An interview with Microsoft about the 360 price drop

By Neil Vaughan - 10 Mar 08

The Xbox Community Network have caught up with Chris Lewis, Regional Vice President, Xbox Europe to ask him some questions about the Xbox 360 price drop in Europe.
So we’ve heard the great news about the reduction in the estimated retail price (ERP) for the European Xbox 360. Why are you deciding to do this now?
From long before we even launched the Xbox 360 we had a very specific plan to hit a number of key milestones in Europe, and our portfolio of games and features now offers the kind of mainstream entertainment experiences that secure wider appeal for the Xbox 360. It’s great to see that we’ve achieved our goals and made it to that critical mass, making Xbox 360 a mass-market proposition. That’s why this is the perfect time to reduce our ERP.
We’ve also seen from history that €199/£159 – which is the new ERP for the Xbox 360 Arcade console - is the price point where a console’s audience really begins to take off, and with these new ERPs in place we’re ready to bring more customers into the Xbox 360 family. For example. PS2 sold 79% of their total installed base after dropping price to this level. It’s an exciting move for us and I’m sure lots of new people will now decide that the Xbox 360 experience is perfect for them!

Over the past few months we’ve seen really strong sales from PS3 and Wii – are you trying to catch up by selling Xbox 360s off cheap?
Not at all. Like I’ve already said, the new ERPs are part of our ongoing strategy to open up the ultimate in high-definition gaming and entertainment to an even wider audience, with an offering for everyone. This is about giving even more people the opportunity to try out Xbox 360.

Tell us more about the overall strategy that you refer to.
No problem. From the beginning we’ve had a very deliberate plan to secure core gamers first, and then expand the market. I think we’ve done a phenomenal job of securing the gamer, with record-setting game attach rates and great growth on Xbox LIVE. But I think Xbox 360 also offers something for everyone. We’ve got huge titles like GTAIV, BioShock, Halo 3, more casual titles like Scene IT? and Guitar Hero, and then there’s Xbox LIVE Arcade’s quick and fun downloadable games, or if you’re in the UK, Ireland, France or Germany a selection of films for the whole family from Xbox LIVE Marketplace.

You also recently reduced the estimated retail price of the Xbox 360 HD-DVD drive. Are these two things connected? Should Xbox 360 owners be concerned about the future of their console?
Xbox 360 owners should not be worried at all – in fact, I think they should be more excited than ever about the future of their console! We’re committed to continuing to offer intense, immersive gaming experiences for gamers – but now we’re priced in a way that will allow new consumers to find out for themselves why we think Xbox 360 is the ultimate high-definition entertainment experience. This isn’t connected to any HD-DVD announcement whatsoever.

How do you think Xbox 360 is doing against the PS3 and the Wii?
I’ve said this before and I still truly believe that if someone offered me to trade places with any of our competitors I’d say no thanks. I won’t deny that competition is very high in this generation, but the race is far from over and we are confident we have a winning strategy. Our new ERP is just part of that plan.

So how many Xbox 360s do you think you will sell before the end of your financial year in June?
I’m afraid that we’re not announcing any guidance figures on Xbox 360 sales for a number of competitive and market reasons. But what I can tell you is that Microsoft recently announced the Entertainment and Devices Division reached profitability in the first half of the year driven by record-setting gains from Xbox 360 hardware and software sales. We’ve got a great story to tell about the success of the Xbox 360 – currently more than 17.7 million consoles have been sold, and Xbox LIVE continues to explode with more than 10 million members online to date. But I think the most interesting stat for me is that we have a record-breaking game attach rate of 7, so on average everyone who owns an Xbox 360 game also has 7 great games in their collection. That is the highest attach rate in this generation of gaming, and I think that says so much about the quality of our games, the quality of the overall experience, and the quality for the Xbox 360 community!

We’ve been hearing a lot about ‘broadening the audience’ and ‘opening up the market’. Do you think that’s a realistic goal for Xbox 360 and do you feel you’re making it happen?
Absolutely! We provide the largest next-generation collection of ‘3+’-rated games – there are more than 150 in all. We want to make sure that no matter who you are, what age you are, or where you’re from, Xbox 360 has the perfect selections of games for you. I definitely think we’re making that happen.

So what Xbox 360 games are you most looking forward to in 2008?
Oh wow, there are so many! It’s so exciting to be able to run through the massive games we’ve got coming, especially the next versions of great franchises like GTA, Resident Evil and the sports games like FIFA and Pro Evo. And of course, the Xbox 360 is going to be the only place to play the complete version of GTAIV with two exclusive downloadable episodes only available on Xbox LIVE Marketplace.
And I have to mention all the massive sequels to games which are already exclusive to Xbox 360! Of course, there’s Gears 2, which will be hitting shops this year. And with Fable 2 and Ninja Gaiden 2 also in the mix I think it’s pretty clear that this is another blockbuster year for Xbox 360.
Another thing I’m really excited about is our plans for the XNA community. We’re giving people the chance to create their own games and share them with the Xbox LIVE community, and I believe the whole XNA program is going to give Xbox 360 owners even more choices and opportunities to experience the broad range of the console.

Xbox has talked previously about the huge number of new Xbox LIVE subscribers who came online over Christmas. How many people are on LIVE now?
There are currently 10 million Xbox LIVE customers in 26 countries. We projected to hit the 10 millions member mark by July 2008, but we are delighted to announce that we reached our goal 6 months early! Of those 10 million members, roughly three-quarters of the Xbox LIVE community are male and one-quarter female, with new members added daily. Something I’m particularly proud of is the huge boost in female Xbox LIVE members, as that number has increased dramatically during the service’s five years. I think it’s another sign that we’re continuing to add the right features like Xbox LIVE Arcade, the Xbox LIVE Marketplace Video Store and great casual games to bring more and more people – men, women, kids and adults – to Xbox 360 and Xbox LIVE.

Thanks for your time Chris!