Even a few consumer-oriented dotcom tragedies—namely eToys and wine.com—were bought, resurrected and are still around today. Although, some would argue that their resurrection is due to the generic nature of both the business proposition (toys and wine bought online) and the brand names themselves, which give both brands greater flexibility and longevity than say eBoodle.com.
Says Meera Mullick-Kanwar, a director at Interbrand, “I think as a brand proposition is articulated, you get a sense of how flexible and stretchable a brand actually is. Some brands just don’t have the flexibility to maintain the relevance of a constantly evolving target market.”
Cases in point involve a couple of companies that offered groundbreaking technologies and a flair for financial melodramatics.
In the early 1990s Motorola began work on a global satellite telephone system that would provide phone service to otherwise unserviceable areas. In typically hyped, techno lingo, it was touted as the next generation of communications. Millions were spent in advertising dollars ranging from full-page ads in newspapers around the world to billboards in major airports to introduce brand Iridium to the international business traveler.
Says Will Kraus, director of marketing at Iridium Satellite “The vision was [that] there would be this one world phone you could take everywhere…. Of course [unlike a cell phone] this one world phone was rather large.” Kraus, also formerly with the original Motorola-backed Iridium, contends that the brand was over-hyped on several levels. “It talked about being a global telephone company. It was almost presented as this super cellular system that would provide communications/dial tone to every corner of the planet…. Very grandiose statements.”
In fact almost immediately after launch in 1998, the company began to falter primarily because the subscriber forecasts based on targeting the international business traveler were grossly out of sync with the actual cost. As Kraus put it, “It turned out that the international business traveler didn’t need Iridium the way Iridium needed the international business traveler.”
The company went into Chapter 11 in August 1999, into Chapter 7 in March 2000 and was subsequently purchased out of bankruptcy in December 2000 for $25 million by a group of investors led by ex-Pan Am executive Dan Colussy. Press reports put the original cost of the company somewhere between $5 and 6 billion.
Iridium Satellite LLC (also known as the new Iridium) is not associated nor affiliated with the old Iridium. Motorola and Boeing ties to the company were severed upon bankruptcy purchase, and the new Iridium targets industrial users such as shipping, commercial fishing, and the oil industry as its main customers.
However from a brand standpoint, you’d never know that there is no affiliation. Not only is the name the same, the visual identity for the original Iridium is still used as the new Iridium’s identity. Like the first incarnation, the new Iridium also provides the same brand proposition of satellite voice and data services to every corner of the earth including oceans, arctic regions and airways.
According to Iridium’s Kraus, focus group results from 1997 showed that the constellation/big dipper elements of the identity played well all over the world regardless of hemisphere. The new company chose to retain the name because they just liked it. “It had a certain panache,” says Kraus. Considering the immense cost of creating, launching and protecting a new international corporate brand name, it was also substantially cheaper.
The original Iridium name was inspired by the original satellite system that Motorola designed, which had 77 satellites. Iridium is the 77th element from the table of elements used in chemistry. The system was later re-designed to 66 satellites. Quips Kraus, “One question we used to get was, ‘Why didn’t you change the name to the technically accurate [name] of element number 66?’ And we would say, ‘Well, because we didn’t like the name dysprosium.’ ”
Another factor in the decision to retain the brand was that the former marketing efforts had largely succeeded in gaining recognition for the brand name—although recognition of what Iridium actually offered or did was abysmal at best. The company and product/service name also came with a clean slate. Product catastrophes, lawsuits, insider scandals and other dubious associations with the brand were noticeably absent. It was simply the case of an ambitious plan that cost more than it could realistically make back in revenue.
Says Kraus, “We didn’t have the money to do [any brand] research at the time. We knew anecdotally that people had a decent feeling about the name and that they didn’t hold it against us. They remembered and recognized it. So we decided to stick with it. Off of that I would say we had absolutely no negative ramifications. Even a great brand like Tylenol has had negative brand issues to overcome, and we didn’t run into that.”
Kraus goes onto state that the biggest challenge the new Iridium has faced is letting people know that, yes, they’re still around. He continues, “There was the other issue that the [former] Iridium’s marketing was complex and grandiose and also pretty vague. So a lot of people would say, ‘Yeah, Iridium I’ve heard of it—so what do you guys do?’ It almost gave us a blank slate so that we could segue into ‘Well, let me tell you what we do.’ ”
All indications show that the new Iridium is successfully meeting this challenge. As of July 2004, the company reports positive EBITDA (earnings before income taxes depreciation and amortization) and has a subscriber base of 100,000. Revenues have grown by 17 percent in the first half of 2004, following a 44 percent revenue increase between 2003 and 2002.
While Iridium’s claim to brand fame came from its introduction and quick demise versus a solid track record, Atari was a phenomenon that reached all aspects of society. In 1972 the brand single handedly launched the coin-operated video arcade era with its game Pong. Five years later, Atari brought Pong and Space Invaders into the living rooms of millions through the release of the first home video game system (then known as a VCS or Video Computer System).
While the Atari product brand may appeal to the Generation X who grew up with the brand, and may conjure nostalgic and rather retro-hip sentiments because of the video arcade and home video systems, Atari, the company brand, reads like a first rate soap opera.
At its pinnacle, Atari was the fastest growing company in US history (at the time) and accounted for reportedly one-third of Warner Communications revenue. (Warner Communications purchased Atari from founder Nolan Bushnell in 1976 for $28 to $32 million.)
By the early 1980s, the independently operated home computer, video game console, and arcade divisions rarely communicated or worked together. Competition, price wars, disappointing game launches, executive insider trading investigations, a settled court case with Activision, which opened the Atari 2600 technology to third-party development, and an industry-wide video game crash, totaling more than $500 million in losses, are among a few highlights. There were even rumors that some time during the 1980s, Atari buried millions of unsold E.T. game cartridges in a New Mexico desert landfill.
Ironically the current incarnation of Atari was possible due to a split in 1984 when Atari’s computer and game console divisions were sold off to Jack Tramiel (of Commodore Computers) as Atari Corp. Warner Communications retained the arcade division and renamed it Atari Games. By the mid-1990s, the Atari brand had all but disappeared after a series of ownership successions. In 1998, the Atari name and assets were sold to Hasbro Interactive for $5 million, less than a fifth of what Warner Communications paid 22 years earlier.
Fast forward to 2004, and the brand is alive in a new incarnation thanks to French video game makers Infogrames’ acquisition of Hasbro Interactive and the internal decision a year earlier to rename its entire global commercial operations to Atari. (Infogrames Entertainment SA is still the parent company name.)
Press releases by the company are ripe with pomp and circumstance, hailing the crowning of the next king. States one press release, “Thirty years after the Atari name first began a revolution in entertainment, Infogrames has returned the beacon of innovation to the forefront of the gaming industry it launched” (8 May 2003).
The press release continues with a statement from Bruno Bonnell, Chairman and CEO of IESA and Atari, “It's the perfect moment in our history to make this change. The ‘break the mold’ approach we took with Enter The Matrix exemplifies the very personality Atari has always represented and captures the personality of our company today, from game development to deal-making to partnerships and so on.”
It’s no secret that PR tactics to build the new Atari feed off of the legendary (if not slightly mythological) status of the circa-1970s brand, and conveniently omit the rest of the fabled story. Presumably the hope is that only the positive magic dust will affect the company. The jury is still out on how successful the new Atari will be. Press reports state that first quarter 2004 revenue fell from $151.4 million to $110.3 million, and net income fell from $23.8 million to $12.1 million compared to last year. Atari executives and their American PR agency declined interview requests for this story.
Concludes Interbrand’s Mullick-Kanwar “It’s really important to understand whether [a brand’s] heritage is in fact positive nostalgia with a timeless quality to it or is just baggage.”