Microsoft's Xbox Live Marketplace Looks to Go Hollywood16 Jan, 2007 By: John Gaudiosi
In just its first two months of operation, Microsoft's Xbox Live Marketplace movie-rental business has catapulted it to the top of the entertainment digital distribution business.
Bolstered by sales of 4.5 million Xbox 360 consoles in the United States, according to the NPD Group, every one of which has access to Xbox Live Marketplace for free, Microsoft has seen high-definition movie rentals, which are available via download, take off with its core young male gaming demographic of 18- to 34-year-olds.
While Honey wouldn't go into specifics about what number or percentage of the 4.5 million Xbox Live subscribers have tried renting a movie through its Video Marketplace service, he did say that a relatively significant portion of Microsoft's user base has tried out this service.
“In the cable VOD business, they talk about buy rates,” said Ross Honey, senior director for media at Microsoft's content and partner strategy group. “The feedback that we've received from our studio partners is that our buy rates are in line with what they see with cable systems.”
Gamers can download current movie releases in high definition for 480 Microsoft Points (79 points equals 99 cents) and standard-definition new releases for 320. Classic films in HD sell for 360 Microsoft Points and SD versions cost 240. Consumers can purchase 1,600-point cards at retail locations for $20 or buy 1,000 points via Xbox Live for $12.50.
Microsoft currently has a catalog of about 70 new and library titles from Warner Bros. Pictures, which are all in HD, and Paramount Pictures, which are all in SD. Top movies on the service (see list below) include both new and library titles from these studios. In February, Lionsgate Entertainment will bring about 20 HD movies to Microsoft's video service, including recent releases like The Descent, Employee of the Month, Crank, An American Haunting, Saw III and See No Evil and catalog titles like The Blair Witch Project, The Ninth Gate, The Punisher, Stir of Echoes and Requiem for a Dream.
Honey said he expects other Hollywood studio movie announcements to be made soon.
“I expect our current releases to be very close with regards to any other competitors that have deals with any other studios, and we'll add those studios, as well,” Honey said. “With library, our goal isn't necessarily to carry every single library title that we can. Our goal is to offer a movie service that speaks to our community. We first and foremost focus on library titles that will resonate with gamers. Lionsgate has a lot of library titles that cater to this audience. We'll easily have hundreds … easily in the low hundreds … of library movies in the near future.”
When Sony launched its Universal Media Disc (UMD) business for PSP in 2005, Hollywood studios flooded the channel with new and catalog titles. Some of these titles made sense, many did not. Microsoft is taking a different approach with its video offerings, which can be downloaded and, once played, must be watched within a 24-hour window.
“We've been very specific to work with our partners to bring out library titles that are relevant to our partners,” said Honey. “The majority of early Xbox 360 users are young males. So we're seeing library titles like A Clockwork Orange actually finding a whole new audience on Xbox Live. It's in the Top 20 sales list for us right now. Beerfest is doing much better than Superman Returns, which was a much more expensive movie and is our No. 2 title right now.”
The adoption of HD downloads has been amazing, Honey said. Going into the service's launch on Nov. 22, Honey knew the majority of gamers who play Xbox 360 have an HDTV to take advantage of its HD gaming capabilities. But the HD movies, which can be 6 GB to 7 GB in size and take longer to download than something in SD, have been more popular than SD offerings.
“When given a choice between HD and SD, over 60% of gamers chose the HD version of a film,” Honey said. “Some titles topped 70% in this category. Furthermore, we're charging a 50% premium for HD movies. Not only do we make greater sales because we're charging a premium price, but we sell more units. That has been tremendous, and Warner Bros. is very excited about it, as well.”
Honey said that Paramount, as well as other studios, have seen this data, and it will likely impact future decisions on releasing movies in HD for the service. Another key point for studios is the fact that library and lower-profile current releases are performing very well on Video Marketplace.
“Library sales are a much larger portion of our sales than you typically see in home video — well over 30%,” Honey said. “In addition, niche titles like Warner Bros.'s Beerfest is the No. 1 title on our service right now. That was a small, niche film theatrically, but it speaks to our demographic.”
One of the key points Microsoft made with the launch of its Video Marketplace was the expansion of the Xbox 360 from the core gamer to other members of the household, including wives and kids.
“The movie Failure to Launch has been in the Top 20 since it was released,” Honey said. “We're definitely seeing gamers' girlfriends or wives watching movies together. A lot of people watch a TV show or movie that they both want to see. Video Marketplace is absolutely core to our strategy of broadening the appeal of Xbox 360. I think that as time goes on and it becomes more established, we'll look to broaden the content offering beyond the core young male demographic to content that might appeal to the entire family.”
Top 10 Downloads (in order of units sold) as of January 16, 2007
Beerfest, Warner Bros.
Superman Returns, Warner Bros.
The Ant Bully, Warner Bros.
Mission: Impossible III, Paramount
Nacho Libre, Paramount
Eyes Wide Shut, Warner Bros.
Jackass: The Movie, Paramount
Poseidon, Warner Bros.
Swordfish, Warner Bros.
A Clockwork Orange, Warner Bros.