Microsoft's Aaron Greenberg Looks To Holiday, Beyond

If you follow industry news, you know the NPD Group is today announcing its sales figures for the month of September. It's usually a great time for Nintendo fanboys on the hardware side, while Xbox 360 backers can gloat over software sales. In advance of the data, we had the opportunity to ask Aaron Greenberg, director of product management for Xbox 360 and Xbox Live, about Microsoft's outlook this holiday season, whether spring 2010 is the new November and much more.

Going into the holiday season, how would you rate Microsoft’s position in the marketplace?

I think this holiday will be very interesting as we continue to expand and reach a more mainstream consumer, but I do expect Xbox 360 to have a strong holiday and remain very competitive. What really separates Xbox 360 from our competition is the massive amount of exclusive blockbuster games and entertainment that you can only get on our system.  Just on the games side alone we have exclusives like “Halo 3: ODST,” “Forza Motorsport 3,” “Left 4 Dead 2,” “Grand Theft Auto: Episodes From Liberty City” (retail standalone), “GTA IV: The Ballad of Gay Tony” (exclusive downloadable content), and a ton of Xbox LIVE Arcade titles like the recently launched “Shadow Complex.” Then you have to add in things like Facebook, Twitter, Last.fm and the ability to instantly watch movies in Instant on HD in 1080p with no disc or download required. So I would say that with the combination of our exclusive content along with our very competitive console pricing starting at just $199, we continue to remain the best value in home entertainment and feel very confident about our position this holiday.

 Wall Street’s been saying that it’s game over for video games, and that games—unlike conventional wisdom—aren’t immune from the struggling economy. With sales of recent releases like Batman: Arkham Asylum and Halo: ODST surpassing the 2 million mark, do you think that skepticism about the industry holds true? Were we just in the middle of a tough summer or is it indeed a trending decline?

That is a good question – we’ve seen that as an industry we are not entirely immune to the economy, but on the other hand, for Xbox 360, this has been a record year for us. In fact we remain the only platform showing year-to-date growth in console sales compared to last year.  I also believe that like the examples you mentioned, great games will generate great sales. There’s no reason to think that as we enter the fourth quarter of the year, where typically 75 percent of annual console sales happen, that we won’t see strong results as an entire industry. 

 Do you see the inclusion of Twitter, Facebook and Last.fm helping sales this season, or are they just extras for the existing user base?

I believe the innovation we’re driving online is just another proof point for our strategy this generation. If you really step back and think about the continuous innovation we have delivered since launch, it’s pretty impressive. At the same time, it seems clear that this strategy and commitment is at a very different level relative to our competitors. In just the last two years alone, we have completely re-invented the Xbox 360 with things like the New Xbox Experience, and now we are bringing Instant on HD movies with 1080p, Facebook, Twitter, and Last.fm to the living room. By combining the biggest social networks on the planet so all your friends are all in one place, we will change the way you connect and stay in touch in the future. Our commitment to innovation does not stop there, as we are excited to be working hard on an entirely new category of controller free games and entertainment with the addition of “Project Natal.”

What do you think of the iPhone as a gaming platform? Do you see Zune HD taking a bite from those sales?

Our strategy has always been to completely focus on delivering the best games and entertainment experience in the living room and not get distracted by anything else. 

 NPD announced plans to start tracking downloadable games. How do you think XBLA will stack up against the PSN or iPhone?

I think we will do very well in this space, just ask the developers and publishers that have work on multiple platforms. The Xbox LIVE community is huge – more than 20 million active members across 26 countries.  No other competitor comes close to offering the breadth of quality entertainment options as we do on Xbox LIVE and we're confident that it will remain the leading online service.

 Xbox has to have the numbers for every single unit sold on Xbox LIVE Arcade; why don’t you release those sales numbers?

Out of respect for our partners, it is our policy not to break out Xbox LIVE Arcade sales data. If a partner wants to share those details, then they are welcome to. 

This will be the first holiday season this generation that Sony and Microsoft will be competing with similar price points—not to mention the Wii’s new price cut. How much of a concern is that for Microsoft?

It is not a real concern to us – in fact, I can tell you to that when NPD releases September sales later today, we fully expect PlayStation 3 will come in as the console with the most units sold for the month. This is frankly not a real surprise to us or the analysts that follow this industry, as it is typical to see a short term bump following the introduction of new hardware and pricing into the marketplace.  What I can tell you is we remain confident that Xbox 360 will not only outsell PS3 for the full calendar year, but for this entire generation.  It is similar to a game of baseball, it is not about just winning one inning, but instead being able to win the game by consistently delivering across all nine innings. 

I actually think the story here is about much more than just hardware sales. It’s about the entire ecosystem and investing in the future; something we are very focused on.  There is also the whole financial side of the equation that people rarely seem to pay attention to.  Sony, for example, has publicly noted that they lose money on every console they sell and with the price cut, they’re now losing even more money – so even with the PS3 in the market today at $299, you have to question if their business model is sustainable. I believe this generation Microsoft has really diversified the business model and the economics of the industry today is that our business about not just hardware, but also software and services. These multiple revenue streams provide not only economies of scale for us and our partners, but award us the benefit of having a profitable business, which in turn allows us to continually invest in the future and remain focused on delivering new experiences and expanding our audience.

Microsoft seems to be juggling a fair number of hardware SKUs this season. What’s the strategy behind that?

We actually simplified our offerings this holiday down to two primary consoles with the Xbox 360 Arcade at $199 and the premium Xbox 360 Elite, now at just $299. We believe this is the right balance of choice for consumers and still lets them decide what they are looking for in a console and how much they are willing to spend.  Of course we also will from time to time do special edition consoles like we are this holiday with the Modern Warfare 2 limited edition console offer.  

Call of Duty: Modern Warfare 2 seems like it’s going to be huge this year. How many more copies do you think you’ll sell more on the 360 versus on other platforms?

I believe Xbox 360 will be home to “Call of Duty: Modern Warfare 2.” We will sell more copies at retail, and we will also be the only platform offering a limited edition console as well as the leading online community where more fans of the series play online than anywhere else.  It is hard to predict specifics, but clearly this title is likely to be the biggest selling game of the year and we expect the large majority of those sales to be on Xbox 360.

Does Microsoft have an average attach rate for games that appear on multiple platforms? What percentage ends up on the 360?

I don’t have those numbers on hand, but I can tell you that Xbox 360 has sold more third-party games this year than the competition. You can look at just about any multi-platform title and the majority of those units are sold on Xbox 360, which is something we expect to continue to hold true this holiday as well. 

How did the movement of Splinter Cell: Conviction from the holiday season affect your holiday projections?

I think it will actually end up being a win for the platform as well as for Splinter Cell. As we have seen in the past, if holiday blockbuster releases get too crowded then everyone suffers as consumers only have so much they’re willing to spend. It is better to have a big exclusive title come a couple months later when consumers have made it through holiday and more willing to spend their time and money on a new game. 

Early 2010 is looking to be an unusually bulky one for games. A lot of the big 360 titles people were looking forward to—such as Microsoft’s Alan Wake—are coming out in the spring. That season’s looking like November part 2; is it less about the one big season than it used to be? Do you think that’s going to have a big impact on sales for holiday 2009?

You are right, this coming spring looks to be the biggest we have ever seen.  There is not only “Alan Wake,” as you mentioned, but other exclusives like “Mass Effect 2” and “Splinter Cell: Conviction.”  Plus, you have to remember that all the killer game add-on content is typically delivered in spring, following the release of all the holiday blockbusters. I do believe that balancing the portfolio in a way that spreads the hits out across multiple months rather than just October and November is good for everyone. You know that these titles are not rushing to make holiday deadlines and taking the time to make sure the game is everything they want it to be.

With users looking to buy a new system this holiday season, are you concerned that consumers are going to wait to buy a system bundled with Natal? 

I don’t think so, as I believe we’ve been really clear to let people know that every Xbox 360 we have ever sold will be compatible with “Project Natal.” If you want great games and entertainment today, with the confidence that you can add new “Project Natal” experiences when they are available to your existing console, there is no need to wait.