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OF THE GAME A BRAND AUDIT PREPARED FOR THE XBOX ONE Daniel Rivera | IMC 613 | West Virginia University

IMC 613 - Brand Audit | Xbox One

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OF THE GAMEA B R A N D A U D I T P R E P A R E D F O R T H E X B O X O N E

Daniel Rivera | IMC 613 | West Virginia University

A. EXECUTIVE SUMMARY

B. STATE OF THE BRANDBenefits of a Brand Audit.................................................................................................2An Introduction to the Market ........................................................................................2Market Share ..................................................................................................................2Distribution ......................................................................................................................3Line and Category Extensions ........................................................................................3Strengths of Microsoft’s Xbox One .................................................................................4Weaknesses of Microsoft’s Xbox One ...........................................................................5Strengths of Sony’s PlayStation 4 ..................................................................................5Weaknesses of Sony’s PlayStation 4 .............................................................................6Strengths of Nintendo’s Wii U .........................................................................................6Weaknesses of Nintendo’s Wii U ...................................................................................6Making the Xbox One Number One ...............................................................................6

C. BRAND INVENTORYBrand Positioning ............................................................................................................7Brand Elements ...............................................................................................................8Marketing Mix Analysis .................................................................................................12

D. BRAND EXPLORATORYTarget Market ................................................................................................................15Qualitative Research .....................................................................................................15Quantitative Research ...................................................................................................18America’s Toy .................................................................................................................19

E. BRAND POSITIONING PLANRecommendation #1: Understand Japan ...................................................................20Recommendation #2: Shore Up Europe ......................................................................21Recommendation #3: Speak Geek .............................................................................23

F. WORKS CITED

To Microsoft, and countless others around the world, the Xbox One brand far transcends a gaming platform. It gives friends and families the opportunity to connect in an alternate universe. One that allows them to be the hero of the story.Since launching the first generation Xbox in 2001, Microsoft’s goal has been to provide an unparalleled experience: one that is powerful, exhilarating, and cutting edge (“Rock meets Bill Gates,” n.d.). Now, 15 years and three consoles later, the Xbox One appears to be on the downward trend of its product life cycle. Meanwhile, the video game console industry is witnessing a drastic decline in sales. Emerging technology like smartphones and virtual reality are increasingly changing the way people play video games. As the world turns, so must Xbox. This audit seeks to assess the health of the Xbox One brand in comparison with its major competitors — Sony’s PlayStation 4 and Nintendo’s Wii U. As we look toward developing a sustainable path for the Xbox One, we must first understand our current market position as a challenger brand to the PlayStation 4. We will perform a Brand Inventory to examine the Xbox One’s existing brand messaging through its ongoing marketing efforts, and take a closer look at how consumers perceive the brand during the Brand Exploratory, which incorporates primary and secondary research from industry leaders like Nielsen. The Brand Audit will conclude with strategic recommendations to reposition the Xbox One brand as the choice of gamers.The recommendations provided in this Brand Audit are a product of hours upon hours of brand-centric research. Of primary importance, is the Xbox One’s inability to connect with the Japanese market. Though smaller in size than Europe and North America, Japan has played an integral role in the development of today’s video game industry. Earning the respect of these savvy gamers will have a profound impact on the brand’s perception among the gaming community as a thought leader. Europe on the other hand, offers a different kind of influence – purchasing power. After a botched launch and diluted international product release, Xbox One will need to rebuild confidence in this diverse group of people through on-time delivery and region-specific software. Lastly, the gaming community must be at the heart of the brand’s strategy. The Xbox One must put gamers first or else risk being number two.

Benefits of a Brand AuditHistory has taught us that strong brands endure the test of time. Kevin Keller a Dartmouth professor, author, and international expert on brands, explains that in 25 of the most popular product categories, 20 brands have maintained their leadership position for the past 80 years (Keller, 2013, p. 48). CNBC reported in April 2016 that Sony’s PlayStation 4 was outselling the Xbox One nearly two to one (Graham, 2016). As the console’s three-year anniversary approaches in November, it is a fitting time to analyze the strength of the current Xbox One brand and develop a plan to increase market share and sustain customers. Conducting a brand audit will help to provide a comprehensive perspective of internal and external brand messaging. This three-pronged approach

hinges on a brand inventory, brand exploratory, and brand positioning plan (Keller, 2013, pgs. 294-299). The inventory allows Xbox One to reflect on their brand’s messaging across a variety of spectrums, such as their logo, advertisements, brochures and packaging (Keller, 2013, p. 294). The exploratory engages consumers through a series of qualitative and quantitative assessments to offer a more detailed picture of how the brand is perceived by the public eye (Keller, 2013, p. 295-298). Insights garnered from these exercises are detailed at the conclusion of this document and can be leveraged to position the Xbox One brand in alignment with its target consumer (Keller, 2013, p. 298).

An Introduction to the MarketThe PlayStation brand has not always led the race. Neither has Mario and his Nintendo family consistently smashed the competition. The back-and-forth history of today’s gaming industry has seen a myriad of brands vying for market leadership; among which, Microsoft, Nintendo, and Sony have all managed to ascend to the top of the leaderboard.

Market Share In an attempt to follow up on the success of the Wii, Nintendo fired the first shots of

“ ...IN 25 OF THE MOST POPULAR

PRODUCT CATEGORIES, 20

BRANDS HAVE MAINTAINED

THEIR LEADERSHIP POSITION

FOR THE PAST 80 YEARS...“ - KEVIN KELLER

2

the eighth generation console war in 2012 with the release of the Wii U. With its motion-sensored controllers, the Wii managed to move bodies and product – selling more than 100 million units, making it Nintendo’s best selling console of all time (Makuch, 2013). Unfortunately for Nintendo, its successor would soon be overshadowed by the success of the PlayStation 4 and Xbox One in late 2013. A global sales report released in May 2016 by VGChartz — a video game business intelligence and industry research firm — reveals that PlayStation 4 holds a 54.5% market leadership position, selling more than 40 million units to date (“Video game charts, game sales, top

sellers, game data - VGChartz,” 2016). The Xbox One holds a 28.2% stake (21.1 million) followed by the Wii U’s 17.3% share (12.9 million) (“Video game charts, game sales, top sellers, game data - VGChartz,”

2016). An analysis of year-to-date statistics indicate further cause for concern, as the PlayStation 4 has gained more ground in 2016, advancing their leadership position by 12% (“Video game charts, game sales, top sellers, game data - VGChartz,” 2016). Xbox One on the other hand has experienced a 5% decline in 2016. (“Video game charts, game sales, top sellers, game data - VGChartz,” 2016). It is worth noting that the Xbox One’s appears to be far more appealing stateside, with its 39% market share running neck and neck with PlayStation 4’s 44% (D’Angelo, 2016).

DistributionThe Xbox One, PlayStation 4, and Nintendo Wii U brands are available in big box (Walmart, Target, GameStop, Toys “R” Us, and Best Buy) and online retailers throughout the United States and most major markets in North and South America, Europe, Asia, Australia, and South Africa. Each console however is sold using various bundle strategies. Xbox One currently offers a combination of 13 different bundles with limited edition themed consoles, games, varying hard-drive sizes, and special downloadable content. Both the PlayStation 4 and Wii U offer only three different bundles that include a game and exclusive downloadable content.

Line and Category ExtensionsBeyond games, leading video game console manufacturers have introduced several branded products to improve user experience. It has now been more than a year since Xbox One halted production of their Kinect camera and motion sensor. The decision to phase out the product, which

Figure 1: A look at how the console market stacks up.

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originally came bundled with the Xbox One, was a response to consumers who were unwilling to pay more for an accessory they were not going to use (Mendoza, 2015). Current Xbox One extension products include limited edition controllers, rechargeable battery controller kits, external hard drives, arcade sticks, headsets, and keyboards. Some of their more interesting partnerships include video game-toy bundles with big brands like Disney and Lego.Dating back to the late 1980s, Nintendo has created quite the reputation for introducing quirky branded accessories like the Power Pad and Zapper Light Gun made popular by the game Duck Hunt. Nintendo has expectedly continued this trend with their latest product, offering motion remotes, steering wheels, a Wii Fit U Balance Board, a modernized zapper gun and amiibos — NFC-powered figurines that wirelessly interact with select games (“What is an amiibo figure? - amiibo by Nintendo,” n.d.) and create a greater affinity with some of Nintendo’s most popular character mascots.Generally speaking, PlayStation’s extensions have been quite traditional — special edition controllers (including the not-so regular-rechargeable units), headsets, and a camera to interact with friends and command the user interface. Just recently, however, PlayStation 4 tapped into the virtual reality craze. The response to Sony’s announcement of the $500 unit was overwhelming. Pre-orders were completely sold out within minutes (Bolton, 2016). PlayStation’s virtual reality integration has the potential revolutionize gaming in the same way the Nintendo Wii’s MotionPlus controllers created an entire new genre of games.

Strengths of Microsoft’s Xbox OneThe third most powerful brand on the BRANDZ Most Valuable Global Brands 2016 list, Microsoft has strategically leveraged their brand equity with the Xbox since it was first announced in 2001 (“Brandz,” n.d.).

“ ...XBOX ONE IS MORE THAN

JUST A COMPUTER: ITS AN ALL-

IN-ONE ENTERTAINMENT HUB.“ Likewise, Xbox has played a critical role in Microsoft’s overall strategy of bringing an inexpensive computer into more living rooms throughout the world (Weinberger, 2015). But the Xbox One is more than just a computer: it is an all-in-one entertainment hub. The brand’s competitive points-of-parity are right on cue with its competition, featuring Blu-Ray playback, internet connectivity, on-demand video services like Netflix and Hulu, as well as downloadable content (Keller, 2013, p. 84). Xbox One users are also able to join forces with PC gamers via Windows 10 integration and the Xbox One SmartGlass smartphone application. Those looking to relive the past will find themselves right at home with backwards compatibility for all Xbox 360 titles. Xbox One owners are free to enjoy both the latest game in the Halo series along with its predecessors — exclusively on Xbox One. Creating and leveraging these established video game brands, like Forza and Gears of War, requires consumers to choose a side in the console war. Halo’s iconic Master Chief character has managed to rally a loyal army.

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Weaknesses of Microsoft’s Xbox OnePrior to its launch, the Xbox One was already the subject of countless rumors. Talks of a console that was ‘always powered on’, drew parallels to George Orwell’s futuristic big brother novel, 1984 (“Microsoft Xbox One integrated marketing: when admitting you were wrong can be a viable strategy - MarketingTango,” 2014). Subsequently, Microsoft’s announced that they would be releasing the next generation console without a physical drive, further aggravating gamers. Microsoft quickly reversed direction and apologized publicly to the many fans who complained through social media world. (“Microsoft Xbox One integrated marketing: when admitting you were wrong can be a viable strategy - MarketingTango,” 2014).

“ ...ITS LACK OF SUPPORT FROM

RESPECTED JAPANESE GAME

STUDIOS AND SECOND-RATE MULTI-

PLATFORM VIDEO GAMES TITLES HAVE

FAILED TO GARNER RESPECT...“ Just as Xbox One was able to improve its perceived weaknesses in the past, the brand will need to revaluate some of the known detriments affecting the product today. Xbox One is often thought of as an entertainment-first console (Balakar, 2015). Further, its lack of support from respected Japanese game studios and second-rate multi-platform video games titles have failed to garner respect from the hardcore gaming

community. It is also imperative for Xbox One to improve its hardware specifications in future renditions. Some critics believe Xbox One does not provide enough power for its retail price, especially when compared to Sony’s PlayStation 4 console (Tennant, 2016).

Strengths of Sony’s PlayStation 4The current market leader has played an instrumental role in welcoming gamers to the 21st century. Beginning with the PlayStation, Sony was responsible for building the bridge out of Super Mario World. Gamers everywhere were captivated by the on-screen adventures that more accurately portrayed the three-dimensional world they lived in; a world less colorful and whimsical. PlayStation is responsible for selling the two most popular gaming consoles of all time, the PlayStation and PlayStation 2 (Murphy, 2016). With the PlayStation 4, Sony looks to continue their historically strong market position. The PlayStation 4 is first and foremost a system for gaming purists (Tweedie, 2013). The system offers many popular entertainment media applications, while immersing gamers in an ecosystem that includes handheld and virtual reality gaming. Business Insider’s Steven Tweedie credits Sony’s narrow focus on gaming as its greatest appeal. The PlayStation 4 has its roots in Japan — a country rich in gaming culture. Japan has been responsible for producing some of the world’s most beloved video game franchises and consoles, among which is the Nintendo brand. (Desmond, 2014). By aligning their brand with this culture, Sony has positioned the PlayStation 4 as an authentic gaming experience.

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Weaknesses of Sony’s PlayStation 4Where the Xbox One wins big, the PlayStation 4 is found lacking. Console reviewer Dan Tennant suggests the PlayStation’s limited multi-function entertainment capabilities decreases the lifespan of the product. The PlayStation 4 lacks support for video chat programs like Skype for instance and includes only the most popular on-demand entertainment applications like Netflix and Hulu (Tennant, 2016). Niche streaming services like HBO and Crackle are currently not supported by Sony (Tennant, 2016). If consumers only have room for a single all-in-one system in their home entertainment system, the PlayStation 4 will leave them wanting.

Strengths of Nintendo’s Wii UNintendo’s Wii U continues the brand’s dominance in creating fantastical stories filled with lovable characters and kid-friendly content. The brand has an uncanny ability to engage a younger demographic while leaving the door open for older generations to reminisce on their childhood days. The Nintendo Entertainment System and Super Nintendo Entertainment System were likely the gaming consoles of choice for today’s target consumer (Lofgren, 2015). This connection gives Nintendo access to a special place in the hearts (and wallets) of many adult gamers.The Nintendo Wii U console is not much of an evolution from its predecessor, the Wii. Its key unique selling proposition is the Wii U GamePad, which gives gamers new ways to interact with their favorite titles. The Wii U GamePad taps into the tablet revolution, functioning as a touch screen controller and portable gaming device (“Features - Wii U

from Nintendo - features video and details,” n.d.). Relentless innovators, Nintendo is hoping the GamePad will stay in the hands of gamers wherever they go.

Weaknesses of Nintendo’s Wii UBut Nintendo’s new tablet controller has been the cause of some concern. The Wii U GamePad’s hardware requires third-party game developers to create games with the controller in mind from the ground up (Tennant, 2016). Development for such hardware is wrought with additional costs and labor requirements. As a result, classic game franchises enjoyed on Xbox One and PlayStation will never see the light of day on the Wii U. Another significant challenge Nintendo has battled for years is its lack of online sophistication. Their limited access network infrastructure makes it difficult to meet and sustain relationships with new friends and competition online (Tennant, 2016). It is also void of any textual- or voice-based communication methods (Tennant, 2016).

Making the Xbox One, Number OneIn its short history, the Xbox brand has proved itself a formidable competitor in the gaming universe. Unfortunately, only one console can claim the number one spot. An audit surveying the Xbox One’s current means of messaging and public perception will serve as the catalyst to reinvigorate the brand during this timely point in the product’s lifecycle.

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Brand PositioningJust a few months prior to the launch of Xbox One, former Microsoft CEO Steve Ballmer announced One Microsoft – a bold business strategy that sought to align an entire product umbrella under a single vision (Ballmer, 2013). Though in its early days the brand was determined to ‘put a PC on every desk and in every home’, the 21st Century was clearly about more than desktop computers for Microsoft (Ballmer, 2013). An unprecedented wave of new devices and product categories, such as tablets and smartphones, would make their way to an internet-crazed market. The Xbox One and its predecessors, the Xbox and Xbox 360, were just one of the brand families that Microsoft believed could help people realize their full potential (Ballmer, 2013).Technology today is rapidly converging. Armed with just a smartphone, users can stream movies and music, or chat face-to-face with their best friend stationed in Japan. With the Xbox One, Microsoft took a similar approach when introducing their console as an all-in-one home entertainment system. This decision would soon prove costly, as Microsoft quickly found themselves trailing in market share to long-time rival Sony (Sapieha, 2014). Microsoft learned that gamers felt abandoned by Ballmer’s One Microsoft strategy. Instead of focusing on backwards compatibility and the

independent game developer community, two trends popular among hardcore gamers, Microsoft touted the console’s multimedia integration capabilities (Sapieha, 2014). But it would not be long before Xbox One would invite dedicated gamers to ‘jump ahead’. Microsoft slashed the Xbox One retail price by more than a hundred dollars and announced the ever coveted backwards compatibility feature, giving users the chance to play their favorite Xbox 360 games on the Xbox One (Sapieha, 2014). Microsoft is giving gamers the control. Something they clearly have experience with.At the time of this brand audit, the Xbox One is currently the leading challenger brand in an industry dominated by Sony’s PlayStation 4. The video game industry research firm VGChartz estimates that Sony has sold 40.7 million PlayStation 4 units, for a 54.5% market share — nearly twice the amount of Microsoft’s Xbox One (“Video game charts, game sales, top sellers, game data - VGChartz,” 2016). It was announced this week that Microsoft will be releasing the new and improved Xbox One S, a revamped console that has the potential to reset the minds of gamers and start anew. As the Xbox One brand draws closer to the release of their new console in August 2016, conducting a thorough brand audit will prove to be a valuable measure in assessing the sustainability of the brand’s long-term success.

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Brand ElementsNameLeveraging the Xbox namesake gives the Xbox One an opportunity to capitalize on the success of its predecessors. The Xbox One name cleverly juxtaposes the console’s early beginnings with its future strategy. The ‘X’ in Xbox is a tribute to DirectX, a proprietary software used by Microsoft for high-performance graphics. The word ‘One’ draws its meaning from the all-in-one functionality of the console (“meaning of Xbox | The Economist,” 2005). Xbox Incubation Group Program Manager Jeff Henshaw said, “To us, One is really the embodiment that this becomes one device that addresses all the entertainment that you want to enjoy on your TV, and it brings it to you in a way that’s so simple…(Leibl, 2013)” Color PaletteThe bright Matrix-inspired green that once emanated from the center of the first generation console has been toned down for the Xbox One. In fact, the ultra sleek black console is completely void of any

green. Microsoft has instead decided to deploy a newer, more sophisticated green to ensure the console’s new brand identity is compatible with their 2012 rebrand (Weir, 2012). In her book Color: Messages and Meanings, color guru Leatrice Eiseman suggests that the color green emotes a feeling of fantasy, think leprechauns, dragons and more recently, Shrek (Eiseman, 2006, p. 39). This is precisely the world Microsoft desires gamers to conjure up when interacting with the Xbox One brand.Logo The Xbox logo consists of two elements: the sphere and the logotype or wordmark. The Xbox One logo is nearly identical to the Xbox logo, with the addition of the word ‘One’, as depicted in Figure 4. Both elements have been a staple of the brand since its earlier beginnings. The sphere is a strong three-dimensional shape, which can be used to communicate a new dimension or world. Using a custom typeface, Xbox One presents a clean wordmark and custom to add balance.

Figure 2: Nearly fifteen years after its unveiling, the new Xbox green shows a more mature side of the brand (“Xbox brand guidelines,” 2014).

Figure 3: The evolution of the Xbox brand logo (Logopedia - Xbox, n.d.).

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Figure 4: The current Xbox One logo (“Xbox One style guide by Sobia Farooqui - issuu,” n.d.)

The two logos appear to be used interchangeably. For instance, packaging for the Xbox One, games, and accessories feature the Xbox One logo. Oddly, the actual Xbox One console is marked with the Xbox logo as displayed in Figure 3. Even Microsoft’s Xbox One homepage uses the this logo. Perhaps this is part of Microsoft’s long-term strategy to soften the ‘all-in-one’ label, which proved to be problematic in the months surrounding the console’s 2013 launch. Use of a consistent logo is critical to strengthening brand awareness and battling counterfeit products. PackagingXbox One tactfully applies its logo, color palette, and minimalist design to ensure the product remains the center of attention. The nuanced green is unlike any green used by popular retail brands, giving the Xbox One a color to call their own on the shelves of retail stores worldwide.

Image 1: Xbox green on display (Microsoft store in Tyson’s Corner, VA: no Kinect bundles on display, 2015).

Xbox One also produces limited edition console bundles and controllers showcasing exclusive package designs. Though the backdrop is often replaced by game-specific artwork, the overall layout of the packaging remains the same. Maintaining this uniformity provides consumers with an expected visual framework both existing and new Xbox One products.

Image 2: Limited edition Xbox One Console Bundles (Xbox One available for $349 starting November 2; up to $150 in savings read more at http://news.xbox.com/2014/10/27/xbox-one-special-savings/#KTrm2iuIUXYqMYu6.99, n.d.).

SlogansHaving undergone a bit of an identity crisis early on, the Xbox One never seemed to fully recover. The Xbox One has tried a variety of gaming-oriented slogans since shedding their ‘all-in-one’ mantra. ‘Jump in’ us is one recent example that failed to gain any traction. Molly Soat for the American Marketing Association’s Marketing News, says that slogans are a call to action about the consumer and situation. They help customers understand how they should respond to a product (Soat, 2015). Sony proudly marks all of their video game commercials, print advertisement, and digital content with the slogan: The best

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place to play. The short, but direct message reminds consumers what the PlayStation 4 is all about.Brand Mascots Mario and Sonic the Hedgehog are popular characters, but how about Halo’s Master Chief – the current Xbox One brand mascot? And even if one is familiar with Master Chief, is he the appropriate face (or helmet in this case) for the brand’s target demographic?

Image 3: A brief survey of the leading gaming console mascots makes it evident that both Microsoft and Sony are targeting a more mature demographic.

To many, the Halo series is the Xbox. Master Chief may not be some fun-loving plumber in overalls, but his courageous demeanor and hi-tech armor help him to explore new worlds and overcome any opposing forces. His identity in embodies the attitude of the Xbox One brand. Spokespersons Though his face does not grace any big me-dia grabs, Major Nelson (real name Larry Hyrb) was introduced to gamers during the launch of Microsoft’s Xbox Live online gaming subscription service in 2001. Major Nelson is at first glance, someone who most

resembles an eccentric uncle. Over time however, it seems his personable approach and geeky tendencies have formed an odd bond with gamers. His insider knowledge and frequent video updates give Xbox Live users a friendly face for trusted information on the latest downloadable content, game demos, and more.

Image 4: Major Nelson provides gamers with another update demographic (Xbox major nelson, n.d.).

Brand AssociationsIn his book Strategic Brand Management, Kevin Keller details six criteria necessary to developing brand elements that positively impact how a brand is perceived (Keller, 2013, p. 142). The following analysis looks at how the Xbox One stacks up.MemorabilityThe Xbox One leverages existing brand equity by adding a hint of modernity to the core elements consumers already identify with: its sphere symbol, wordmark, and color. The new Xbox green is the most significant change, serving as a unique marker of the brand. Xbox has the potential to own this color much in the way that Nintendo owned red during 1980s and 1990s. The effects of this choice are further amplified by the Xbox

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One’s competition, which have both chosen a more neutral color scheme. Xbox green is a easily identifiable when walking through a store or passing a billboard on the highway. It gives consumers the green light to join in on the fun.MeaningfulnessKeller suggests that strong brand elements provide general information on the function of the product or service and transmit specific attributes or benefits one can expect when interacting with the brand (Keller, 2013, p. 143). The only reason consumers know that the Xbox One logo represents a gaming console is because of Microsoft’s past successes with the Xbox and Xbox 360. The standalone Xbox name and logo elements fail to create a direction connection with a specific product category, such as Burger King’s logo does with the fast food industry. On the contrary, the Xbox One’s sleek typeface and high energy color scheme do convey a sense of creativity and innovation. LikeabilityEvaluating the likeability of a brand’s core elements is subjective without first conducting research. The Xbox brand has possessed a familiar aura throughout the entirety of its existence. Thus, it can be speculated that Microsoft has not received any significant pushback regarding the brand’s overall identity. In a 2010 fiasco, popular American clothier Gap faced immediate backlash when announcing their revised look. The decision to revert back to their original logo was made less than a week later (Ellis, 2010). In a recent instance, the Cleveland Indians demoted

the iconic Chief Wahoo to their secondary logo in response to a public outcry citing the caricature as insensitive (Foltin, 2016). Today’s consumers have no shortage of ways to have their voices heard. At the moment, there does not appear to be any public signs of disapproval regarding the Xbox One’s brand identity elements. TransferabilityThe Xbox One brand name is inherently ambiguous. Keller states that transferable brand elements successfully aid in the creation of new products and markets (Keller, 2013, p. 144). The name ‘Xbox’ happens to be a completely contrived word. The word ‘one’ is a universally accepted word that quantifies something. Together, the deeper meaning behind Xbox One may face cultural challenges, but it will certainly not offend anyone. The color green is most commonly recognized for its natural connection to the environment. In China however, green could also symbolize infidelity (“Green,” n.d.). Likewise, people in Israel might associate green with bad news (“Green,” n.d.). Viewing color through a cultural lens is critical to harmonizing with customers in key global markets.When examining brand mascots, Halo’s Master Chief is an undoubtedly strong presence. His fierce, two-gunned pose is quite the juxtaposition to Nintendo’s playful good guy, Mario. In the eastern world, anime cartoons and comic culture thrive. Brands like Pokémon and Dragon Ball Z are credited with generating an enormous fan base in Japan and China. This impact that this culture has had on the video game industry

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should not be underestimated. A thorough understanding of cultural norms and values is critical to thriving in foreign markets (Sighamony, n.d.). AdaptabilityOver the span of the Xbox brand’s 15-year history, Microsoft has introduced four logos. On each occasion, the sphere and wordmark have received minor adjustments. The change has been both methodical and gradual. The updated logo typically accompanies the release of the latest console. This approach allows the brand to systematically apply contemporary design trends to position their product using a fresh perspective.ProtectabilityXbox One is backed by the multi-billion dollar Microsoft Corporation. Recognized internationally as a pioneer of the technology world, Microsoft’s financial strength and global operations are evidence of the brand’s business savvy. Aesthetically, the shape and style of the Xbox One logo is not overtly different. Popular brands that use a similar style include Marriott, AT&T, and most closely, Xerox. These are all massive corporations doing business in a different space.

Marketing Mix AnalysisThe marketing mix is a classical framework used by professionals throughout the world. The mix examines a brand or product using four key components that contribute to the sale: product, place, price, and promotion. The final portion of this brand inventory will survey how and what the Xbox One brand offers its consumers. CONSOLES

n Xbox One (1TB) n Xbox One (500GB) n Xbox One Special Edition Quantum Break

Bundle (500 GB) n Xbox One Special Edition Gears of War Bundle

(500 GB) n Xbox One Elite (1TB) n Xbox One Limited Edition Halo 5: Guardians

Bundle (1TB)GAMES

n More than 800 Xbox One Games n More than 100 Xbox 360 Games

MISCELLANEOUS n Xbox One S n Wireless Controllers n Design Lab Wireless Controllers n Controller Stands n Chatpad n Media Remotes n Wireless Adapters n Kinect n Headsets n Play & Charge Kit n IR Extender n Disney Infinity 3.0 Starter Pack n LEGO Dimensions Starter Pack n Skylanders SuperChargers Starter Pack

ACCESSORIES n Xbox Live Gold Membership n Xbox One SmartGlass Smartphone Application

Image 5: The new Xerox closely resembles the Xbox One sphere (A tale of two logos, n.d.).

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Product As of April 2016, Microsoft has officially stopped manufacturing the Xbox 360 (Fingas, 2016). Though it may come as a surprise to many that the console was still in production, the executives at Microsoft are intimately familiar with the impact that the Xbox 360 had on the gaming industry. Having outsold PlayStation 4, the Xbox 360 was the feather in Microsoft’s hat. The Xbox One will now be the sole focus of Microsoft, at least until the Xbox One S releases in August.The Xbox One family includes a variety of product. The table above is a cumulative list of the proprietary products offered under the Xbox One banner.Place Like most electronic goods, video games and consoles can be purchased through a variety of direct and indirect channels. Xbox One, PlayStation 4, and Wii U all offer their products through website-based stores and specially designed console stores, which allow gamers to purchase and enjoy downloadable content, such as movies and games.

Image 6: Gamers are invited to play their favorite titles at Microsoft stores throughout the world (Microsoft retail store Washington Redskins, n.d.).

Additionally, Xbox and Nintendo sell products directly through their brick-and-mortar storefronts. Microsoft has 116 stores throughout the world (Dilger, 2016). Their balanced retail strategy enables the brand to have a presence in both the physical and virtual world.The Xbox One is also distributed via indirect channels, like retailers and wholesalers. These ‘middlemen’ also sell competing brands. The Xbox One, PlayStation 4, and Wii U are available for retail at big box and electronic consumer stores throughout America. Target, Best Buy, and GameSpot are just a few of the popular stores that sell these brands.Price The Xbox One was first introduced to the market at $499 — a whopping $100 dollars more than the PlayStation 4 and $200 higher than the Wii U (Swider, 2016). To remain competitive with its counterparts, Xbox One would ditch the Kinect add-on and begin selling the Xbox One at $399. It was announced just a few days ago that the price of the standard Xbox One retail price would drop even lower, to $279 — less than both the PlayStation 4 and Wii U (Warren, 2016). This move is likely part of the brand’s strategy to make way for the Xbox One S.Beyond the basic console package, the Xbox One can be purchased in more than a dozen different bundles. Bundles feature an assortment of games, exclusive downloadable content, and limited edition console skins. These options provide consumers with variety and Xbox One with the opportunity to capitalize off of different pricing tiers.

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Promotion Traditional advertising is and always has been a critical component of the Xbox brand communication strategy. Last year alone, Microsoft Studios spent $30.5 million on 15 different television advertisements (Briers, 2016). Though this figure trailed expenditures for PlayStation 4 and Nintendo, it is evidence that the brand still sees value in a mass market approach. Prior to the UK launch of Halo 5 last year, Xbox One announced that more than 80 percent of gamers would have already seen an advertisement for Halo 5 (Calvin, 2015). The campaign would feature television, outdoor, and print, among other mediums (Calvin, 2015). A digital media company at its core, Xbox One has produced some of the most brilliant non-traditional forms of advertising, such as their Xbox One SmartGlass smartphone application, which serves as a second screen for gamers looking to enhance their gaming experience. SmartGlass also allows gamers to keep tabs on their Xbox Live account outside of their home. The Xbox One console also comes with social media integration out the box, encouraging gamers to share their awesomeness with the world. All the while, gamers are functioning as defacto brand ambassadors. And of course, these the Xbox One social media strategy leverages Facebook, Twitter, and Instagram to serve up daily geeky goodness for fans looking to engage with the brand.

Image 7: The Xbox One SmartGlass smartphone creates an additional touch point for gamers to interact with their favorite Xbox One products (Xbox Smartglass, n.d.).

Now that a comprehensive inventory of the brand’s messaging is complete, a brand exploratory will be used to further understand how the Xbox One is perceived by both industry experts and consumers. The brand exploratory will review the intended target market and employ both qualitative and quantitative measures to uncover tangible insights. Finally, the exploratory will be used to help develop an actionable plan that seeks to strengthen brand equity.

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Target MarketNearly two and a half years later, the Xbox One is still overcoming an ill-fated launch that positioned the console as just another device in former CEO Steve Ballmer’s One Microsoft business strategy (Ballmer, 2013). Instead of focusing on the thing gamers cared about most — video games — Microsoft branded the console as an all-in-one source of entertainment, isolating long-time fans (“Xbox One: the complete all-in-one games and entertainment system - Xbox Wire,” 2013). This announcement was soon followed by news of Microsoft’s decision to add new requirements, like a mandatory Internet connection. Additionally, Microsoft shared that the Xbox One would be manufactured absent of several highly coveted features, such as a physical disc drive and the ability to share video games with friends (Newman, 2013).At launch, Microsoft failed to define a niche target market for the Xbox One. Their loosely defined audience, males ages 13 and older, were not quite sure how to perceive the brand (“Microsoft and Xbox One | Facebook for Business,” n.d.). Did Microsoft care about hardcore gamers? In an open letter to former XBOX Chief Executive Officer Don Mattrick, podcaster Danny Pena opined: “What made Xbox so unique in the past was its relationship with its gaming community. Something changed in 2009 [the year

Mattrick was hired] and it has not been the same since. I believe you lost touch with the community…we are only seeing the business side of the Xbox product. (Pena, 2013)” Pena’s sentiments eloquently communicated the frustrations endured by loyal Xbox gamers.The Xbox One team moved quickly to address consumer concerns prior to the console’s launch in November 2013. Mattrick told the gaming community that their feedback mattered, and that the retail version of the console would include the great features loyal gamers had enjoyed on the Xbox and Xbox 360 (Mattrick, 2013). But was it too late? Had the gaming community already felt abandoned? The qualitative and quantitative research that follows details how consumers perceive the Xbox One, today.

Qualitative ResearchFor the purpose of this audit, consumers will be analyzed as experts and gamers. Consumers as experts are leading professionals in the video game industry, while consumers as gamers are representative of potential video game players. Consumers as ExpertsIGN, GameSpot and CNET are three of the leading online authorities in the video game industry. Figure 5 captures their perceptions of the Xbox One, along with its competitors – the PlayStation 4 and Wii U.

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GameSpot IGN CNET

XBOX ONE

n Big and glossy2

n Extra entertainment features2

n Online gaming2

n Lacks power2

n Buggy interface1

n Innovative media features1

n Bold, sleek design1

n All-in-one1

n Underwhelming gaming experience1

n Challenger brand2

n Compelling bundles1

n More exclusive game titles1

n Multimedia strength n Confusing interface1

n Slow download times1

PLAYSTATION 4

n Most powerful next-generation console1

n Small and sleek1

n High performance1

n Focus on gaming1

n Powerful2

n More mature, high-end look and feel2

n Elegant2

n Leading performer2

n Gorgeous interface2

n Stunning visuals2

n Leading console2

n Logical interface2

n Independent games2

n Beautiful graphics2

n Blazing performance2

WII U

n Poor hardware performance3

n Slick, small, and quiet3

n Disproportionately expensive3

n Backwards compatibility3

n Limited multimedia functionality3

n Thin game library3

n Weakest 8th generation console3

n Feels cheap3

n Lacks media features3

n Smooth interface3

n Economical3

n Innovative3

n Limited hardware functionality3

n Kid-friendly3

n Awesome exclusive titles3

n Childhood classics3

n Great portability3

Figure 5: Thoughts from industry experts.

1(Brown, 2013a)2(Brown, 2013b)3(Crossely, 2014)

1(Mirabella, 2013)2(Lowe, 2013)3(Vargus, 2012)

1(Balakar, 2015a)2(Balakar, 2015b)3(Stein, 2014)

The three gaming authorities share a similar tone. The Xbox One is a multimedia powerhouse that boasts a strong online gaming and entertainment component. The PlayStation 4 meanwhile, provides an unparalleled gaming experience, backed by a high-performance processor and ultra-realistic graphics. And finally, the Wii U is a quirky, but fun console that includes a controller with a screen – giving gamers the chance to play their titles even when the television is occupied.

Consumers as GamersIn preparation for this brand audit, a survey was prepared and randomly distributed via an online message board, Facebook, and Twitter. Relative to the qualitative portion of the exploratory, the following primary research will detail what consumers valued most when purchasing a video game console, as well as what adjectives they associate most with the Xbox One brand and its competitors.

D. BRAND EXPLORATORY

16

All survey takers were over the age of 13 (Microsoft’s targeted age demographic for the Xbox One) and had previously owned a gaming console. Of the 85 respondents, 20 were male. Though males were outnumbered 3:1, this survey provides the Xbox One team with critical insights regarding a growing female gaming community. In 2007, Nintendo launched their Wii to a target market that included men and women over 25 (Conlin, 2012). This strategy helped them differentiate from Xbox 360 and PlayStation 4 to become the global leader in console sales, with more than 100 million units shipped (Conlin, 2012). When asked what feature was the critical determinant in purchasing a console, besides high-quality video games, more than a quarter of respondents (27.38%, to

be precise) indicated that online gaming was most important. This was followed by the 19% who saw on-demand movie applications as a key factor in their decision-making process. The second area of focus from this survey, which is of key importance, is the free association activity. Respondents were asked to provide an adjective that they believed best described the Xbox One and its counterparts. Figure 6 is a graphic representation of the descriptor words that were submitted for the Xbox One. The larger the word appears on the graphic, the more frequently it was suggested. Most notable among the positive Xbox One brand associations were ‘fun’, ‘advanced’ and ‘cool’. The most common negative association was ‘expensive’, followed

Figure 6: Xbox One Brand Associations as tallied from the primary research performed for this brand audit.

D. BRAND EXPLORATORY

17

by ‘costly (a derivative of costly)’, ‘slow’, ‘limited’ and ‘boring’. The most popular desirable terms among the PlayStation 4 responses were ‘amazing’ and ‘fun’, along with ‘improving’ and ‘versatile’. The Wii U received particularly interesting brand perceptions, with 12 respondents submitting the word ‘fun’ — more any other descriptor recorded in the entire study. ‘Interactive’ and ‘active’, two similar words, were also used to describe the Wii U, along with ‘childish’. The only negative perception involved respondents referring to the console as ‘outdated’.

Quantitative Research

Figure 7: Examining allegiances to video game console manufacturers (Pike, 2015).

A 2015 study from leading research firm Nielsen, entitled No Stranger to the (Video) Game: Most Eighth Gen Gamers Have Previously Owned Consoles, analyzed brand loyalty among today’s gamers (Pike, 2015). The survey revealed that 9 out of 10

gamers previously owned a console from the preceding generation (Pike, 2015). The results show that 76% of respondents who purchased an Xbox One previously owned the Xbox 360. Microsoft was only outdone by Nintendo Wii U loyalists, who have managed to form a formidable connection with their consumers, as 86% of Wii owners having purchased the Wii U.Gamers who participated in this study also cited the top five reasons they purchased their console of choice, as shown in Figure 8. Most relative to this exercise, it is important to note that Xbox One customers surveyed mentioned branding as the key catalyst in their purchasing decision. A healthy blend of technical and psychological benefits was totaled to round out the top five most influential Xbox One features (Pike, 2015). PlayStation 4 responses revealed a performance-driven culture, while Nintendo’s Wii U found harmony in kid-friendly content (Pike, 2015).

Figure 8: Eighth generation gamers offer why they purchased a specific console (Pike, 2015).

D. BRAND EXPLORATORY

18

Figure 9: Gamers explain how they use their Xbox One (“Game consoles in 2015: one stop shop for games and entertainment,” 2015).

Once purchased, 71% of Xbox One owners claim to play video games online — more than any other competitor and perhaps, the console’s greatest strength (“Game consoles in 2015: one stop shop for games and entertainment,” 2015). Other common uses include playing video games offline (62%), watching DVDs/Blue-rays (52%) and watching video-on-demand/streaming subscription services (51%) — another industry leading category (“Game consoles in 2015: one stop

shop for games and entertainment,” 2015). These responses look beyond consumer intentions to analyze the day-to-day value consumers find in their console of choice.

America s ToyThough global reports indicate that the Play-Station 4 is pummeling the Xbox One in sales, a different narrative can be explained when examining the consoles’ performance domesti-cally. The Xbox One is nearly as popular as the PlayStation 4 stateside, with just 2 million units separating the two competitors (“Platform totals – VGChartz,” 2016). A 2016 study examining Google search data offers further support behind the popularity of Xbox One in America. Looking at data from March 2015 to March 2016, researchers uncovered that Internet users search for Xbox One on more occasions than PlayStation 4 in 49 out of 50 states (Smith, 2016). Likewise, the generic ‘Xbox’ search topped the list of video game console manufacturer searches in 35 out of 50 states (Smith, 2016). These results do not necessarily translate to sales, however they do infer that consumers are genuinely interested in Microsoft’s Xbox One brand.

Figure 10: Xbox One has more people talking than PlayStation 4 in 98% of the United States (Smith, 2016).

D. BRAND EXPLORATORY

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RecommendationsThe Xbox One has much to offer the global community. It a shining example of modern ingenuity, using online-enabled video games and multimedia applications to break down barriers and unite people in more than 40 countries, including Russia, China, Mexico, and the United Kingdom. But Microsoft cannot embrace these technological advances and dismiss the past. Before an online universe or motion-censored controllers ever existed, there were video games — and they fascinated people. The 1980s and 1990s, often considered the pinnacle of gaming (for both performance and sales), are proof that quality games matter. The Xbox One will need to begin at step one, immersing their brand in a gaming renaissance that draws from history to reimagine the future. Recommendation #1 - Understand Japan In North America, it’s no secret that the Xbox One is performing comparatively well to the industry leading PlayStation 4. The scene is much different however in Japan and Europe, the gaming industries other two major markets. According to graduate researcher Anita Ching Yi Ngai at the University of Waterloo, “Unlike other cultural products in media entertainment which are mostly dominated by the West, video games have a major representation

of Asian influences, especially from Japan. (Ching Yi Ngai, 2005)” The United States may have had a hand in developing some of the earliest video game consoles, but it was Japan who created the culture. Connecting with Japanese consumers is absolutely essential to the long-term sustainability of the Xbox brand. The power of unlocking Japan rests in its influencer power.

“ UNLIKE OTHER CULTURAL

PRODUCTS IN MEDIA

ENTERTAINMENT WHICH ARE

MOSTLY DOMINATED BY THE

WEST, VIDEO GAMES HAVE

A MAJOR REPRESENTATION

OF ASIAN INFLUENCES,

ESPECIALLY FROM JAPAN. “ - ANITA CHING YI NGAI

The Japanese are a disciplined people who value tradition and culture (Ching Yi Ngai, 2005). Also, their love for comics, anime, and manga is central to their identity (Ching Yi Ngai, 2005). They are responsible for

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creating some of the most prolific episodic video game series, such as Final Fantasy and Pokémon. Their imaginative storytelling is consistently providing gamers with new ways to interact with fan favorite characters like Pikachu and Mega Man. The Xbox One differs in that its most prolific titles exist in a real world filled with action and violence (Young, 2013). First person shooters like the Call of Duty series most appropriately capture the spirit of American gaming – one that is a far cry from the fantasy-filled role playing games of Japan (Young, 2013). Likewise, the Xbox One’s Master Chief is the antithesis of the super fast and witty Sonic the Hedgehog, whose platform transcends video games into the worlds of television and apparel. Although some popular Japanese video game studios are already developing games for the Xbox One, others have failed to cooperate. The Xbox will typically get popular multi-platform Japanese titles, but rarely if ever will they develop partnerships with Japanese studios to develop organic experiences unique to this market. The Japanese demand a good story; one that doesn’t involve individualistic Americans hoping to capitalize off their people.During the 2001 Tokyo Game Show, Bill Gates took to the stage to introduce the first generation Xbox — a gigantic console with even bigger controllers (Davison, 2013). It was everything the Japanese had envisioned America to be (Davison, 2013). What seemed like a classy move would soon turn sour, as Gates’ spiel was perceived as nothing more than a sales pitch (Davison, 2013). For the Xbox One to

be successful in Japan, the brand should prioritize relationships with local video game developers, particularly smaller startup studios looking to break into the market. By partnering with these studios to develop refreshing new stories and memorable characters, Xbox will demonstrate their commitment to delivering content that resonates with Japanese consumers. It is not about bringing America to Japan, rather, its about identifying how the Xbox One can be used to further enhance the gaming culture in Japan, and in the process, strengthen the console’s credibility amongst the gaming community (Davison, 2013).

“ FOR THE XBOX ONE TO BE

SUCCESSFUL IN JAPAN, THE

BRAND SHOULD PRIORITIZE

RELATIONSHIPS WITH LOCAL

VIDEO GAME DEVELOPERS,

PARTICULARLY SMALLER

STARTUP STUDIOS LOOKING

TO BREAK INTO THE MARKET. “ Recommendation #2 - Shore Up EuropePerhaps Europe presents the Xbox One’s greatest opportunity for growth. It also presents one of its most significant challenges. Contrary to Japan, which is

F. BRAND POSITIONING PLAN

21

largely homogenous, Europe is a diverse group of peoples, cultures, and languages. Gamers across Europe favor the PlayStation 4 nearly 3:1, which translates to 16.28 million units sold (“Video game charts, game sales, top sellers, game data - VGChartz,” 2016.) When asked about this disparity, head of Xbox Phil Spencer credits Sony’s success to doing “a really good job in those markets” and a longer history (Dunning, 2015).

“ GAMERS ACROSS EUROPE

FAVOR THE PLAYSTATION

4 NEARLY 3:1, WHICH

TRANSLATES TO 16.28 MILLION

UNITS SOLD. “ PlayStation 4 has clearly prioritized its emerging markets. Having gained the confidence in the loyalty of their Japanese market over the years, Sony opted to release their console in the U.S. and Europe, first (Phillips, 2013). This aggressive move was due to the company’s abundance of regional-specific titles available. Keeping its domestic consumers in mind, Sony decided to release their console in Japan once they had a sufficient selection of games available for the Eastern market (Phillips, 2013). Meanwhile, Microsoft released the Xbox One around the same time in the U.S. and Europe. Unfortunately, the European rollout would flounder, with only select countries

receiving the console in time for launch. The fragmented release meant that some countries would receive their stock in the months that followed the ‘first round’ of releases in Europe’s larger markets (Philips, 2013). This left some gamers with only one option to join the eight generation of consoles – PlayStation 4. One thread entitled, ‘why (sic) aren’t Europeans buying xbox?’ on the popular gaming message board Gamefaqs presents some interesting perspective on Sony’s popularity. The following, are excerpts from this thread:“… Europe has always been known for fine taste, class and culture, though. It is the pinnacle of human contribution when considering its achievements in art, science, mathematics, inventions, etc.” (“why aren’t Europeans buying xbox? (good read) - Xbox One message board for Xbox One - page 1 - GameFAQs,” 2014)” – Crystyn_7B

“I’m from Belgium ... Something less obvious was the way it was marketed. For example, the heavy focus on TV features which don’t even work over here. This alone convinced quite a few of the people I know that Microsoft simply wasn’t aiming for them with the Xbox One, so they saw no reason to get one.” (“why aren’t Europeans buying xbox? (good read) - Xbox One message board for Xbox One - page 1 - GameFAQs,” 2014)” – Soul Trapper

“Essentially, they spent a lot of effort talking up TV integration and other such applications, which caused a lot of people to simply roll their eyes ... I think this caused some Europeans to feel that they were

F. BRAND POSITIONING PLAN

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being neglected, something that was later reinforced when they went back on their launch plans and cut out eight countries, seven of which were European for a total of around 61 million people.” (“why aren’t Europeans buying xbox? (good read) - Xbox One message board for Xbox One - page 1 - GameFAQs,” 2014) - Vmode

Though far from conclusive, the silver lining woven throughout these public conversations is that Europeans feel like Microsoft’s secondary audience. There was not one consistent release to all European markets. Instead, consumers throughout Europe received a North American console with a plethora of features they could not enjoy on unexpected release dates.

“ ...EUROPEANS FEEL LIKE

MICROSOFT’S SECONDARY

AUDIENCE... “ As a result, they opted with a tried and true system that has consistently delivered a quality gaming experience. The Xbox One brand will need to rebuild its trust with Europeans by releasing hardware and software in tandem with its U.S. counterpart, as well as creating European-specific applications to enhance the experience of Xbox One owners over seas.

Recommendation #3: Speak GeekAt one time, playing video games was something people did during the free time. Today, gamers represent a unique lifestyle. The billion-dollar video game industry has inspired movies and conventions, as well as a homebrewed video game culture. Geek is now chic. Just take a look at a few products of pop culture, like the hit television show The Big Bang Theory or the unprecedented interest in Marvel Comics-inspired movies (El Nasser, 2012). Xbox One should explore opportunities to sponsor gaming culture. Not just monetarily, but effectually. Imagine an interactive Xbox One experience at Comic-Con, where visitors could win exclusive collectibles from their favorite game series or dress in their favorite in-game character’s official gear, such as Master Chief’s armored suit. As it pertains to video games, Microsoft could house international tournaments at their home offices in Washington or offer contracts to inspiring independent game developers. The Xbox One brand will need to work to practically shift the perception surrounding the console from multimedia powerhouse to a gaming greatness.

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