The video game market is currently expanding into many different segments thanks to the Nintendo Wii, as games are no longer aimed at the 13-40 year old male consumer. There’s the 60-plus market who love to stay active by playing Wii bowling or the 30-50 age range who are losing weight using Nintendo peripherals like the Wii Fit. Both Sony and Microsoft should applaud Nintendo for expanding a previously narrow market.
With Nintendo monopolizing these market segments, Microsoft and Sony have been quick to react. Microsoft introduces a camera that can track your body movements without holding anything in your hand, while Sony is following a similar path to Nintendo by offering motion controllers. So what’s the deal with ‘Kinect’? Who is it for? And how the heck will they compete with the extremely popular Nintendo Wii? This article will aim to answer these questions.
There is no doubt that Microsoft is behind the casual market. This newly developed market has enormous potential and is worth millions to Microsoft. Microsoft revealed the Kinect brand at E3 this year, and for the first time, it was broadcast in Times Square for all to see. In addition, they commissioned a show from the exquisite Cirque du Soleil to showcase Kinect which was also broadcast on MTV. These communication channels are not commonly used in the video game industry to showcase new hardware. By broadcasting their E3 press conference live through Time Square, they indicate that they want Kinect to bring the casual gamer into the Xbox experience.
However, is this group right to aim? Xbox’s chief marketing officer recently said, “I think we know that the most demanding gamers will be the first to go out and buy it, just like any product.” This statement underlines their intentions to bring Kinect to the most demanding gamers, but the problem is that none of the Kinect programs will appeal to them. Casual games like Kinect sports or Kinectimals will never be a sales system for the hardcore gamer. In fact, until Microsoft releases a Kinect game that fans can get excited about, they’re likely to hold off on buying. Microsoft built its brand to deliver a rich experience, and it might be unwise to neglect it.
Kinect pricing has become a hot topic of conversation in recent weeks. Although not confirmed, it has been widely considered that the price of the Kinect will be around $150. Compared to the Nintendo Wii ($180), the Kinect’s value might seem low. Why would the consumer who currently owns a Nintendo Wii part with a significant amount of money to buy a peripheral that is essential to a very similar product? Microsoft needs to create a value proposition that warrants the $150 price, and controller-free gaming could be the answer. The Kinect’s unique selling point is the fact that they offer a hands-free way to interact with a game, something the Nintendo Wii and PlayStation Move don’t. Therefore, Microsoft must highlight this advantage when announcing this piece of hardware.
In fact, looking at Microsoft’s marketing strategy, you can see why they charge $150. They have to penetrate the market and make the casual market aware of this new product. Microsoft has already spent a large amount marketing the Kinect through the Cirque du Soleil show and displaying the Kinect at various Macy’s stores. Do not doubt that they paid an arm and a leg to do it. Kinect marketing will increase as the release date approaches and therefore costs will increase. Microsoft will try to recoup this cost and therefore set the price at $150; however, it is doubtful that they will make a profit on each unit sold, since according to ‘Develop’ it costs Microsoft $150 to make the Kinect camera.
The casual market is here to stay and it is going to grow and grow. Microsoft is entering a market where they are determined to gain significant market share, they are in it for the long haul. Kinect is just the beginning for Microsoft. It is expected to be included with Xbox Slim when it launches as Microsoft brings Kinect to homes around the world. Microsoft will initially want to focus on market share rather than profit, so the price of the Kinect is expected to fall and fall rapidly. Kinect or maybe an upgraded version will be included in the next generation Xbox console because this will force the consumer to use it.
Consumers are more likely to see the value of Kinect and therefore use it if it’s bundled with the console rather than on its own. Microsoft has a great opportunity with Kinect and if sales are slow in the first year, don’t expect Microsoft to abandon Kinect. It’s here to stay, and if they do it right, it could become a huge success, just like the Nintendo Wii. Microsoft’s main customer is the hardcore gamer and they shouldn’t ignore it. Nintendo has now realized its mistake of neglecting its hardcore consumer and rectified the problem by announcing numerous fan-friendly titles. If Microsoft can maintain that balance, then it could satisfy the die-hards while becoming a big player in the lucrative informal market.
