We chat with Microsoft about what it means for Xbox.
Though Microsoft successfully pushed Xbox 360 out the door in North America, Europe and Japan by the end of last year, the launch hasn’t been without troubles. Supply shortages and a less than stellar start in the land of the rising sun have blemished the company’s otherwise ridiculously optimistic next-generation viewpoint.
This evening the company announced their second quarter earnings to the world, though not much was surprising. Microsoft’s Home and Entertainment division managed a $55 million profit last quarter, but encountered a $293 million loss this time around. Thing is, most of those are probably attributable to the Xbox 360 and the immense expenses required for the global launch.
Microsoft has confirmed selling 900,000 Xbox 360s in North America, 500,000 in Europe and something between 0 and 100,000 in Japan. Either way, it adds up to 1.5 million. The numbers are lower than Microsoft originally anticipated, and while Japan’s are unsurprising, Europe seem a little lopsided. In order to put all the numbers in perspective, though, we chatted with Microsoft’s Xbox global business manager Maroof Haque about what it all means.
“I think you may have even heard Peter [Moore, executive VP at Microsoft] say we would have liked to have more for Europe just because we did okay in North America but it’s still out of stock and Europe is just as bad if not worse,” he says. “We had to make allocation decisions especially when you’re trying to do a launch as complex and unique as we did.”
In Japan, Haque admits the adoption rate has been slow, even when compared to the original Xbox. The commonly cited problem has been a lack of games, something Haque agrees with and cites Moore’s strategy of a long-term focus. Not having Dead or Alive 4 admittedly hurt the launch of both Xbox 360 and likely Dead or Alive 4 as a result, he says Tecmo’s fighter isn’t Xbox 360’s defining moment – games like Blue Dragon and Lost Odyssey will be crucial to Japan’s future.
Another bullet point on the release was the reported four million downloads on Xbox Live, but the company’s not talking about what that means for their bottom line. Haque says those numbers may be released eventually, but in effect, Xbox Live isn’t just about the money involved – though it’s a part. “It’s both,” he says. “It’s great on both ends because if we keep people happy and engaged in the platform we think it’s more likely they’ll run out and buy games.
Xbox Live is unmistakably an integral and exciting gpart of the Xbox 360 experience, but unfortunately, many people can’t participate because they can’t find an Xbox 360. At CES, Microsoft announced Celestica as an additional manufacturing partner. Due to the complexity of Xbox 360’s components, however, consumers won’t be seeing the fruits of that partnership yet. Haque speculates two to three months before Celestica kicks into gear, and hopes people will be able to buy Xbox 360 without stressing by late spring.
In the meantime, many gamers are keeping themselves occupied with the original Xbox. Microsoft themselves doesn’t have plans to release any more games for the machine, though a number of third parties are still supporting the 24 million worldwide userbase, and manufacturing may be phased out after this year. “We’re still going to be selling this thing in 2006. We haven’t committed to anything beyond that,” he says. “The good news is that we still have publishing partners bringing great games.”
For the 1.5 million who are digging their Xbox 360s now, though, the problem is a drought of games. The barrage at launch was fantastic, but now people have beaten Perfect Dark Zero on all the difficulty levels and managed gold medals on all the Project Gotham Racing 3 challenges. Microsoft doesn’t have an issue with not releasing a first party game this spring, instead happily pointing to its third party relationships and preparing for a big holiday season.
“Gamers don’t care who’s making the games, they just want a great game. We have a pretty stong pipeline, he says. “When it cones to first party, first party can’t be rushed and we’re going to get the games done and they’re going to be really damn good when we get them done. I’m looking forward to a really strong back half of the year.
Xbox 360 will likely encounter a solid amount of success throughout 2006 as the only readily available next-generation machine, and while they’ve hit some financial roadblocks currently, Haque is thankful Microsoft is built like a tank. “The best part about Microsoft that way is that it’s an enormous company…,” he says. “They’re big numbers [the quarter losses], but big numbers in a huge pot still don’t look that big.”
Note: Source: www.gametab.com