On November 10, Kevin McCarthy, the CFO of Microsoft’s (MSFT) Xbox business segment spoke with analysts at the BMO Digital Entertainment Conference to highlight “the transformation of Xbox from the gaming console to an entertainment hub in your living room”; here are some of the highlights from the transcript and from the PowerPoint presentation:
At the end of Q1, Xbox had an installed base of 57 million; it is the number one console in the United States and is on pace to become the number one console globally this year.
Xbox Live, which Mr. McCarthy calls “our core asset”, was launched in 2002, and has seen a meteoric rise in membership over the past decade; it hit one million members in 2003, five million plus in 2007, ten million plus in 2008, twenty million members in 2009, and thirty-million plus as of 2011.
As noted by Mr. McCarthy, part of the explosion in membership since 2008 is directly attributable to the increased breadth of the Xbox as an entertainment hub as opposed to a gaming console:
“In 2008, we introduced the next Xbox experience. This is where we brought the first vestiges of entertainment to Xbox. You can see the difference that that has made to the adoption curve of our product, moving from 13 million members to the 35 million members we have on the service today. And, in addition to that, it has moved beyond gaming. As you can see from the stats, over one-third of the time online in the U.S. for LIVE is now spent in entertainment applications not gaming. And that has grown over 100 percent in the past year.”
As of this week, Kinect is a year old; with time, the library and selection has improved, with 75 Kinect games expected to be available at the end of this holiday season, over four times the library that was available last year. However, the reach extends well beyond gaming; while it is still in the early stages (240 applications for the pilot program to date), the future is bright for Kinect applications outside of the living room.
The company also announced that this holiday season they are launching a revised user interface (UI) experience, which is based on the Metro design principles featured in Windows 7 phone and which will be a part of Windows 8 (expected release in 2012); essentially, Microsoft has an opportunity to expose 35 million-plus consumers to the interface of Windows 7 phone and Windows 8 and potentially lock them into the ecosystem in the search for compatibility across multiple devices.
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