The Microsoft Advantage

One of the reasons for not adopting a game console through the various generations of consoles is because the decision standard I used was to find at least five games I would be willing to play more than once or would be engaging enough to offer more than 24 hours of play. Single user PC games have this flaw. Most are solvable within 24 hours, except those that are coded to deliberately become progressively harder by throwing more minions at you so you cannot. The result: none matched this criteria. All console systems are priced about the same. The console games are priced per brand and market opportunity rather than if they're any good or not. And for users, the measure for buying a game is based on the Borg-collective of gamers on sites like Gamestop, IGN, or CNET, where game ratings from hundreds of players factor largely for new players to consider the game title. Games aren't cheap anymore. The average new release costs a player $50-70 per user license, depending on what kind of bundle it is. And, you can't return a game after the box has been opened or you purchased it online and downloaded it. 

But, I digress, this post is not about console games, its title publishers, or consoles, but rather Microsoft's near-term strategy for its media portfolio.

Today's top console manufacturers are Microsoft, Nintendo, and Sony.

When a marketer thinks about media outlets, what generally comes to mind? Print. Broadcast radio/tv. Internet web/email. In-game advertising has been around for at least a decade, maybe longer. Barack Obama used in-game advertising during his 2008 campaign. It's nothing new. What is revolutionary and adds a whole new dimension to advertising is the ability to stream in real-time, ads and programs, from partner firms, like Netflix, Hulu, YouTube, or Pandora radio, through a new media platform, the game console.

This includes, but is not limited to video-on-demand (VOD), web conferencing, simucasts (from existing radio and web tv stations), HD radio, or user-generated content.

Here is a rough timeline of partnerships:

...and the WWW - no official add-on, but this capability has been around since 2005
...and YouTube - no official add-on, but this capability has been around since 2007
...and Netflix - May 2008 (Netflix gained a new distribution network; Microsoft gained access to partner media content)
...and HD radio - May 2009

...and Virgin Radio - Apr 2007
...and YouTube - Jan 2009
...and Netflix - Apr 2010

...and IPTV - Jan 2007 (IPTV has roughly 28 MM subscribers, though when introduced to the PS system, this was free content)
...and Virgin Radio - Apr 2007
...and Netflix - Nov 2009

After subscribers reach into the double or triple digits worldwide, what's left to conquer in the media universe? Someone else's subscriber universe for their revenue annuity, of course.

Ahh yes, but what is the advantage if everyone jumps onto the same bandwagon? KPI metrics and the ability to target content based on user behavior. You wouldn't know it from observing console users or buyers. When you register a product, all that demographic info you fill out in a questionnaire isn't just for marketing. It's for customer profiling. Even if a manufacturer is only able to get 25% of its users to register and opt into receiving more info, if XBOX Live really has over 17 million subscribers, that still represents a lot of data points. Microsoft has been at the partner integration strategy for a lot longer than anyone else and executes it pretty well.

Toshiba debuted a motion-sensing tv experience at CES 2009. It won't be long when more users of Internet-ready TVs will be able to change channels, switch between 'screens', or open up a video conferencing window just by using simple hand gestures, regardless of tv brand or media platform. Now how cool is that?

And a side note: Apple didn't show up to E3 because of a business decision not to. If you look at what companies comprise ESA, they are all top devs, publishers, and manufacturers of pc, console, and Internet gaming. Apple does not make a gaming device. Users may use the iPad/Phone/Touch, or desktop/laptop Mac as a gaming device, but that's not its core purpose nor revenue model. You'll find Microsoft and Sony at the E3 Expo because they are multi-verse companies.

Disclosure: I'm a PC.


This Is Microsoft's Opportunity
Microsoft and Netflix Unveil Partnership to Instantly Stream Movies and TV Episodes to the TV via Xbox LIVE
Obama's in-game ad bill: $44.5K
Apple and Windows Computers Living Together Under One Roof, Oct 2009 stats
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