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Microsoft and the Mass-Market

It's searching for it, but where should it be looking?

Dark blue icons of video game controllers on a light blue background
Image credit: Eurogamer

Published as part of our sister-site' widely-read weekly newsletter, the Editorial offers analysis of one of the issues weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to newsletter subscribers.

The first true price-cut of the new generation of consoles, which I explored a little last week, has done what you'd expect it to in the first few days - driven a spike in Xbox 360 sales, and given Microsoft a fresh angle for its promotion of the console. Sales were up 40 per cent over the weekend in the UK, and the new GBP 159.99 price point of the Arcade model has been heavily promoted - with a new marketing push focusing firmly on the new entry-level price.

One concept which has slipped readily out of the mouth of Microsoft's European Xbox supremo Chris Lewis in the wake of the price-cut is "mass-market". The Xbox 360 Arcade is now, after all, the cheapest console out there - undercutting Nintendo's Wii by a fairly significant GBP 20 margin in the UK.

As such, talking about mass-market appeal is fair - isn't it? After all, it's well-established that there are certain price-points at which consoles break out of the core gamer audience and start to flood the living rooms and bedrooms of less devoted game players. Are these not the much-vaunted "mass-market"?

Actually, while that's a common perception, it's also something of a falsehood. Price is only one of a number of sets of interlocking factors that influence a wider update of game systems - and even dropping the price of a system to under GBP 100 will make little difference if the system and its software aren't already attractive and desirable to a wide range of consumers.

The proof of that lies with the many, many consoles whose low price-points haven't suddenly attracted massive success. The GameCube is a recent example, a console which traded on hugely competitive pricing but ultimately failed to attract much more of an audience than Nintendo's traditional core consumers - most of whom would have bought the machine even at a higher price. Indeed, every console in history has eventually seen its price crash down through the GBP 100 barrier - but very few of them have become top sellers as a result, even when they significantly undercut their competition.

Price, then, isn't simply a matter of "cut the price, sell more units". A price-cut can provide a valuable boost and a broader appeal for a console that already has major sales momentum and desirability - but it will do next to nothing for a console that's stalled, or that doesn't appeal to a wide enough range of consumers.

The simplest comparison, perhaps, is to say that dropping the price of coffee machines might increase uptake among consumers who want one anyway, but couldn't previously justify the cost - thus creating an immediate sales spike. However, it won't do anything to improve sales among customers who prefer tea or soft drinks - if the product doesn't appeal, then the same product at a cheaper price won't appeal either.

The relevance of this to Microsoft's situation at present is obvious. While the Xbox 360 is by no means stalled in the market - and comparisons with consoles like the GameCube or Dreamcast are clearly unfair - it does have a problem in terms of the breadth of its appeal. It's an old drum and it's been banged many times in the past year, but the Xbox 360's biggest limiting factor right now is the perception that its line-up rarely strays from the safe core gamer genres of driving and shooting.

As such, simply being twenty quid cheaper than the Wii won't be enough to eclipse the appeal of the Wii. I don't doubt that the price-cut will be very effective in delivering a sales spike that lasts quite some time - and it will pay out handsomely once again when gamers make console-buying decisions around the launch of GTA IV. However, talk about reaching the mass market may be premature - because I'm not convinced that price was the barrier between the Xbox 360 and the mass market.