Fast Company

Microsoft Marketing Misses

Tonight, at midnight, Microsoft's new Xbox 360 gaming console will be launched around the country. It's a critical first step for Microsoft, which has said it expects to move as many as 3 million of the new consoles in the coming three months. Microsoft's big midnight launch last year, for flagship game Halo 2, was a clear marketing success. The demand for that title was so high that the game rang up $125 million in first-day sales, a record in the booming entertainment industry, according to Microsoft. (By comparison, the fourth Harry Potter film just took in $101 million, over an entire weekend). Will Microsoft break its earlier record?

Seems like a long shot. The 360's hefty price-tag, $300 for the core system or $400 with a hard drive and extra accessories, will reduce the number of willing purchasers. Couple that with the rumor going around that Microsoft is intentionally limiting the supply of consoles to ensure they sell out, and it seems that "Halo 2"-type success may be much harder to come by.

If that strategy seems self-defeating, Microsoft may be shooting itself in the foot with other aspects of this launch too. The television marketing has been badly handled. One spot shows teenagers jumping rope double-dutch. Another shows dozens of kids in a water balloon fight. The Xbox 360 logo appears at the end. The logo surprised me the first time I saw it. How can this be? There are no shots of the sleek machine, no video of the high-definition graphics. It's just kids playing. While I understand the message, large numbers of teens playing together as a metaphor for the 360's robust online community, I don't think the ads are effective in selling the system.

That's not a good start toward creating momentum and establishing the next generation of gaming.

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21 Comments

  • Terri Larson

    And speaking of geniuses – who at Microsoft decided to hype the Xbox 360 this Christmas season knowing full well the warehouse was basically empty? What soul was so removed from reality and actually thought this was a good idea? Sunday morning Best Buy at Coral Ridge Mall got in their second shipment. They received 24 Xbox 360s. Twenty-four. Mall security said they wouldn’t allow a line to form until 4 A.M. The game would go on sale at 8 A.M. It was 2 degrees outside.

    I have to congratulate Best Buy on handling it well, however. We’ve all seen the national news items of people stampedes to get sale priced computers this holiday season. Best Buy simply hands out 24 tickets to the first 24 in line. If you show up and you’re 28, guess what – you can go home and back to your electric blanket.

    Is someone somewhere at Microsoft giggling at this? Do they not understand that Santa is going to disappoint a gazillion kids this year? That besides Santa’s dilemma, not many parents can leave their homes at 2 A.M. to stand in a line outside that isn’t supposed to form until 4 A.M. in 2 degree temperatures?

    While it appears to be very poor planning on someone’s part, my guess is that it was intentional. I haven’t heard any explanation as to why you’d nationally market an item, one that you know will be popular, when you don’t have any available for sale. What I do know is that the 16 year old in my home has wanted one for a long time, has worked and saved his money to buy one, and can’t. He’s done all the right things, but it’ll likely be spring before they’re on the shelves. While I could preach to him about how he shouldn’t covet material things, I’d rather gripe about some executive who’s made a poor executive decision causing Santa and parents a bit of angst during the season of supposed happy, happy, cheer, cheer.

    That executive or committee or whatever, had better watch out, though. Santa sees and knows everything, and he doesn’t like to be set up for failure. His warehouse has plenty of coal, and he’s a very capable winter weather driver. He knows how to drive to conditions, and will be able to deliver his coal in a timely manner.

    Parents everywhere can smile with this knowledge.

  • Xrew

    I didnt like Microsoft`s television marketing too. Games becames same media a product as well as cinema and music. The orientation only on childrens is main mistakes of this marketing

  • Jon

    Whether the marketing was a success or not does not necessarily have an impact on product sales. If people want the product bad enough, horrible marketing will not deter people from getting it. I am not saying that the commercials were a success or not, because I have not seen them. It is true that commercials don't need to have a direct bearing on the product to be effective; it's called "emotional marketing." That's a fact. Whether MS used this effectively or botched it, I am not sure. Will it sell well? Yes.

  • Brad Windecker

    I agree with Kevin. I have seen the jump rope ad repeatedly, and didn't even remember it's for XBox. The ads do not depict the benefits of shelling $300 for a new system. The in-store display in Target on the other hand was very enticing. Mainly because it actually showed me what the 360 could do.

  • Talon

    Just because something is "selling like hotcakes" doesn't mean that it is "an overwhelming marketing success."

    It is entirely possible that the marketing campaign has had a negligible or even negative impact on sales. You can't really tell without conducting the same 360 release without marketing, a test which can't really be accurately done, only simulated.

    As a casual gamer I've learned about the 360's specs from online articles that I stumbled across (which probably were marketing driven) and consider it well priced for the features you get (I also currently used Media Center) and will probably buy one when they are easily available. I have exclusively played games on the PC and have never owned a gaming console. My reason for purchasing the Xbox will have very little to do with marketing and everything to do with value and use.

    Up until now I have seen my friends play on game consoles and have not been sufficiently impressed to purchase one. If a great game came out on a console (such as Halo) I would simply wait until it came out on the PC. If it didn't no big loss, as there are plenty of games to play on the PC.

    However, if I have to wait until about the PS3 release time to reasonably purchase a 360 (I'm not interested in paying more than msrp or spending time waiting in line to pay msrp), then I will have to seriously look at the PS3 and see if it will be a better choice.

    I think the demand now is from hardcore gamers who certainly are more prevalent than they were even two years ago. We'll have to see how successful it has been at the end of next year.

    BTW, I haven't seen a single video ad for the 360.

  • Jack

    I agree with your comments. I am a avid gamer and was looking forward to purchasing a system sometime over the holiday season. When I discovered that Microsoft was intentially holding back on units I questioned this strategy. To me it was simple. If there is a great 'buzz' for your product already created and demand is high, why wouldn't you want to distribute as many systems as possible?

    This is partially why the original Xbox was always playing catch up to the PS2. Sony was able to saturate the market with their systems 6 months before the Xbox launch. It seemed Microsoft was going to be able to have similar success this time around but as a result of this poor marketing ploy I feel it might back fire on them.

    Personally, I'm annoyed enought to wait for PS3 in the spring.

  • John Wilcox

    Apparently you guys don't know jack about marketing, as 360s are selling like super hot cakes all over. In fact, some are going for 3-5k on eBay.

    I call this an overwhelming marketing success.

  • Rob

    My wife and I looked at each other with bewilderment as kids pummeled each other (and by-standers) with water balloons.

    What was this? The intro of some drama? A commercial? For what?

    Even more confounding was the apperance of MSFT's XBOX 360 logo.

    Hope it made sense to the "core consumer" because, is sure didn't resonate with us!

  • Cody

    What a let-down for a FC blog post. I hate people who hate the man just to hate the man and I hate uneducated assumptions. "I bet nobody buys one, it will flop".....

  • Tord Magnussen

    I've worked with sales and marketing for over ten years now, and to my experience Microsoft are quite good at marketing their stuff.
    Believe me, I work at a competeing IT-company...

    Anyway, I think that Microsofts thoughts on their marketing campaign are simply this; Who wants the Xbox under the Xmas-tree?! The kids.Who pays for it?! The parents.

    The parents don't really care about three CPUs, great graphics and oodles of fancy features. They are told what they want to be told, a story of simpler times where kids play together and have fun. Simple, innocent, peaceful fun...

    In my humble opinion I think it will work, cause no matter what they do wrong over there at Microsoft they always get people to buy their stuff...

    And it's not because of lousy marketing....

  • mahendrakumardash

    A steep rise brings in expectations and in rarest of the rare cases,the trend is maintained.

  • mahendrakumardash

    The graph and expectation level are high in the beginning.The important factor is whether it remains steady or shows decline.Market is very sensible to so many things.Ultimately it is the market that will decide.A steep rise then a steep fall is not unusual as well.

  • Xboxer

    the console launch today is focused on hardcore gamers...when they see the ads, they understand...and even casual gamers get it...why do u have to peddle a product in an ad. just to make sure it sells...

    what Microsoft is emphasizing is the essence of Xbox 360...not the hardware itself...but WHAT IT REPRESENTS...and in my opinion that's good marketing...

  • WALTER RICHARDSON

    I believe the launch is doing just fine. Consider this event Microsoft's Normandy Invasion.
    An invasion that is more like a counter-attack to avenge Sony's PS2 dominance of the video-game universe.
    Like Paul Revere, with his three lanterns, Bill Gates and MS have launched the 360 on 3 continents.
    THE LIVING ROOM AND ECONOMY HE SAVES MAY BE YOUR OWN.

  • EcinPC

    "Seems like a long shot. The 360's hefty price-tag, $300 for the core system or $400 with a hard drive and extra accessories, will reduce the number of willing purchasers." You are so wrong. Easily 90 Million in sales. $2000 bundles got sold out quick @ gamestop.com.