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Changing the Way People Buy: Physical to Digital on Xbox LIVE
Ben SmithDirector of Program Management Xbox 360 - Xbox LIVE - [email protected]
In the beginning…
Part 1:A simple story about a man and his horse…
And the people spoke…
and voted with their wallets
Lessons
• People will buy digital goods, even if they don’t have intrinsic value
• Most people would prefer in-game items that have value in the game
• People were/are still developing their digital-value instincts
• The is money to be made and customers to make happy
Part 2:Plastic guitars that mint money
http://www.joystiq.com/2009/03/26/npd-rock-band-surpassed-1b-in-retail-sales-in-north-america/
Experience + Microtransactions = $$$
• According to NPD, by March, 2007 both Rock Band and Guitar Hero passed $1B in sales.
• In 2008-2009 Rock Band topped Xbox 360 in:– add-on revenue– downloads– More downloads that the rest of the Top 10
combined
Lessons
• Existence proof that a viable business model in console gaming that relies as much or more on digital add-on sales than physical media
• Content matters, especially having content people love
• You can build a franchise online within console gaming
Part 3:The Map Pack Revolution
Call of Duty MW2 Stimulus Package
Lessons
• Digital is a real, viable channel on its own• Be prepared for unbelievable demand• Just because you aren’t worried about supply
chain problems, doesn’t mean you won’t have capacity issues
Part 4:Power of Pint-size People
Lessons
• People love to express themselves – it about “me” and “who I am”
• Be ok with being playful• The uncanny valley is not a fun place• Hardcore gamers aren’t immune from
expressing themselves if you let them “drive”
So what?• Future is very digital • Virtual is less virtual everyday • Still have a lot to figure out:– DRM policies and technology– Value/Price balance in mainstream markets– Interesting twists – scarcity, limited edition,
transfer, time expiration, rental, etc….– Fraud and other unfun topics– How micro can you go?
The Final Word
Thank you!