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Shane Kim Writes for Edge
At our E3 presentation on Monday morning, we outlined our strategy for Xbox 360, showing how our games as well as titles from our third-party partners and the new Xbox Experience are going to appeal to both core gamers and the broader market.
Whether you’re talking about avatars or Live Party or Xbox Live Prime Time or even the new interface, these are all elements we believe are going to appeal to a wide audience whether they’re core gamers or not.
Of course, there are also some announcements that are going to appeal more to one segment than the other. But I don’t want to say that a game like Resident Evil 5 or Fallout 3 is only going to appeal to core gamers. And I also don’t want to say that core gamers won’t want to play something like Lips, because that’s just not true. What we’re doing is acting as an enabler for bringing more people into the gaming experience, across the board.
It’s fair to say that we still have a lot of work to do to extend our appeal into the non-hardcore space, but our aspiration is absolutely to attract those people. That’s why we spent the majority of our briefing on service features and on content that will appeal to a broader audience.
The look and the feel; the ease of use; the approachability of the new Xbox Experience. These are all examples of how we are going to make the Xbox 360 much more accessible. And of course we talked a lot about content like Banjo and Viva Pinata, Lips, You’re in the Movies, Guitar Hero, Rock Band, and so on; really fun titles which all have strong appeal no matter what your relationship is with games.
Again, it goes back to our aspiration. Our objective is to win this generation and in order to do that we have to grow beyond the hardcore gaming audience that we’ve been so successful with. That’s our focus.
Microsoft is a trusted and well-respected brand all over the world. That is equity that I wouldn’t trade away. We want to build on that, take all the good things that people associate with Microsoft, and with Xbox, and leverage that, to appeal to consumer audiences as a consumer entertainment company.
I’d also like to use this opportunity, to talk about our hardware strategy. We’re all trying to move towards mass market price points with our consoles. We know historically the volume of the business that gets done at those mass-market consumer price points. It is significant and we’re not there yet.
The price reduction we announced yesterday is not a system price reduction; I want to be really clear about that because I don’t want people to accuse us of doing something that we didn’t do. We reduced the price of the 20 GB version of the Xbox 360 at the same time that we told everybody that a 60 GB Xbox 360 is coming in August at the current price of 349 dollars.
But take a moment to think about the core system. The Xbox 360 Arcade is more successful than many people credit. We’ve seen it grow to be a meaningful part of the overall portfolio of sales and I believe as we drive towards more mass market pricing, as we add mass market mainstream consumer services, the Xbox 360 Arcade is going to continue to grow to be a bigger part in terms of our sales.
Consumers will decide for themselves which options fits them best. They might consider the Xbox 360 with the 60 GB hard drive or the Xbox 360 Elite or they may decide to add a hard drive to their Xbox 360 Arcade system. We love having a variety of choice for customers. It gives us the opportunity to add value to the offer, to differentiate and offer options to the consumer so that they can decide to make the choice that fits their needs.
Choice is part of the overall offering and consumers are reacting positively. We feel good about our position. We feel confident in our ability to outsell PlayStation 3 in this generation, and although you have to give Nintendo credit for the success of Wii, we’ll always point back to the data that shows that consumers are spending far more overall on Xbox 360 then they are on PS3 and on Wii.
We think that that’s an important measure of success, particularly when you add in the amount of consumer spending that’s happening online on Xbox Live, and which, to finish where I began, we are going to see a lot of growth in as we bring in more and more gamers.
Where are the games? The originality?
RE5, Fallout 3, Guitar Hero, Rock Band? Multi-platform releases.
Viva Pinata? A sequel, one that doesn't expand the premise at all.
Lips? Karaoke.
Banjo? A game about characters...based on vehicles?
Avatars? Somebody has been playing the Wii.
Take away Gears of War 2, a sequel ignoring the single-player issues, and what's left?
On top of that, Microsoft's main focus was on Live functions. That's not a good thing when talking about a *gaming* console. Don't get me wrong, I think all the additions are good, but they have very little to do with gaming. For being the main focus, none of it is really new. I already have VoD through my cable provider, I can get full DVDs from Netflix, movies/songs/shows through iTunes, various items through the internet, etc.
As for the HD switch, let's be honest here. With focusing more on the online content, one of the glaring flaws is the miniscule size of the 360 HD (and let's have a moment of silence for all those unwanted users without a hard drive....) Otherwise, Microsoft was just waiting for the users to buy up most of the existing inventory so they could announce the switch. I do think it is a bad business practice, but it's something Sony has done numerous times (combined with straight faced denials) and was purely a business decision.
All of this price and product choice is great news for all gamers; but how can Microsoft be happy with maintaining a $200 price point on a 120Gig hard drive accessory when it's selling complete systems for only a bit more than that?
As a consumer, I lose my incentive and desire to upgrade when there is such an obvious imbalance in value-proposition to upgrade after my initial investment.
Even if you consider the cheaper 20Gig hard drive at $100; that's still 40% of the price of a core system and the size of this smaller drive is proving less and less desireable with all of the new services on XBox Live offering and enticing me to download and store content on my hard drive.
Owning a 20Gig Pro system, I find myself managing my content on the system far too often; and the lack of a reasonable upgrade option is pushing me towards other content providers on other platforms despite my desire to stick with Microsoft and XBox Live services.
I believe that the 360 has the functionality and ease-of-use necessary to draw in a larger market - but I haven't seen any real success from Microsoft with regard to actually marketing the machine towards that broader base. Maybe that will be coming with the end-of-year marketing push? Because while I applaud their efforts, I haven't seen the 360 expand beyond the core market yet.
--Simon Strange
Some comments to cronotrigger913,
regarding the monthly fee for XboxLive, it can be pretty transparent as well. I mean, its 50 dollars a year, which means basically that it costs as much as one game. One game per year is what it costs to have XboxLive Gold. Im sure you buy more than one game a month, right? The option of monthly or yearly fee is nice and like I said, it can be pretty transparent. MS needs to add value and show that Gold membership is not only for online-gaming but much more and this is what they are doing with all the announcements (Netflix is nice, but us europeans need something like this as well)
Regarding the MS presentation, it was good. Lots of content and a true push to casual market. However, "casual content" is very nice, I do have some problems with the pricing. How do we offer this "casual content" for casual gamers with a hardware that still "costs" a bit.
The different SKU approach is nice but waaay underutilized. The arcade-pack should be at $199, this is the price that will skyrocket sales for casual gamers and sales of casual content.
And then, the old and tried formula of.. selling more hardware means more software sales but also more potential XboxLive-payers and more peripheral sales.
With the added features to XboxLive, as "optional HDD install", there will probably be an increase in harddrives. MS should capitalise on this and with lowering the arcade-pack to $199 dollars, more potential buyers will be the HDD. I assume that the profit margins for the HDD are higher as a peripheral sale than as included in the Pro and elite-packs.
So yeah, make sure to reach the pricepoint of $199 and then we will see the true impact of the Arcade-pack.
But all around, a good presentation. MS is handling this pretty good..
While I still find a few problems with the 360 in general, I do have to give Msoft credit at this year's E3 presentation. Things like Live Primetime, Live Party, the Avatars, and the Netflix partnership are really great ideas, and it shows that online is quite possibly where the future is in video game entertainment. I'm still not a fan of the subscription fee, especially when Nintendo and, more importantly, Sony are offering up their services for free, but you do get a substantial return on that fee. If you can get casual players to fork that over for things like Live Primetime, then you guys will be very successful, but I have my doubts. $50 a year is asking a lot from consumers that are hesitant to get video game systems to begin with. I play games all the time, and even I have problems with the subscription fee. And every time I see a piece of content only open to Gold Members, my appreciation for Live and Msoft goes down a little. I'm sure there are others unlike me, but I'm also sure there are some JUST like me. I guess that's all I have to say on the matter. I still gotta give you props though for this year's E3:)