I'm at Kellogg Technology Conference today, listening to Jeff Bell, Corporate Vice President of Global Marketing at Microsoft, talk about interactive entertainment. What I found interesting is the business model considerations and big launch marketing insights. Here's an impressionary transcript.
Specifically with Xbox. 41.1% of households own at least one gaming console, with an 18.5% increase in the last two years. Largest genre Action and Adventure, was surpassed this year by family and social games. The primary demographic driver is no longer young white males, the average age is moving into the mid thirties and a balancing of genders (now 60/40, and in teens its 50/50). As the hardware evolves, so does the software and usage.
$18 billion industry in 2007. Looking to not just be a market share leader, but a wallet share leader. Like Windows, Xbox 360 looks to be an ecosystem leader, with the most partners of this generation. By the end of this year we will have 300 games for $3-5 that you can download and play from the Arcade. We don't have as many first party or exclusive titles as our competitors, so when we win everyone wins.
The average Xbox household has 7 games attached to it, with 4 accessories (controllers, etc.). Rock Band and Guitar Hero are exciting because they are evergreen franchises, because you can download additional content over time. 3 million songs downloaded for Guitar Hero 3. Packs like the Brady Bunch. In the future you bring any content, including what you generate, onto the Xbox and it suddenly becomes more fun.
What if you were the person to generate dance steps or riffs and upload them into the community and gain monetization? Games for Change says gaming is where film was in the 1920s and 30s, it is just coming into its own for a diversity of content Games for Change has 5k teams trying to develop the best game about global warming.
I came to Microsoft to develop some consumer marketing muscle. Xbox Live has 10 million members globally. We get community. 60-70% of users connect to it. Just launched movie downloads in Canada and Europe. Fundamentally a great brand has to be an external and outrageous promise. The New Definition of Fun is a committment to continual newness. Promises let us segment our customer targets, which have regional differences and lets us go after them with different messages:
- Xbox 360 has more fun for your friends and family. Parental controls with all rating systems as a proof point, and then going after games that matter.
- Xbox 360 has the biggest blockbusters. Taking control of the Grand Theft Auto IV launch to also help explain the value of our platform.
- Xbox 360 has the most Choice and Value. We didn't put BlueRay or HD DVD in, but instead DVD because it is a global standard. I thank the Wii for broadening people's minds. Rock Band is the new Twister, we need to bring this kind of family entertainment back.
- Xbox 360 owns Sports. Fell over the last year from 25% to 20% of the market, and needs new innovation.
Three years ago these four statements had not been realized. Applying good business and marketing principles, partnered and focused, and seizing pricing and customer segmentation opportunities has realized two quarters of profit for what had been previously unprofitable.
We are the largest distributor of downloadable HD content. The only online distributor of Movies and TV in High Def (huh? Apple?), with 3k hours of movie and television content. Twice the hours of the leading cable provider.
On the launch of Halo 3, the largest consumer entertainment launch in history. They asked Peter Jackson about LotR 3 and he said, "You don't have to see the first two movies to enjoy the third, and the third time is a charm." Primary target was halo purchases, focus on the engaged. Secondary target was Next Gen Inenders, focus on PS swings and fence sitters, migrate Xbox v.1 owners. Broad target: Entertainment Enthusiasts, male gamers age 17-35, tuned in to entertainment hits. Grew the core with real world puzzles that were hacked in less than four hours. Shows a commercial, "Believe," for the masses that is about a hero, with the classic struggles -- man vs. man, man vs. self and man vs. environment. Reused the diorama in the commercial in different creative, one version viewed over 27 million times on YouTube. Launched the game without showing it. New definition of reach and frequency is showing a commercial once on tv and gaining 40 million online views. Biggest opening day in entertainment history with $170 million in day one sales, and over 10k retailers worldwide hosing midnight madness events.
In a closing recruiting pitch he talks about how Microsoft has changed, and how if you see them in the Silicon Valley they are open and constructive partners, not "we're going to beat you or buy you" -- and jokes, "except if you are Yahoo."
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