Doing the Math: What Xbox Momentum Means for Advertisers

Since we started experimenting with advertising on Xbox in 2007, I’ve raved to just about anyone who would listen about its potential for advertisers to reach a broad and growing audience. But sometimes even I, one of the biggest cheerleaders for the business, am surprised by the success of Xbox. The numbers we announced at CES this week are the best example of exceeding my already high expectations. The most recent audience figures confirm that Xbox 360 and Kinect have reached a point of critical mass. Consider these numbers: 50 million consoles sold worldwide, and eight million Kinect sensors sold since its recent launch in November. And there are now 30 million active Xbox LIVE members—a number that will grow by at least one by the time you finish reading this sentence, because a new member joins Xbox LIVE every two seconds.

In fact, just 18 months ago, the Xbox LIVE subscriber base was 20 million. I believe there are two reasons for this phenomenal 50% growth.

The first are the awesome, substantial new Xbox LIVE service offerings, some of which were announced at CES:

• Kinect and Netflix: while Netflix is increasingly ubiquitous, there will be only one place to experience it controller-free in the living room, and on the biggest screen in your home—through Xbox LIVE. Just imagine, no more searching for the remote between the couch cushions. Soon you’ll be able to control your Netflix experience with voice or gesture – the natural way.
• More controller-free content: A Hulu Plus subscription service to Xbox LIVE will be available in the United States later this spring, so Xbox LIVE members can instantly watch the full, current and back catalogued seasons of popular TV shows, in smooth streaming HD, of course.
• Even deeper audience engagement: time spent on the Xbox LIVE service continues to grow, and change—and it’s not just gaming. Consider:
  • Xbox LIVE members are each spending almost 40 hours per month on the service.
  • Cumulatively, Xbox LIVE users are logging over 1 billion hours a month on the service.
  • In addition to gaming, the most loyal Xbox LIVE Gold members are watching at least an hour of television and movies on their Xbox, every single day. That’s more than 30 hours of digitally distributed television and movies every month.

Second, the Xbox console is now, truly a social hub. Recently, I predicted that “social-ism” would be an even bigger juggernaut in 2011 than it was in 2010. One of the many ways we are poised to ride that social tidal wave is with the announcement that, coming this spring, Avatar Kinect will allow Xbox LIVE Gold members to hang out with up to seven friends in creative themed environments — from talk-show and late-night comedy sets to tailgate and performance stage — and capture animated videos they can share online.

There comes a point in every successful business where it has an almost unstoppable momentum. In other words, it grows because it is growing. Facebook has achieved this kind of momentum in the past few years. The late majority has now signed up for and discovered Facebook because all of their friends have. These same social forces are, in part, what I believe is driving the growth of Xbox 360, Kinect, and Xbox LIVE.

I can’t stress enough how important and real this social aspect is. I saw it in action as recently as last month: My daughter goes to NYU, and shares an apartment-style dorm with four other roommates. Over the holidays, I installed a Kinect system in the commons space in their dorm. Suddenly, her roommates – two of whom are from San Francisco and one from upstate NY – have a way to “Kinect” with their families in full screen HD. After witnessing my daughter’s new age “phone home” experience, her roommates instructed their parents to buy Kinect and Xbox LIVE. Suddenly the Kinect system is in four new living rooms, and four more families have joined the Xbox LIVE community, a great example of how Kinect’s momentum has become viral.

In my next post, I’ll be sharing more on how advertising is working on Kinect and discuss some new ways marketers can take part. Meanwhile, I’ll keep crunching these momentous new numbers. I never knew math could be so much fun.

Thank you,

Mark Kroese, General Manager, Advertising Business Group, Entertainment & Devices Division

Follow us on Twitter @MSAdvertising | Find us on Facebook | Share your thoughts in the Forums | Subscribe