How to Get Microsoft’s Xbox 360 Strategy On Track

Microsoft has made some early noise at E3 with clear communication of a broader, more family-oriented strategy involving both hardware (new, easier to use controller) and software (a deeper portfolio of E games), as chronicled in an article in today’s New York Times. Clearly moves in the right direction. That said, Microsoft’s Xbox 360 strategy has fundamentally been a failure thus far, at least as economics, customer relations and competitive positioning is concerned. And while I think Robbie Bach’s and Microsoft’s messaging at E3 is ok, I think there are a few concrete steps Microsoft needs to take to really get in the game with the Xbox 360 and move beyond its legacy issues:

Cut the price. Now. As previously noted, I am not a buyer of this “window to the family room” strategy, especially if you are asking people to pay for it before its been shown that people actually want it. Therefore, I think the Xbox 360 needs to be priced like a gaming console, not like a media center, if it truly wants to garner the broad audience of which Robbie Bach and Shane Kim speak. Can it be priced at a premium to the Wii and sell to the casual gaming audience? Sure. But at a $150 premium? No.

Deal with the product defect issue head-on and move forward. Microsoft’s handling of Xbox 360 product defects has been absolutely, positively abysmal. You can’t simply throw an extended warranty at a hardware problem, give people few hard facts and expect it to go away. Xbox 360 buyers are generally very tech-savvy, very committed people who want answers - not obfuscation. In order to truly heal the wounds of a defective product, Management needs to prove that it understands the issue, take full responsibility for the defect and address the problem in long-term, permanent fashion. Otherwise, this issue will continue to fester. Whether this is done via a product recall or an offer to replace consoles made during times when the defects were occurring I don’t care. The issue is provide the data as to what really happened, educate users about the problems and remedies and move on.

Executives predicted that the company’s recently announced plan to
spend up to $1.15 billion to fix defective Xbox 360 game machine would
improve, not undermine, the system’s image with consumers.

“The important impact for us is that our customers know we’re going to
support the console and support them and if they have issues, we’ll
take care of it,” said Robert J. Bach, president of Microsoft’s
entertainment and devices division.

Sorry, Robbie. This just isn’t good enough.

Make the development of E games and changes to the platform core to its messaging. If Microsoft wants to move beyond the core gamer, it has no choice. I know Microsoft is moving in this direction, and Robbie and Shane’s comments at E3 and Microsoft’s moves to widen its appeal through deals with Disney and games based around the Scene-it product are good. Also, news that it is coming out with a simpler, more intuitive controller for novices will help. But for the impact this strategic shift to be fully felt in the marketplace, it will need to create a strong, integrated, family-focused campaign that puts the Xbox 360 out there as a viable alternative to the Wii. It’s all about fun, folks. Whiz-bang graphics and complex, hard-to-learn controllers are not going to get it done if you want to move mass-market.

“We believe we have the best game lineup in video-game history for the
holiday season,” said Mr. Bach. “You can look top to bottom and we
think we have the goods to please any type of gamer.”

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“Part of our strategy is we want to win this generation and in order to
do that we have to expand beyond the core gamer audience that we’ve had
success with and that means appealing to the broad consumer market,”
said Shane Kim, general manager of Microsoft Game Studios.

Nice, guys. You are on the right track.

Continue to develop leading-edge T and A games for the core gaming audience. Broadening its appeal does not mean abandoning the core gamer on which its franchise has been built. Incentivize developers to write edgy games for the console that benefit fully from its graphics capabilities and preserve its leading position at the upper end of the market. Discrete development strategies and targeted messaging for different audiences is a perfectly reasonable and, in this case, I believe the perfectly rational approach. Communicate clearly to each constituency, because you can’t win the war without succeeding in both.

But even as Microsoft hopes to appeal to new sorts of users, the
company wants to avoid neglecting the serious player. So Microsoft also
said that the next version of the popular Resident Evil series from
Capcom of Japan would also be designed to run on the Xbox 360.

In the past, Resident Evil games have run only on Nintendo and Sony
consoles. Persuading Capcom to develop games for the Xbox 360
underlines the success Microsoft has had recently in attracting
Japanese developers who had shied away from the American console.

Exactly.

May the force be with you, guys. You have a shot. You appear to be getting your mind around the right strategy. Now lets see if you can make it happen around execution.

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COMMENT:

AUTHOR: Tim Hussar

EMAIL: thussar@cwm.us.com

URL: 

DATE: 07/11/2007 01:42:35 PM

Agreed, they have incredible hits such as Gears of War and the Halo franchise but they need to have party games playable by all.  

As silly/simplistic as it sounds, it all boils down to gender. They need games which a woman can embrace, not necessarily in content, but in learning curve.  This has nothing to do with  intellect, but rather the utility to the user.  A guy won’t feel guilty spending double digit hour amounts learning the intricacies of Halo 2, but if a woman can’t figure out the game in short order, forget about it.  Once they breach this, then  they have a entertainment center that people, gamer or not, are waiting for their turn to use at a party/gathering/etc.

I think Xbox Live needs to be promoted more as well.  It’s relatively inexpensive and adds tremendous social value to the gameplay experience.  It also enhances the attractiveness of games because it adds countless hours to the life of each game.  If I read a review saying a game can be completed in 15-20 hours, I probably won’t buy it, or I might rent it.  But if it has Live gameplay, I seriously reconsider.  It also plays in with the aspect mentioned above.  If I have three people over, two of which aren’t into video games, and I put in something easy for them to play where we can “team up” against four other people online, ta-da, instant attractiveness to the audience they need to breach.

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