Commentary

Microsoft's Got a Live One

Microsoft this month touted its Xbox Live service at a game developer's conference in Britain, reminding everyone that the online gaming service, which has grown up quite a bit from when it was just a place to play "Halo," is burgeoning into what is sure to become a bona-fide, coveted media property. The big number announced at the conference was 60 percent--60 percent of Xbox 360 owners have activated an account for Xbox Live.

Sixty percent is an enormous number for the Xbox Live service--up from the 10 percent the original Xbox garnered. Marketers, developers, and other games-industry watchers can look at the Xbox Live attach rate as roughly analogous to broadband penetration--that all-important stat for advertisers looking to put up bandwidth-intensive advertising on the Web. According to eMarketer, U.S. broadband penetration will be about 37 percent by the end of 2006, and hit 60 percent by 2009.

A huge part of the popularity of Xbox 360 is the Marketplace, which allows users to download new game content for major titles, classic arcade games like "Pac-Man" and "Street Fighter II," movie trailers and demos. According to Sullivan, roughly 75 percent of connected users have used the Marketplace for over 5 million game downloads since the launch of Xbox Live Marketplace. Conversation rates for users who play for free and then buy range between 10 and 50 percent; the average conversion rate for casual games hovers around 2 percent.

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And Xbox Live is about to get a lot more expansive. Microsoft is providing previews of a service dubbed "Live Anywhere," which will allow users of the upcoming--and coming, and coming--Windows Vista, to access their Xbox Live accounts from their PCs, and play certain PC games, including the immensely popular "Halo 2," against their Xbox 360 counterparts.

Along with opening the Xbox 360 network to the larger Internet for users, Microsoft is planning to do the same for publishers and marketers, allowing them to integrate their own content into Xbox Live. Publishers will be able to draw content out from game feeds and link them into Web sites, and advertisers will be able to link into in-game ad campaigns run by Massive Incorporated, the leader in the in-game ad space, which Microsoft recently purchased.

If the cross-media campaign possibilities aren't becoming clear by now, chances are, you're not looking hard enough. An in-game ad campaign, run through Massive or arranged directly with the developer, could include components within a premium title's content, as well as on the Web and in the Xbox Live Marketplace. And the tracking possibilities offered by in-game ads through Xbox Live are impressive. Massive Incorporated allowed advertisers to know what time, for how long, and where gamers were viewing their ads embedded in-game, and that was before they began integrating their system with Xbox Live--which can collect still more demographic data about individual users.

Xbox Live offers marketers as dedicated an audience as television, the quick, easy action of e-commerce through the Live Marketplace, and the tracking and metrics of the Internet. As a way to reach the coveted demographic of men aged 18-34, it could be hard to pass up.

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