Making Xbox One Number One

BY

The battle for the title of “#1 selling next-gem console” has already begun, and Microsoft faces a huge challenge from Sony. Yes, both companies can be successful with new consoles even without being the sales leader in either the U.S. or worldwide. But there’s always bragging rights to consider, and game company employees tend to be more competitive than most. We’re going to see companies keeping score over the number of consoles sold this holiday season, and telling the world about it.

Both Sony and Microsoft are, of course, already well into their strategies for success. Both companies have finalized the engineering of their consoles and are in manufacturing right now. Game development has been under way for years, and the development schedule is pretty much set for the next year or so. Marketing plans have been drawn up, materials created, and marketing is already rolling out. Given all of that, what can Microsoft do over the next year to improve the Xbox One’s chance to be the #1 console

Here are some strategic ideas that Microsoft could implement over the next year in order to boost the numbers of Xbox One consoles getting into the hands of consumers. While some of these ideas might be difficult or unlikely, keep in mind that Microsoft has already displayed unusual speed and flexibility this year in changing policy for the Xbox One on more than one occasion.

Reduce the price

Microsoft has already conceded a major advantage to Sony with the pricing of the Xbox One at $499 compared to the PlayStation 4 at $399. Yes, Microsoft made a carefully considered decision that the inclusion of the new Kinect was worth the higher price, and there will be a great deal of marketing effort to convince consumers of that. Still, for the consumer who comes in without much knowledge, the lower price will be more attractive. Surveys and relative pre-order numbers have borne out the logical supposition that at least so far, the PS 4 is running ahead of the Xbox in units pre-ordered.

It’s time for Microsoft to unlimber the enormous weapon it has that Sony lacks: the $77 billion cash stockpile Microsoft has sitting in the bank gathering interest. One way to do this is a straight price drop, and just plan on losing $50 or more per unit sold until manufacturing costs drop enough to put the console back in the profit column. This, after all, has traditionally been the way the business worked. Granted, Microsoft lost billions of the Xbox division, but the sweet profits generated eventually are making up for it.

Of course, this could impact Microsoft’s share price, but is that really a problem For the past four years Microsoft stock has traded in a narrow band from about $25 to $35 per share. Note, too, that with the Surface RT Microsoft just took a $900 million write-down over unsold hardware. Wouldnt the company have been better off setting a lower initial price for the Surface RT, and perhaps losing the same amount of money but getting millions of tablets into people’s hands Microsoft’s not going to have piles of unsold Xbox Ones to contend with, but there’s no denying having more consoles out there would boost the profits from software sales.

There’s more than one way to drop the price, too. Analyst Michael Pachter has suggested Microsoft might team with an ISP to offer a discount on the hardware if you sign a service contract, similar to the way smartphones are discounted. Perhaps an ad-supported version of the hardware could be sold at a reduced price, similar to the Kindle Paperwhite. Or offer a reduced cost Xbox One with a multi-year Xbox Live contract agreement. Even if some of these reduced price options aren’t all that popular, it still allows you to market the Xbox One as “starts at $399” instead of just plain $499. 

Drive the Kinect advantage

Microsoft has already announced a brilliant service with Xbox Fitness that requires the new Kinect in order to offer some strong advantages to regular fitness programs. It’s a program that Sony can’t offer to all PS 4 users (because they won’t all have PlayStation Move, and it won’t do some of the things Kinect will) — and it’s free, at least through 2014. Microsoft should be looking for more such services or games that Sony can’t match, and offering them for free if possible — that drives up the value of the Xbox One and makes that $100 price difference less important.

Embrace advertising

Microsoft was quick to scotch rumors that the Xbox One with Kinect would be tracking consumer responses for the benefit of advertisers. Clearly, though, marketers salivate at the idea of comprehensive information about how consumers respond to advertising and marketing, down to measuring their heart rate. Consumers wouldn’t want that to happen automatically, which is why Microsoft made it clear nothing like that is planned.

Here’s the thing, though: Why not offer this service with a consumer opt-in Of course, you’d need to give consumers something in return… Perhaps advertisers would underwrite the cost of Xbox Live as long as you allow them access to your personal marketing data. Or just give you credits to use in buying games/ This could even be a way to reduce the cost of the hardware to consumers. If consumers get to do this as a choice, there should be no concerns about privacy. 

Race to the future

Microsoft already tried to move ahead into the future of digital distribution by offering a way for friends to share games, but at the cost of preventing the sale of used games. Backlash caused Microsoft to change course on that policy and go back to the current Xbox 360 policies about used games, which is similar to Sony’s stance. Yet there were people who liked the idea of sharing games, and even calls to bring that policy back. Microsoft should be thinking about the possibilities of the digitally distributed games, and craft policies around that.

Microsoft could gain an advantage over Sony by being the policy leader concerning game sharing, resale of games, and similar issues. It may require some complex policies, but there’s a large potential payoff for Microsoft. Being there first with the right policy is also an advantage.

More than just policy, Microsoft should strive to be ahead of Sony when it comes to things like VR, cloud computing, game streaming, and the like. Make the Illumiroom available even if it’s expensive, it will be a cool differentiator. Push the voice controls, home automation, integration with mobile devices. Why let Valve be the company that brings keyboard and mouse gaming to the living room Microsoft has a massive R&D budget, and perhaps there’s a way to do much of what Valve’s new controller does with an ordinary smartphone or tablet.

Microsoft shouldn’t slow down at all as this next-gen console battle continues. The competition is more than just Sony, it’s Apple, Google, and Amazon as well, and probably others. Introduce innovation when you can, even if there are flaws. Fix things fast and keep moving. Empower the Entertainment division to move at the speed of mobile. Go for the top achievement, and keep Microsoft #1 in console sales.

Activision Is ‘Indie’

BY

It didn’t take Activision Blizzard long to gain independence from its previous owner, Vivendi, once the court gave the go-ahead. One day later, the sale was completed.

Last week, the Delaware Supreme Court overturned an injunction that was filed by Vivendi, preventing the game publisher from purchasing its stake back from the company. Back in September, the preliminary injunction was originally filed because of a lawsuit filed by shareholder Douglas Hayes against Activision, arguing that shareholders needed to be notified in order for it to proceed. The court, however, feels that, in Activision’s favor, the sale was a stock repurchase that didn’t require the say-so of shareholders.

Because of this, the purchase of the stake by Activision Blizzard proceeded as planned on October 11, with the help of an investment group, ASAC II, headed by Activision Blizzard CEO Bobby Kotick. The sale is estimated to be worth just over $8 billion, with purchases between both Kotick and the publisher.

“While some investors may have concerns about declines for the company’s core businesses, we remain fans of Activision Blizzard. The company communicates clearly, executes well, and its management appears to truly understand how to make money,” said Wedbush Securities over the court’s decision.

Activision Blizzard is currently in the midst of the holiday game releases, with the all-ages adventure Skylanders: Swap Force out now and Call of Duty: Ghosts arriving in early November.

Source: GamesIndustry International

China Eclipses U.S. In Gaming Habits

BY

A new report from Magid has revealed that the U.S. may not be the country where gaming has the highest popularity. This report indicates that out of all the people surveyed, 84 percent of China’s occupants stated they play computer and video games, compared to only 69 percent of U.S. citizens.

The report also states that the pervasive gaming habits of China have picked up tremendously, with 79 percent of people playing games on tablets, compared to only 57 percent on smartphones.

“The base in the study I sent is Chinese internet users – which skews younger, more urban, more educated than the general Chinese population. The U.S. Internet population is much more reflective of the U.S. pop,” said Tom Godfrey, Executive Director at Frank N. Magid Associates. “And the fact that over two-thirds of the broad U.S. audience is gaming  is a huge figure. Our latest study (Smartphones and Tablets 2013) found that 68 percent of U.S. tablet owners and 66 percent of U.S. smartphone owners play games weekly or more their devices.”

Mobile and tablet gaming have risen 59 and 50 percent, respectively, compared to PC gaming and free-to-play MMO’s standing at 45 and 44 percent. The U.S. numbers have dwindled by comparison, with 33 and 41 percent with tablet and smartphone gaming, respectively, and 24 and 10 percent with PC and MMO playing.

Source: GamesIndustry International

Google TV Becoming Android TV

BY

Google TV is going away – but not entirely. The web company is looking to rebrand its streaming service to something more Android related, as it integrates more services from the Android line into its products.

Though Google hasn’t made the official announcement for the switch-over just yet, an executive from a consumer electronics manufacturer confirmed that the company has been producing Google TV devices with a rebranding, saying, “They are calling it ‘Android TV’.”

Sony has already made the switch on the label with a new smart TV adapter called the Bravia TV stick last month, not mentioning Google TV once in its announcement. Instead, it referred to its compatibility with “Google services.”

Another indication of the name change actually came from the Google TV team, when an announcement in Seoul was officially labeled “Android TV Developer Day.”

It’s only a matter of time before Google announces the switch, as well as the services that will come with it. Considering the speed bumps that have come with the service, look for it sooner rather than later.

Source: GigaOm

Twitch Testing Ad-Free Streams

BY

Twitch has become an immensely popular destination for live-streamed programming on the internet. However, not everyone is fond of the “forced” commercials they have to occasionally watch during Twitch programs.

Luckily, Twitch has come up with a way to break away from the ads — with some help from sponsors. The company has announced the first “Commercial-Free On Twitch” program block, which will launch this Tuesday in conjunction with Sony and the PlayStation 4.

With this service block, users can now view the action as a commercial-free experience, with a single premiere partner working in their place. Sony will take the first role in this, offering 12 full hours of commercial-free action going from 9 a.m. PST to 9 p.m. PDT on Tuesday, October 15. The only ad streamers will see at this time is a pre-roll hosted by Sony, revolving around its PS4 game console.

“This first-to-market event truly showcases the way fantastic brands like the PS4 can maximize their marketing messaging while benefiting the Twitch users here in North America,” said Andy Swanson, VP of Sales, Twitch. “It’s a great example of how Twitch’s unique live streaming platform can balance the needs of both its partners and its passionate gaming community.”

In addition, Sony will host a special live broadcast on Tuesday at 4:00 PDT, where it will reveal first footage of the new Abandoned Map Packs for its hit action/adventure game The Last of Us. Viewers can tune in at the official PlayStation Twitch channel here.

The “Commercial-Free on Twitch” promotion shares some similar elements to Twitch’s ad free subscription feature called Turbo, but will be free of cost to ALL Twitch visitors during the duration of the program.

The PlayStation 4 releases in the U.S. on November 15.

Source: Twitch

Xbox 360 Gets Bundled

BY

Even though Microsoft will put a great amount of focus into the Xbox One this holiday season, it isn’t forgetting about selling the Xbox 360 system.

The company has announced three new bundles that will be available soon, providing not only some great content within each one, but also a deal that can save potential buyers $50.

The first two bundles focus on the Kinect motion-sensing peripheral, with a 250 GB or 4 GB Xbox 360/Kinect bundle that includes both Kinect Sports: Season Two and Kinect Adventures, along with a month of Xbox Live Gold. In addition, the 250 GB version will include the racing game Forza Horizon. The 4 GB version lists for $249.99, and the 250 GB version lists for $349.99.

A third bundle that will focus more on general action gamers will include a 250 GB system, the first-person shooter Halo 4, Square Enix’s critically acclaimed action/adventure Tomb Raider and a month of Xbox Live Gold for only $249.99.

In addition, those who purchase one of these bundles between October 13 and January 4 will be eligible to save an additional $50 off each purchase from participating retailers, bringing the cost down to $199.99 or $299.99, a very competitive price.

Source: Major Nelson

Subsidies For ‘GTA’ Players

BY

Ever since its launch last month, Grand Theft Auto V has been immensely popular in the video game realm. However, its online counterpart, Grand Theft Auto Online, managed to run into a number of server and operational problems when it went live.

Rockstar Games is hard at work on repairing these issues.  In the meantime, to reward the players who have been experiencing these problems, it’s preparing a little Stimulus Package. Set to release sometime over the next few weeks – starting this week – this bonus will add $500,000 to player accounts, allowing them to spend it however they please on weapons and other in-game items.

There are certain conditions to receiving these rewards, and they are as follows.

You must play or have played Grand Theft Auto Online at any time during the month of October 2013 in order to qualify for the GTA $500,000 deposit in your in-game bank account.

Players will first have to install a forthcoming GTAV title update which we expect to happen next week. That title update (1.04) is expected to fix the remaining instances of issues that have caused vehicle purchase loss and will also enable the functionality through which we’ll be providing this GTA $ stimulus cash to players.

We will announce at the Rockstar Newswire when each deposit is made.

Each of the two GTA $250,000 deposits will be made by Rockstar and should automatically appear in the in-game GTA Online bank accounts of eligible players. Beyond downloading the forthcoming title update mentioned above, there should not be any additional special action required by eligible players to redeem.

Source: Rockstar Newswire

Hands-On With The Steam Controller

BY

When Valve’s Steam Controller was announced a few days back – as part of a trifecta of new announcements from the company – some folks were skeptical of how it would work, since it uses touch-sensor pads in favor of traditional analog sticks.

Putting such worries to rest, Valve released a new video showing off just how the controller would work with a variety of games, including Portal 2, Civilization V and the company’s highly popular first-person shooter Counter-Strike.

Throughout the video, the engineer demonstrating the games shows just how movement and actions work with the controller, and how to use the one-to-one view control mode to get the most out of each game’s performance.

 

The controller will ship out later this year alongside the 300 Steam Machines that are going out for beta, and should be in production sometime in 2014. Pricing hasn’t been revealed just yet.Source: Ars Technica

The Secret To Console Success

BY

This year has seen a remarkable number of introductions of new gaming hardware — consoles of varying prices and capabilities designed for the primary purpose of playing games. So far we’ve seen Nvidia’s Shield, the Ouya, GameStick, GamePop, and soon the PlayStation 4, the Xbox One, Mad Catz’ MOJO, and likely Amazon’s Android box as well. This is on the heels of the Wii U introduction late in 2012, and the looming Steam Machines headed to 2014. The only clear winners so far (judging from preorders) are the PlayStation 4 and the Xbox One. Why?

Sure, massive marketing budgets are going to help Sony and Microsoft succeed. We don’t really know how their new consoles will do in the long run, but the strong pre-orders indicate an initial surge that should last some time. Nintendo had that with the Wii U, though, and sales fell off a cliff after the initial flurry of enthusiasm right after launch. Similarly, the Ouya had an amazingly great Kickstarter, but since actually shipping we haven’t heard much about sales.

The secret to success for dedicated game consoles is simple: Games. Not just any games, or a lot of games, or cheap games. You need great games. Ideally, with a unique experience of some kind that you can only find on that game hardware. Damn good games will do if you have a steady stream of them, but a great game can propel a console into wide acceptance all by itself. Super Mario 64, for instance, drove the N64 forward. Where would the original Xbox have been without Halo Sure, eventually the Xbox got a lot of good games, but Halo is the thing that propelled sales for a long time.

The Wii U’s biggest problem is a lack of compelling games and game experiences you can’t get anywhere else. Sure, there are some good games out for it, but many of them (like Just Dance or Call of Duty) you can get on other hardware. Pikmin 3 can’t carry the console all by itself, and Nintendo knows this. More great games are comping, but they have to be more frequent, not less.

The Ouya’s games so far have been a very mixed bag, and not one has been something you can only get on an Ouya that is driving people to by the console. It’s great to have 25,000 developers signed up, but what Ouya needs is 25 solid games. Or even just one or two that are great experiences you can’t already find on an Android tablet.

Exclusive games are important if they provide some compelling game play. Both Sony and Microsoft have lined up a large number of exclusive games for their new consoles. No doubt many of them will only be OK, and some will be really good, and perhaps a few will be impressive enough to generate hardware sales all by themselves. Hopefully many of these games will be impressive enough that you clearly wouldn’t get the same experience on a PS3 or an Xbox 360.

The speeds and feeds of game hardware are only important in so far as they enable games to be better, or unique in some way that’s really fun. The Wii’s easy-to-use motion control was a perfect example of a hardware feature that drove sales by enabling a lot of fun. The audience expanded because anybody could pick up a Wii controller and bowl or play tennis in a way they never could before. The Wii was clearly less powerful than a PS3 or an Xbx 360, and lacked HD graphics, but those things were unimportant compared to a lower price and unique game play opportunities.

The Wii U’s Gamepad controller isn’t particularly unique these days, not with the second-screen capabilities that Sony and Microsoft have been busy adding. Worse, the Gamepad has brought a different interface to many games but nothing that’s really resonated with a broad audience. The ‘asymmetric gameplay’ touted by Nintendo turns out to be as compelling as the 3D screen on the 3DS.

Sony and Microsoft have thrown immense amounts of money at proven, talented game developers in the hopes of getting some great games. Early indications are this brute force approach will work, but it’s not something a small manufacturer can duplicate. Nintendo’s working hard to bring out more key games for the Wii U because it knows that’s the secret to success.

A multiplatform game like Destiny will probably be an excellent game, but it’s not going to help either Sony or Microsoft differentially unless one version of the game has a compelling advantage. Halo for the Xbox One, if it’s as good as its predecessors, certainly will boost Xbox One sales. Amazon and Valve need to realize this before their boxes arrive on the market. Valve should look for some exclusive games, or at least compelling exclusive features, in order to boost Steam Machine sales.

If you’re bringing a new game console to market, throw in speeds and feeds only if you think they will create new and compelling game experiences. Otherwise you’re going to need a compelling price and a large marketing budget, and it will be an uphill fight. Remember that free-to-play doesn’t necessarily mean fun-to-play. Business models are useful and interesting, but if there’s not a fun game there the business model or the marketing doesn’t really matter all that much. Focus on great games and great experiences for the win.

Worldwide PC Sales Drop Again

BY

A report from IDC  {link no longer active} indicates that the PC market has seen a bit of a drop-off, but it isn’t as bad as it was originally foreseen.

The drop in sales was an estimated 7.6 percent in the third quarter, beating the expected 9.5 percent decline.

The United States part of that market didn’t have too much of a drop-off, suffering only a minor 0.2 percent compared to the year before. However, with the rising device volume for the three largest OEMs, it still didn’t seem like the market was as thriving as some were expecting. ASUS and Acer seemed to lose the most when it came to unit volume, with just more than one-third of volume compared to how they were doing the year before.

The total figure count for the season was 82 million, which was down six million from the year before. Though it continues to be a strong market, these drops may be of concern for particular companies. Business sales of PCs held up, but consumers are not buying them in the same numbers as last year. “Consumer sentiment remained lukewarm at best, as evidenced by the continued struggles of Acer and ASUS,” said IDC.

Source: TechCrunch