Console Maker Royalty (~ 4%)
Cost of goods
Unit Contribution

$199
$69.65
$9.05
$4.80
$110
$5.50

$299
$104.65
$13.60
$7.20
$110
$63.55

Channel: The consumer survey revealed that the consumers preferred to purchase hardware at the stores
rather that would allow them to view a demo and physically test the device. And since Emotiv will cobrand with consoles, it should target those channels where people buy the consoles from. Considering
these facts, Emotiv should target retail outlets like BestBuy as they will generate the highest sales,
despite their relatively higher margins.

Pricing and Channel with PC video games:

Pricing: In case of PC, a large chunk of the users is hard-core gamers. These gamers invest thousands of
dollars in high performance PCs and Brain Computer Interface (BCI) was already a topic of discussion
among these gamers. Therefore, this segment is not price sensitive; they want a high performance
device. Thus, Emotiv can price the EPOC at $399 for the PC market.
Channel: The case talks about hard-core gamer blogs in case of PC market. Therefore, WOM will be a
very important factor in the awareness of EPOC. Not all consumers would like to view a demo. Hence,
Emotiv, in addition to the retail outlets, should consider other distribution channels as well e-tailers
and direct from company. These channels provide higher margins, greater control over the inventory and
prevent Emotiv from being dependent on only one channel for its distribution.