Lately, it seems like Microsoft always comes up a little short. The company has suffered several embarrassing failures in different markets. Internet Explorer, Zune, and Bing are just a few. I’m sure there are several ways that each of these efforts can be dissected to show why they’ve come up short in their respective markets.
However, I believe that at the heart of each product’s failure, is Microsoft’s inability to accurately understand its customer. Microsoft Office and Explorer shared similar initial successes because of their early entry into their markets. The Zune and Bing, however, were late entrants that did not achieve enough significant differentiation from the current competitors. Furthermore, none of those products really captured the majority of consumers’ interests and preferences.
Microsoft’s shining beacon that seems to have “got it right” is their popular game console, the XBOX. The Xbox entered the market later than its competitors but gathered enough interest AND adapted well enough to survive and even thrive in the gaming industry.
Recently, The New York Times recently released an article explaining how Xbox planned to further engage its consumers and attract more business.
Through strategic brand extensions, I see Xbox’s effort to increase their brand’s perception as the premiere alternative for interactive entertainment, but also extend their relationship with their consumers beyond just gaming.
You’ll remember that Xbox is the brand that brought competitive gaming between distant participants from computers to consoles with the ingenious, “Xbox Live.” This fit perfectly as a complement into Aaker and Keller’s (1990) discovery of three bases in which consumers categorize and evaluate brand extensions. The new extension of the brand must either “fit” into the consumer’s idea of the brand as a:
- Complement,
- Substitute, or
- Transfer
Yet again, Microsoft is taking interaction to another level. I think they have wisely decided to create a live-action television series (with director Steven Speilberg!) modeled after their cash cow, Halo. This makes total sense as a brand extension because it has an immediate connection to a current brand winner and has the potential to drive even more interaction with the brand. Furthermore, no other game system currently occupies this space successfully. Xbox has the opportunity to define this sector in a similar way that they did with Xbox Live.
I see where Xbox strategists are trying to draw the linkage between their second extension, a smartphone app in partnership with the NFL that allows users to interact with their fantasy league teams as they watch the game, but I think ESPN already provides significant competition in this space. They will need to really make their offer to their consumers extremely salient and prove that their mobile app is the method for real gamers to interact with their fantasy football leagues.
The following video alludes to the XBOX ONE’s new features while heralding the brands previous accomplishments and almost makes me want to become a gamer again. Enjoy.