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HIVE EXCLUSIVE: Retailers Will Bundle Microsoft's Xbox with Games and Peripherals

31 Aug, 2001 By: John Gaudiosi

Although some specialty video game retailers began taking $10 deposits for Xbox last fall, the official Xbox pre-order programs launch Sept. 1with many key retailers.

Xbox will be available for pre-order at Amazon.com, K-B Toys, Electronics Boutique, Babbage's, Software Etc., EBGames.com and FuncoLand, in bundled form, at prices ranging from $499 to $1,199 and including different arrangements of games and peripherals with the console. Gamestop.com announced its pre-order plans several weeks ago and is packing multiple first-party games, controllers and memory cardswith the console for $599 to $1,199.

“This was an optional program in which retailers could choose to participate,” says James Bernard, marketing manager, Microsoft. “Retailers put together their own reservation programs, under certain flexible guidelines, based on what they felt their customers would want. Some retailers may, in fact, sell stand-alone boxes, outside of our official reservation program.”

The console will be sold for $299 at retail on Nov. 8, but is expected to be in short supply, so retailers are making the most of the situation early, hoping that hardcore gamers are willing to invest to be the first to own the system. Microsoft is providing additional marketing dollars to retailers who bundle their first-party games. There will be 15 to 18 launch titles for the system, which will retail for $49.99 each.

Gamestop.com has 44 Xbox titles listed on its Xbox page, including one for $29.99 (THQ's Tetris Worlds) and five for $54.99 (Electronic Arts'Madden NFL 2002, NBA Live 2002, NHL 2002, NASCAR Thunder 2002 and TheSimpsons Road Rage).

“The number of Xbox units available this year will be low compared to the demand and we think the hardcore gamers will be willing to buy a bundle,” says Jeff Griffiths, president and c.e.o., Electronics Boutique. “We'll also be selling Xbox at retail by itself at $299 at launch.”

Microsoft doesn't expect its bundling to have any negative impact on the crucial hardcore gamers that will buy any new video game system atlaunch.

“Thousands of gamers have already committed to buying an Xbox on several presale programs that retailers are already promoting,” says Bernard. “Many gamers have told us that they want this kind of program because it allows them to buy the best games and the console.”

Analysts believe the bundling will work on the lower end packages, rather than the high end. “Xbox bundling will cause some serious stickershock to gamers,” says P.J. McNealy, senior analyst for Gartner G2. “I think Microsoft is overestimating how much the hardcore gamer will pay for bundled packages. Some of these packages are over $1,100.”

The ability for consumers to choose which games they buy in the bundle will also be a factor. “People like to choose which games they buy, so if a choice is involved and good games are an option, it shouldn't be a big problem,” says James Lin, managing director and senior analyst for Jefferies and Co.

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