Gamerscore Blog

Strategic analysis of the competition of xbox 360 versus PS3 and Wii, and even Apple and Google

Microsoft:
Advantage:
Infrastructure of MSN, live.com, windows
Being in the market first
Xbox live

Disadvantages:
No HD drive compared with Sony
Not so strong support from 1st party

Sony:
Advantage:
Built-in BR drive
Compatible to PS2, PS1 games

Disadavantages:
Higher price
Online untested

Nintendo:
Advantage:
1st party support
Fancy controller
Lower price

0. Content is the King. PR war with Sony
MS need to tell third party that Sony’s hidden /bland agenda to risk the gaming industry for its own good (BR). You need consistently tell EA that when consumer spends $600 for console he will spend $200-$300 less for EA games compared with Xbox 360. And if PS3 is here without BR, there will be larger bases for EA contents instead of Sony movie contents.

1. HD-DVD vs BR.
In order for Xbox 360 to win, BR must fail. (Do not just look at two years ahead, look at 5years at least). There is no chance that BR wins the HD war while Xbox wins the console war.
A. the Xbox HD-DVD add-on must be able to work on PC too. So when people buy a HD-DVD add-on, they also get the HD-DVD drive for their PCs. Rather having a HD-DVD drive $150or $200 for both Xbox and PC than $100 or $150 for Xbox alone. There is a path to Xbox, from PC to HD-DVD, then get Xbox.
B. the price of Xbox360+HD-DVD add-on equal to PS3
C. in any case, do not lose money to sell the HD-DVD add-on

2. Wii must be the last console for Nintendo or keep them less than 10% market share
The Xbox 360 Core should be priced same as Wii (no matter it is $200 or $250). Pricing the Core at $200 or $250 will hurt MS bottonline, but just remember if Nintendo stays in the market with more than 20% market share, MS will be hurt more than Sony.
There is no way for Microsoft to earn (enough) money with 3 consoles on the market. Do not show sympathy to Nintendo; look at what Sony do with the controller. No matter how you respect Nintendo, Nintendo must go. Or at least let them know there is no chance to sell hardware for a profit.
Every body likes Wii, but the reality is that a consumer buying a Wii is likely not to buy a Xbox 360. It is better for them just sale the Wii controller and port games to Xbox or PS3 (better for customers, and Nintendo knows it). Nintendo knew that if Wii price is equal to Core, It would be disastrous (so they did not reveal the price at E3). MS just need to wait their price announcement and reduce the Core to Wii’s price.

On the other hand, MS should not reduce Premium price unless the PS “supply meets demand”.

3. Online feature needs improvement (this is a competition with Google too)
A. Core will have the ability to save online (64Mb), rather than buying the Memory. Xbox 360 Core with Silver account should be able to save game remotely, by pass the need to buy the memory. This feature will be ad-supported. While you saving your game, “Verizon wireless” commercial runs.
The perception is that Xbox is cheaper (though many people will still buy the memory). Even with bare $300, you can play and save next-gen games.
For the same reason, Core must be on sale in Japan for $100 less than the Premium
B. a big hard drive (100, 160, 250 G with $100-$200) with the ability to store multiple HD movies
C. a feature to download a movie using a PC to the Xbox’s hard drive any time (so one can download /rental the movie at work)
D. voice command at home. Pocket PC’s Voice command shall be ported to Xbox 360, so users can bypass the need to use remote control to see a movie. Just speak to the machine. “Video” “the lord of the rings”, the box will download (stream) the movie
E. A online movie store is ultimately needed to combat with Apple for digital formats.

4. Do Not change the two SKUs (very important for consumer perception). If you want something, do the add-ons.

5. The biggest competition for Microsoft is probably not Sony, but Google. There are two gateways to a consumer’s house, one through the PC with MS on OS, but Google 1st step online, another is through the living room (mostly TV) with no absolute monopoly.
Built a community of Xbox live is the key to battle both Sony and Google in the living room front.
A. give Xbox gold members 100 Gb of storage. Yes, 100 Gb not a typo. And also see 3.A. So than Gold members can download HD movies (in WMV formats).
B. xbox live member will be able to do online live.com search and many other stuffs.
C. treat Xbox live as the only advantage (beyond windows OS) in competition with Google. It is illegal to ban Google search on Windows, but It is legitimate to ban something else other than gaming on Xbox. Xbox can put MS back on driver’s seat.
D. with TV advertising effectiveness goes down every year, “private” community is the key to future (MS must grasp the chance to outrun all other competitors, Google, Sony, Apple, etc). MS will set a toll for anyone want to invade the Xbox live community.
E. one day there is a rumor that Google and Sony will merge, that is the day Microsoft should be proud of (i.e. either of them cannot compete alone anymore).
F. From the sense that Xbox is the future for MS, it is nothing to knock Nintendo off by spending a billion dollar more (see #2).

6. It never hurts to get exclusive contents for Xbox or Live (even commercials!)

7. For Piracy countries like China, Do not release Xbox 360, rent them to NET cafes. Over 80% of Net cafes activities are on windows gaming. Negotiate with third party developers and Rent Xbox and games to café owners. MS will earn millions easily.

8. It never hurt to hype “Xbox handheld” to squash PSP.

9. Establish “MS financial service for interactive entertainment”. This arm is to support third party or indie developers to develop content for Xbox and Windows platform. This is the future. Just like GMAC supports GM to sell cars, MS Financial is to support MS to sell Xbox and Windows. Got a game for Xbox? Borrow money against your house.

10. Xbox kills (Sony, Nintendo, Google and Apple). This is not just a war with Sony any more.

Wow, you've given this a lot of thought!  Thanks for sharing your ideas.  Nicely done.  What do the rest of you think?  

Marketing thought

To implicate that PS3 is a copying cat, yet Xbox is innovative, live, HD gaming, etc.

1. find a true copy machine looking like PS3

this one
http://www.officemax.com/max/solutions/product/prodBlock.jsp?BV_UseBVCookie=yes&expansionOID=-536907390&prodBlockOID=537213056

2. a TV commercial
A guy walks to a copy machine with a few pages

first page read "innovative"
but the copy machine prints a logo of Xbox 360, like this
http://cache.gizmodo.com/images/360logo.jpg

second page read "HD gaming" (or whatever Sony says about PS3)
but the copy machine give a logo of Xbox 360

Third page read "live"
but the copy machine give a logo of Xbox 360

Final message
"You don't need a copy machine to have fun"
(imply PS3 is a copy machine. Getting a truly onsale copying machine to do the commerical is the key to avoid law suit).

I am no marketing genius, but as an assistant professor, I am offended by Sony's decision to draw BR into the console fight. (We probably all know, if Sony give up BR and provide a similar priced product as the Xbox, it is extremely hard for MS to win the console war. But Sony did not stop there, they want more, they want higher magin by including the BR so they can get a toll for every future movie disc.)