Spencer+Setters

=**Strategy Report**=  TO: Proximity video team FROM: Spencer Setters DATE: September 28, 2009 SUBJECT: XBOX360 Strategy Analysis

This is my Xbox 360 strategy report. The Xbox 360 is Microsoft’s 7th generation gaming console. The Xbox 360’s predominate feature is XBOX Live, which allows users to play games via the internet. The Xbox 360 is the second video game console created by Microsoft and has the ability to It was launched on Nov. 22, 2005 and has sold 31 million systems worldwide.

** Profile **

Microsoft is a computer software company that was founded by Bill Gates and Paul Allen in Albuquerque, New Mexico on April 4, 1975. Microsoft develops a wide range of computer software and has also developed the Xbox 360. The company is now based in Redmond, Washington and the current CEO is Steve Ballmer. Microsoft’s revenues come from Windows Operating Systems and Microsoft software. Microsoft also has various online information systems such as Windows Live and Zune, as well as the Xbox 360 and games that go along with it which yield profit but are not the company’s main source of income.

** Competitive landscape **

The competition of the gaming console market is driven by features. Today’s video gaming consoles are no longer just gaming consoles. The Xbox 360, PS3, and Wii all have the ability to connect to the web, stream content and play local video. The PlayStation 3 has an integrated blue-ray player while the Xbox 360 has an external HD DVD player, now discontinued. However, physical capabilities are not the main concern of consumers. Web technologies and how users can interact with them is the primary factor behind system sales. Despite Xbox 360’s lack of built in blue-ray, WiFi, and customization, it has sold over 31 million consoles to date. PS3 expects to sell 13 million consoles total this coming holiday season. Microsoft still has its work cut out for itself because the Wii is in a completely different league with over 50 million game systems sold because of its revolutionary gaming interface.

** XBOX360’s strategy **

Microsoft continues to fight the substitution of its products by relentlessly upgrading the technology inside the XBOX Live subscription. Instead of online game-play, XBOX Live now offers video game downloads, on-demand video features, and the beginning of integrated social networking. For example, Xbox 360 users will soon be able to sync twitter to their console. In an attempt to increase sales Microsoft has reduced the price of the Xbox 360 console by $100 in preparation for the holiday season to adjust buyer’s demand of the product. This is following a similar move by Sony to cut the price of the PS3 for holiday sales. Nintendo has no plans to cut the price of the Wii. Some new world will control the force between TV and Internet. Traditional cable television will be replaced by internet protocol television. Microsoft is a company in the position to achieve a foot hole in the new marketplace. Microsoft is trying to make itself the leader in the new industry, the problem is nobody is sure what the new marketplace will look like. The first step is capturing the minds of Generation Y.

** Gen-Y implications **

What compels Generation Y to connect to the internet via their televisions is the ability to play interactive games while being connected to social networks. The more computer-like gaming consoles become, the more Generation Y will be attracted to them. However, the Xbox is more of an entertainment console than a computer. Microsoft’s has a few other challenges as well. The Xbox 360 is branded a gaming console rather than an entertainment system. The Xbox 360 could invade the world of cable’s on-demand capabilities as well as products like TiVo. Another challenge facing Microsoft is the Xbox 360’s form of game-play, traditional, with a controller. Wii’s revolutionary game play has set Nintendo ahead in the gaming world. Microsoft is planning to capture Wii fans with Project Natal. Project Natal is a new way to play, with no controller at all. This appears to be Microsoft’s response to Nintendo’s “Wiimote”. The challenges that Microsoft will face in the future are the rate at which technology advances and how they can use it to their advantage. The two major competitors have existed long before Microsoft’s gaming division and it takes a company like Microsoft to enter the gaming console industry. The Xbox 360 has captivated Generation Y and will continue to do so. Whether Microsoft can keep the following or also capture the minds of Generation Z remains a business mystery. Whether Gen Y users will adopt the Xbox 360 at their primary source of new content depends on whether or not Microsoft can offer them innovations that captures the minds of those hypnotized by social networking.

__ Reference __

IndieGames. (2009, November 30). December 2007 Video Playback FAQ. Retrieved September 25, 2009 from http://web.archive.org/web/20080213124920/http://blogs.msdn.com/xboxteam/default.aspx Miers, Paul. (2009, June 7). Retrieved Sept. 23, 2009 from @http://5668264795785045011-a-towson-edu-s-sites.googlegroups.com/a/towson.edu/engl-317/memo-2/sample-strategy-report---tivo/TiVo_strategy_report.pdf?attachauth=ANoY7crof_SkY8ajLPC2fCr9wx-HymdJ8sCEJpzzQj-jBjrxshJ6YbGunqBjLkdLUpcThbjWqNBay45z7xbPbzoYXv9byu4UdoFY7hFSkcpQ8upur6kGH-_ukkTjUXxOxX5bPwO2piNio4Uc7lTlas6XOPH1Fx1EkotXDMyJJu81NxeuR4yhvvxPUOqxK4aZQ_w4QSMTtV7ANpDBXUO5uj0ROwjVlmKL92CMCI1g6dLCxx41wmJcMXKg9e_Ao0X_Dosz4jh3gg7a&attredirects=0 Paul, Ian (2009, September 25). Game Console Makers Gear up for the Holidays. PCWorld, Retrieved Sept. 26, from @http://www.pcworld.com/article/172635/game_console_makers_gear_up_for_the_holidays.html Savitz, Eric (2009, August 27). Microsoft To Cut High-End Xbox 360 Price By $100. Barrons.com, Retrieved Sept. 25, 2009, from @http://blogs.barrons.com/techtraderdaily/2009/08/27/microsoft-to-cut-high-end-xbox-360-price-by-100/ Tartakoff, Joseph (2009, September 15). Industry Moves: Microsoft Interactive Entertainment CVP Kim To Leave. paidContent.org, Retrieved Sept. 25, 2009, from @http://paidcontent.org/article/419-industry-moves-microsoft-interactive-entertainment-cvp-kim-leaves/ Thorsen, Tor. (2009, August 27). $299 Xbox 360 Elite official, Pro ‘phased out’. Retrieved September 25, 2009 from @http://www.gamespot.com/news/6216343.html?tag=recent_news;title;5 Wikipedia. (2009, June 6). Retrieved Sept. 25, 2009 from @http://en.wikipedia.org/wiki/Xbox_360

=**Blog Proposal** =  TO: Proximity video team FROM: Spencer Setters SUBJECT: Blog post proposal DATE: Oct. 26

I propose that the Proximity video team creates a blog post on the obsolescence of cable television and the emergence of the internet protocol television. This post can be used to identify which companies have best the positions and strategies in the new emerging market of IPTV.


 * Rationale **

IPTV will be the new way in which video enters the home. IPTV can deliver digital television by three different means: 1) live television, 2) time-shifted programming, and 3) content on demand. Generation-Y has tuned out of the top-down model of communication. Gen-Y doesn’t listen to newscasters or men in grey suits who just so happen to be on television. The YouTube generation is a hard target market to reach for businesses and governments. Streaming television is becoming increasingly common. Apple, Microsoft, Sony, Google, Netflix, Bit Torrent, and TiVo all have the potential to become the company that the world turns to for communicate with Generation Y.


 * Sources **

I recommend that the video team organizes the post around the following two posts: Seeking Alpha’s blog: __Internet Television: Who Will Win the Day__ which focuses on business intelligence and emerging markets and the second blog post that I recommend that we use for the blog post is IPTV-Industry’s post titled __Internet TV: Communicating in the 21st Century__.

@http://seekingalpha.com/article/28689-internet-television-who-will-win-the-day

@http://www.iptv-industry.com/ar/19d.htm

=Report proposal = 

TO: Proximity Video Team FROM: Spencer Setters DATE: November 25, 2009 SUBJECT: Proposal for report on Xbox360

Xbox 360 is a key player in the video market due to its most notable feature, the Xbox Live subscription, which gives the subscriber the ability to download games, view trailers, TV shows, and movies. Xbox 360 is now attempting to expand from the cliché branding as a video and game console into other new social and entertainment features. I propose to write a report on how Xbox 360 is positioning itself to become the world’s number one portal for broadband entertainment.


 * Need**

Game consoles, game rentals, movie rentals, internet browsing, and social networking are all continuously integrating themselves into each other.

· Netflix offers movie rentals on the Xbox 360 and PS3 while Blockbuster offers video game rentals on the Wii.

· Game systems can be linked to an external hard drive, network storage, or even a computer on the same network to watch videos and play music from.

· An internet browser is already on the Wii and there is a rumor that PS3 will replace its mediocre browser with Firefox

· Facebook has been made an application on the PS3. Xbox 360 also has a Facebook application for the Xbox 360 along with a Twitter and Last.fm

There is still a noticeable line of distinction between video game consoles and computers. Not a single video game system can do everything that a computer can do and vice versa. However, video game consoles are bridging the gap between entertainment systems and personal computers with the addition of features only previously seen on PCs.

Clients of Proximity who wish to target Gen-Y consumers need this report to understand the role that the technology inside current generation video game systems will play in allowing them to deliver interactive as suited to the new video landscape.


 * Topics**

The proposed report, “Xbox 360: The PC Hybrid,” will cover the following topics:

· Video game consoles becoming hybrid PCs;

· The integration of streaming video applications in game systems;

· The integration of applications for web browsing and social networking in game systems;

· The future of interactive, contextualized advertising.


 * Sources**

The following items are key sources for the report.


 * Hachman, Mark. Microsoft Sees ‘Natal” as Your Next TV Remote (2009, November 11).**
 * PC Magazine. Retrieved November 23, 2009 from PCmag.com.**

Hachman argues that the controller-less Project Natal technology being developed by Microsoft will replace the remote control on Xbox 360 and even televisions. Hachman reports that we are not in the golden age of television, game consoles or the internet because, Xbox general manager, Marc Whitten reports, “five years from now I don’t know that you’ll be able to tell the difference between those worlds.” Natal will be a remote control that recognizes the users in the room and identifies the content in which they are interested in.


 * Kane, Yukari Iwatani. Beyond Gaming: Watching TV on Your Xbox (2009, November 23).**
 * The Wall Street Journal. Retrieved November 23, 2009 from The Wall Street Journal.**

Kane reports that video game consoles are “evolving into multimedia home-entertainment devices as manufacturers add nongame features.” Microsoft began offering video streaming services through Netflix and Sony’s PS3 had its own streaming video service. Xbox will now have a feature to stream music as well as video via Last.fm. Also, high-definition movies will be available for download through the Zune marketplace. Microsoft has reported that one million Xbox Live Gold subscribers had active the Netflix application within the first three months of its launch.


 * Oliver, Sam. Microsoft looks to combat Apple globally with Zune content (2009, November**
 * 16). Apple Insider. Retrieved November 23, 2009 from AppleInsider.com.**

Oliver reports on Microsoft’s plans to compete with Apple globally by introducing Zune on its Xbox 360 game consoles in 18 markets worldwide. Zune is a digital movie service that streams high definition video instantly. The acquisition of licensing agreements such as Zune has slowed the expansion of Apple iTunes movie sales. Xbox 360 has no plans to use Zune hardware to extend the high definition movie service being that the console is the hardware.


 * Sullivan, Laurie. Microsoft Targets Television Advertisers for Xbox Live, Embeds Nielsen**
 * Measurement In-Game (2009, November 19). Media Post News. Retrieved November 23, 2009 from MediaPost.com.**

Microsoft’s Xbox Live advertising group has been courting television advertisers in an effort to expand its game console service into a cable television station. Microsoft unveiled the first pilot Thursday on the second season of the Xbox Live show “1 vs. 100.” The test will embed Nielsen’s traditional TV and video measurement tool in the game to identify demographics of players. Advertisements are moving from traditional TV ads to being embedded into the Games themselves. Mark Kroese, general manager of Advertising Business Group at Xbox says these ads can reach about 20 million people.


 * Wittmershaus, Eric. Impressions: Facebook, Twitter on game consoles (2009, November**
 * 20). PressDemocrat.com. Retrieved November 23, 2009 from Google News.**

Wittmershaus reports that “the Xbox360 and PlayStation 3 have both broadened their social networking capabilities” by incorporating Facebook application on their consoles. Xbox 360’s application is a limited version of the Facebook page one would see on their browser. However, Xbox 360 incorporated a feature in the application that lets you view slideshows of your friend’s pictures. The PS3 has no special feature like this. Instead you can view Facebook with the integrated web browser and link your account to the website so that when you are watching a video or buying something from the online store, your Facebook account will be updated. Twitter is a one page application that lets you read and post to twitter just like the web based version.

=Team conference presentation proposal =  I would like to propose the following topics for the conference presentation:

1. The video team will mention how traditional cable television is dying and being replaced with "what you want, when you want it" video and entertainment choices.

2. The video team should mention the position that companies such as Microsoft, Sony and Nintendo have in the world of real time video distribution.

3. The video team can discuss the battle between OnDemand features of current cable television versus true IPTV such as YouTube streaming through television.

4. The video team might be able to attempt to answer the questions as to how online streaming video services will eventually pay for their worth rather than be supported by large companies attempting to grasp a hold on a future competitive market.

= =  =Sales Letter =  December 9, 2009

Mr. Tim Chen, Director of Marketing Bridgestone Corporation 535 Marriott Drive Nashville, TN 37214

I enjoyed talking with you yesterday at Proximity’s Next Generation Media seminar regarding Bridgestone Corporation’s need to promote its brand to Gen Y consumers. Enclosed you will find a prospectus for the report I mentioned describing how broadband video is replacing cable television.

As for yesterday, you informed me about how Bridgestone Corporation feels the need to establish its brand with members of Gen Y before becoming key players in the automotive market. I believe Proximity can work with you to devise a comprehensive campaign that uses on-demand media and social networking to achieve that goal.

We can provide you with customized survey and focus group results to help shape Bridgestone Corporation's image as a progressive, green company. Our faculty consultants can advise your sales force on how to position new products, and our production teams can make multi-platform ads that appeal to Gen Y. In addition, we have trained student marketers who can promote Bridgestone Corporation and its product on online streaming video sites and on demand video. Proximity has done research in regards to the effectiveness of IPTV as opposed to cable television. Our findings are that Generation Y is spending less time watching television and more time watching streaming video online.

I invite you and your staff to join us at Proximity’s Towson office for a special focus group session on Bridgestone’s Gen Y brand image. After that session, you can meet with members of our group to discuss how Proximity can help you meet your marketing goals.

Sincerely,

Spencer Setters Associate Media Analyst

**//Proximity Reports //**  ||  ||  //connecting with Gen Y using on-demand media // ||^  || **IPTV: How Broadband is Replacing Cable ** Spencer Setters  //<span style="font-family: "Arial","sans-serif";">Internet Protocol Television is the substitute medium for video entertainment shown by the diminishing popularity of traditional cable television. // || <span style="color: #333300; font-family: "Arial","sans-serif"; font-size: 13.5pt;"> <span style="font-family: "Arial","sans-serif";">Generation-Y has tuned out of the top-down model of communication. Gen-Y doesn’t listen to newscasters or men in grey suits who just so happen to be on television. The YouTube generation is a hard target market to reach for businesses and governments. Streaming television is becoming increasingly common. Apple, Microsoft, Sony, Google, Netflix, Bit Torrent, and TiVo all have the potential to become the company that the world turns to for communicate with Generation Y. <span style="color: #333300; font-family: "Arial","sans-serif";"> <span style="color: #333300; font-family: "Arial","sans-serif";"> <span style="color: #333300; font-family: "Arial","sans-serif";"> <span style="color: #333300; font-family: "Arial","sans-serif";"> || <span style="color: #333300; font-family: "Arial","sans-serif"; font-size: 18pt;"> <span style="font-family: "Arial","sans-serif";">In order to get in touch with Generation Y, companies will now have to employ need techniques to reach them other than television advertisements. Traditional cable television is dying and being replaced with "what you want, when you want it" video and entertainment choices. Companies such as Microsoft, Sony and Nintendo have positioned themselves in the world of real time video distribution. <span style="font-family: "Arial","sans-serif";">This report shows how streaming video sites and game consoles are evolving into the world’s number one source of video content which will include mainstream TV programs and movies. Top of the line video will be available legally via IPTV. <span style="color: #333300; font-family: "Arial","sans-serif";"> <span style="color: #333300; font-family: "Arial","sans-serif";"> <span style="color: #333300; font-family: "Arial","sans-serif";"> <span style="color: #333300; font-family: "Arial","sans-serif";"> ||
 * //__<span style="color: #333300; font-family: "Arial","sans-serif"; font-size: 18pt;">The problem __//**
 * //__<span style="color: #333300; font-family: "Arial","sans-serif"; font-size: 18pt;">The problem __//**
 * //__<span style="color: #333300; font-family: "Arial","sans-serif"; font-size: 18pt;">Proximity’s on-demand media solution __//**
 * //__<span style="color: #333300; font-family: "Arial","sans-serif"; font-size: 18pt;">Proximity’s on-demand media solution __//**
 * <span style="color: maroon; font-family: "Arial","sans-serif";">Available now at www.proximity.edu **