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Alan Poon

on 21 October 2013

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Transcript of Xbox

Graphics Chips
Burger King
Advertising and Marketing

Advertising on Food packages
Xbox Launch
Nov 2001
Game Store
Advertising with Game Trailers
Microsoft XBox
-Microsoft's Solution for its entrance into the video game console market
- Released in 2001
- New-to-the-firm
Marketing Budget
Future plans of Xbox
Future Speculation of Xbox
Opportunity Identification and Decision
Concept Generation
Concept Evaluation
Product Development
Product Launch
Operation Phases
History of Video Gaming
Cafe: Microsoft Retreat
Should we enter game console market?
How do we develop it?
Game Development
Introduction - History
- First video game developed by Thomas T. Goldsmith Jr. and Estle Ray Mann in 1947

- Poor initial reception & response

-World was not ready for the technology
Video game market flourished 2 decades later!
- Atari's Pong game (1972)
- First commercially successful game
- Led to the start of the video game industry
Grown into 4 major categories:
-> Arcade
-> Computer
-> Console
-> Handheld
Video Game Market Only Flourished 2 Decades Later!
Making appearance in scenes of
car show
Shopping Malls
Exhibition in a Shopping mall
Microsoft Xbox 360 Annual Marketing Audit
Identifying the Market Research Problem
Kinect was perceived as the Copy Cat of Wii by some potential customer
Key Technological Difference
Xbox's voice Technology features:
Controlling movie with voice

Conducting Bing search engine with voice
Market Goals
Increase familiarity with Kinect among all audiences
Ensure that Family Timers who own Wii understand how Kinect is different from what they already own
Drive purchase intent of family bonding for Xbox and Kinect
Become the # 1 selling console globally
Campaign description
Adopted both 'rational' and 'emotional' strategry
Aim: To explain a clear story of "
" Kinect works and to "
" the Wii existing customers
The campaign launched in the week of October 2012 with the launch of Kinect Sports Season 2 and Dance Central 2.

Voice Controlled entertainment features were also launched.
Did Microsoft's Effort
go into the drain?
Or did Microsoft's Effort
bear fruits?
Phase 2: Defining Xbox Concept
Discussion with Potential Suppliers
Benchmark to exceed Sony PS2 performance
PC architecture console
Built-in hard disk drive
Integrated broadband internet connection
Phase 3: Concept Evaluation
Technical Process Evaluation:
Building up production line
Product cost Evaluation:
Cost estimation of product's life cycle
Key components (Microprocessor and Graphics Chips)
Adopting console sales model:
Slowly decreasing price after launch
Losing money from selling hardware
Profit mainly from selling games
Phase 5: Launch of Xbox
The launch of Xbox (Nov 2001) was delayed a year because Microsoft wants it to be equipped with new technology
Benefit: offer better performance than Sony PS2
Cons: Sony PS2 had a head start
Expected revenue from the video game industry:
From USD62 billion in 2012 to USD 82 billion in 2017
Next Xbox rumoured to be called Xbox 720
Better specifications of the gaming console
New features expected such as multitask gaming, in game notifications of email, SMS and phonecall and speech to text support
Future Plans of Xbox
Plans to gain confidence of the game developers
Requires an always-on internet connection
Plans to move into the tablet sector
Rumoured to be developing a seven inch Xbox tablet
Can differentiate itself by:
1) Allowing saved games to be played on both tablet and console
2)Using tablet as controller for Xbox console
Tap on the current loyal Xbox users to aid the sales by infusing features of current Xbox and Xbox tablet together
Gains confidence from game developers that they are ensured of better profit
Case study: Should Michael Dell takes up the Xbox offer?
Should Xbox team choose between
1) conventional console model
2) PC model?
Gaming market is very competitive and uncertain
Xbox being a better performance game console has given them the leading edge in the long term run up till now
The outstanding winning strategy from the Xbox team is to put in huge amount of marketing budget to target a huge range of consumers.
Order from Intel and Nvidia
Major Parts
(Microprocessor and Graphics chips)
Custom Designed Part
(Game Controllers)
Commodity Part
Phase 4: Supply Chain and Games Development
Negotiation of design and signed contract
Order based on Microsoft’s contract
Major Part Suppliers
Order from Intel and Nvidia
Games Development
First Party Games:
Recruited game developers
Bought game companies

Third Party Games:
Developers submit plans before licensed
1. Large consumer pool
4. Financial Justification
3. High entrance barrier, Microsoft can overcome
Phase 1: Opportunity for Market Penetration
2. Good timing for market entry
Attractiveness of Industry (1999)
- Just prior to development of XBox
- Very attractive indeed!
- Total worldwide sales figure = 20 Billion USD
- Majority share held by console
- "Large enough for several companies to thrive in"
Answer: No.
PC industry:
Drive technology up, keep price stable.
Not driving the price down, while keeping same technology.
Not profitable without very good supply chain fundamental and low production cost.
Flextronics has industrial park (low inventory cost), large production line for OEM, product cost very low.
$100 m
$420 m
Microsoft XBox
-Distinguishing features
-Online support
-Better Specification
Microsoft XBox
-Lost to Playstation 2
-Loyalty fan base
-Delayed entry into market
Current Video Game Console Market
Lets take a look at the market share trend
Current Video Game Console Market
-Increasing number of phone users
-Computers slowly taking over console as top position
-Technological advancement of PC
-Increasingly popular
-Game developers less restricted
-Able to do other tasks than gaming
Current Video Game Console Market
Current Video Game Console Market
- Console Market Reaction
- Shift in focus/direction towards body motion sensor
-Nintendo's Wii
-Xbox's Kinect
-Sony's Eyetoy
Nintendo WiiU's ZombiU
Wii U as the Survival Kit
Select Inventory
Check the CCTV
Gore factor
Punching Bag
High interaction with environment
Able to hide from Zombies
Different walkthrough after each death
Video Game Crash of 1977
Golden Age of Video Games
North American video game crash of 1983
Major Periods in Video Game History
- Caused by flood of Pong game clones in the market
- Manufacturers clearing stock at a loss
- Ended with launch of Taito's Space Invaders
- Saved Atari and revived the video game industry
- Late 1970s to Mid 1980s
- Rapid spread of popularity in video games
- Number of arcades doubled within 2 years
- Start to appear everywhere in public areas
- Sales grew $50 million in 1978 to $900 million in 1981
- Era ended with saturation of video game copies
- Massive Recession in the industry (1984-1985)
- Revenue fell from $3.2 billion to around $100 million
- Main cause was the supersaturation of low-quality games and copies in the market
-Lost customer's confidence
Video game console manufacturer
targeting car lovers
Discontinued on:
March 2001
Jan 2013
Compete with tech giants like Apple and Samsung
Audi R8 LMS racing simulator at video game fair
Manufacturer for Xbox
Gran Turismo 5 racing game
Full transcript