Microsoft Xbox Stats Emerge

It was announced today that Don Mattrick had left his position as president of Microsoft’s Interactive Entertainment division to join online gaming giant Zynga as its new CEO. Interesting news… but even more interesting were some of the Microsoft stats included in Zynga’s press release. The numbers were cited as evidence of Mattrick’s huge success with the Xbox. But they reveal just as much about the limits of that success.

“[Mattrick]… has grown the Xbox Live player network… to 50 million active members in 41 countries.”

“…[Mattrick] was responsible for the team that grew Microsoft’s Xbox 360 global installed base… to more than 75 million consoles.”

There are several interesting observations we can derive from these numbers.

1. Note the total number of Xbox Live members: 50 million, globally. By a strange coincidence, that’s the number of active members Valve has been reporting for its PC-based Steam service. And yet, we are constantly asked to believe that the PC is dead, or PC gaming is dead.

Steam on the PC, operating without Microsoft’s gargantuan Xbox marketing budget, has the same number of active users as Xbox Live. Keep repeating that to yourself. Because you certainly won’t hear it from Microsoft. Or in most media coverage.

2. Next, it’s interesting to observe that only about two-thirds of Xbox 360 owners are on Xbox Live. Fully one-third of Xbox 360 owners — about 25 million gamers — cannot or will not subscribe to Microsoft’s totally free online service. These 25 million Xbox gamers are the ones that Microsoft was essentially willing to throw under the bus with its always-on Xbox One. Microsoft has now (wisely) relented on that original hard-line strategy. Nonetheless, it is worth remembering that Microsoft’s biggest brains (including Don Mattrick) must have looked at these numbers before coming up with their always-on strategy in the first place.

3. Finally, it’s important to ask how many users subscribe to Microsoft’s paid Live Gold service. Microsoft has historically been very reluctant to talk about these numbers. However, in an interview with GamesIndustry in December of 2010, Microsoft Interactive Entertainment Division CEO Dennis Durkin said:

“Of our 25 million [Xbox Live] members, about half of them are subscribers for the business and pay us about $60 a year for that.”

It’s impressive that Xbox Live subscriptions have apparently doubled since 2010. But for now, let’s focus on the fact that paid subscriptions accounted for about half the Xbox Live user base. (This ratio has been confirmed by other reports, over the years.) Pro-rating to today’s totals, you’re talking about 25 million users, globally. That’s a substantial number in absolute terms — especially at $60 a pop. But it’s also roughly the same number that haven’t subscribed even to the free Xbox Live service. And who Microsoft was willing to leave behind with the Xbox One. (Now maybe we see why…)

Doing a further bit of arithmetic, we can see that the overall ‘attach rate’ for Xbox Live Gold is only about 33%, across all Xbox 360 hardware units in the field. That ratio might be as much a cause for concern as for jubilation. Yes, it’s true that $60 times 25 million users comes out to a great big steaming pile of money — year after year after year. But it’s a “hole or donut” kind of number. Fully two-thirds of the user base is not on board with Live Gold.

This raises all sorts of questions about how the Xbox — and consoles in general — are marketed and used. In particular, it seems very relevant to Microsoft’s touted role for the Xbox One as a set-top media device. It’s always been debatable how many consumers would happily spend $60 per year to access Netflix — on top of the $96 they pay Netflix itself. Now we see that only one-third of Xbox gamers have been willing to pay. It’s hard to believe that couch potatoes will be any less stingy.

None of these calculations drives a stake through the heart of Microsoft’s Xbox strategy. But they do provide some interesting perspective. It’s not enough to say that the audience for these products is large. Microsoft, and the games industry as a whole, should also be asking whether it’s as large as it could be. Or whether it’s being addressed in the most effective possible way.

About fung0

Long-time tech journalist. Contributor to numerous periodicals, online sites and TV productions in the US and Canada. Author of several books on computing topics. Graduate mechanical engineer (Queen's U).

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