The Microsoft View

While Microsoft did best Sony in system sales this month, it also lost ground on its weekly sales rate from February 2008. More importantly, the lead that the Xbox 360 installed base has over the Wii base shrank by nearly 460,000 systems.

The strongest point in Microsoft's favor right now is the launch of Grand Theft Auto 4 in late April coupled with exclusive downloadable content for that game, currently scheduled for release later this year. For its part, Microsoft will heavily promote GTA4 on the Xbox 360. According to recent reports, the marketing will rival the commercial push for Halo 3 in 2007. Furthermore, it appears Microsoft will not drop its system prices before GTA4's release.

Choosing to keep its current pricing structure is an interesting move. Halo 3 demonstrated that a top-tier game coupled with saturation marketing and a price drop can be a potent combination. It isn't clear from the available data how important the August price drop was to Halo 3's sales in September 2007. If Microsoft is avoiding a price drop prior to GTA4, there must be some reason. Perhaps it is confident that its current pricing coupled with GTA4 and exclusive downloadable content will be sufficient to maximize its sales. On the other hand, Microsoft needs to keep its gaming division in the black as much as possible, and cutting the margins on hardware will definitely drive down profits.

The top 10 chart this month also brings home just how focused the Xbox 360 population is on shooters and action games. Microsoft's attempt to broaden its appeal – specifically Viva Piñata and Scene It – have not sold well enough to break into the top 10 whereas Call of Duty 4 is enjoying its fifth month on the chart, accompanied by two other shooters.

On the other hand, that hardcore base continues to buy software at a solid rate. Microsoft announced that after March 2008 its attach rate stands at 7.5, in line with estimates published in this column last month. Moreover, Microsoft reported $220 million in third-party Xbox 360 software revenue for the month. Taking that figure at face value, 23% of all software revenue in March 2008 was made by third parties on the Xbox 360.