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MICROSOFT XBOX: THE BATTLE FOR GAMING SUPREMECY

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MICROSOFT XBOX: THE BATTLE FOR GAMING SUPREMECY

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    2. Introduction What is Xbox? Product Description Gaming Market Competitive Landscape Microsoft’s Current Marketing Strategy Recommendations

    3. What is XBOX? Xbox is an entertainment hub that provides users: High Quality Video Games DVD Player Internet Support Online gaming Web surfing, Checking E-mail, etc. Audio/Video System Create soundtracks Supports HDTV and TV resolutions up to 1920 x 1080.

    4. Product Specifications

    5. Market Size Total Gaming Market Size: $50 Billion, 2001 2001 total market served by Xbox: $18.5 Billion 2006 total market served by Xbox: $47 Billion

    6. Market Share The console market has few players Sony owns 45% of the console market Sega exited the console market this year

    7. Gaming Value Chain The value chain in the game industry A few strong incumbents are leading the market Content companies and console makers are creating the capabilities to control the consumer Content companies are creating platforms and consolidating to create economies of scale

    8. Top Competitors Sony PlayStation 2 Sony is the market Leader PS2 has entered market a year earlier than Xbox and GameCube PS2 has achieved critical mass Sony has the largest selection of video games PS2 is targeted at 18-34 year old consumer market Nintendo GameCube GameCube is $199 only Nintendo has historically successfully game brands Nintendo has most advantageous royalty structure GameCube is targeted at 7-16 year old consumer market

    9. Product Comparison

    10. Competitive Landscape

    11. Current Marketing Strategies Target Market Sophisticated gamers Men, ages 18 to 34 Consumers who want more than just games Pricing Console is priced at $299 Bundling issues Distribution Sell 1 to 1.5 million consoles by the end of the year Xbox will be available at most major retail outlets The product will be launched in Europe and Japan next year

    12. Current Marketing Strategies Cont. Supply Flextronics: regional Xbox manufacturing operations in Mexico Retailers started taking advanced orders in early September Partnerships The company has signed more than 200 of then world‘s top game developers and publishers to create Xbox games Marketing partnerships have been formed with Taco Bell and Sobe Communication $500 million worldwide marketing budget $111 million domestic this year Primarily print and television advertising Only $500k spent on online advertising

    13. Long Term Strategy Competing consoles run on different OSs Microsoft must ensure that Xbox, and more importantly, its OS, is the dominant standard. Keeping Xbox at the forefront of migration to PC Introduce new features closely related to PC to accelerate the console’s transition to a PC

    14. Positioning Strategy Xbox is positioned as possessing higher quality and more functionality than existing consoles

    15. Recommendations: 3 P’s Pricing: Increase price point $50, to $349 Aid in positioning as higher quality: “Price = Performance” Reduce loss per unit Non-Price Competitive signal to Sony and Nintendo Positioning: Target online gaming niche by focusing on Internet Gaming as the KEY differentiator Ability to improve prices as a result Dominate online gaming market niche Partnerships: Increase game development network Tap entertainment industry for band and creativity Online gaming developers

    16. Recommendations Cont. Distribution: Create Incentives for Retailer Increase margins on console and/or Video Games Develop joint promotion and advertising campaigns Communication: Focus communication of superior capabilities Specifications vs. Capabilities Co-Promote games More co-advertising online with e-tailors

    17. Questions?

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