Xbox's mass-market makeover

July 14, 2008: 6:10 PM ET
Xbox Live
A new interface and customized avatars gives the Xbox a Wii-like feel. Image: Microsoft

By Yi-Wyn Yen

LOS ANGELES - Microsoft's Xbox 360 is getting an image makeover. To appeal to the "casual" gaming audience, Microsoft executives on Monday said they are aggressively marketing the hardcore gamer console as a multipurpose entertainment machine to watch movies, TV shows, and listen to music.

The approach appears to be the latest tactic to compete with Nintendo's Wii, the top-selling video game console. As the E3 video game conference kicked off this week, Microsoft (MSFT) announced several exclusive partnerships with big media companies to deliver more movies and TV shows to watch through the Xbox. Gamers can now download any movie available on Netflix (NFLX) on the Xbox to watch on their TVs. The service is free for Netflix subscribers.

Microsoft has also teamed up with NBC (GE) and Universal Studios to stream hits like "Monk," "30 Rock," and "The Bourne Supremacy" in high-definition through the Xbox. "This is how we're fueling our growth with more entertainment choices," said Xbox executive John Schappert at a press conference in Los Angeles.

Schappert promises that the Xbox operating system will be easier to use. He unveiled a new Xbox Live dashboard that arranges the different categories in a more simplistic manner. The Xbox also introduced animated characters known as avatars - a feature found on the Wii - that players create to interact with Xbox Live's online community. Don Mattrick, who leads Microsoft's entertainment and gaming division, said the new graphical look of the Xbox will "drive console demand."

But will it drive the mass market to buy the Wii over the Xbox? Gaming analysts say that despite the new games and family-friendly offerings from the Xbox, the console still has a ways to go to convince soccer moms it's a better value. Microsoft cut the price of its older Xbox versions by $50 to $299 but plans to discontinue that model. It will sell a 60 gigabyte version for $349. The Wii retails for $249. "If Microsoft wants to attack the casual market, they need to get down to $249," said Todd Greenwald, a gaming analyst with Signal Hill Group.

The Xbox has struggled to crack the broad consumer audience the way the Wii has. Mattrick declared that the Microsoft would sell more Xboxes than Sony's PlayStation3 (SNE), the other console favored by hardcore gamers. Though he never challenged Nintendo publicly, Mattrick said the Xbox will "transcend to deliver to everyone."

Microsoft tried a similar strategy at the last E3 gaming conference when it introduced a new movie trivia game called Scene It that used a four-button controller that resembled the Wii controller. Said Greenwald, "[The Xbox] is trying to be too many things to too many people. It's not succeeding. I don't think the Xbox is getting the right message across to the Targets and Wal-Marts, where the mass market is."

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