Even before the final approval was given, the research and market planning for Xbox had begun. Consumer marketing at Microsoft was comparatively new. Microsoft had experience marketing to corporate accounts, but less experience with marketing to individual consumer demographics, and almost none at marketing for the video game crowd. In fact, according to Beth Featherstone, prior to Ed Fries games marketing was actually achieving a net negative. “Prior to Ed taking over Games, the group was run by someone who managed to piss off all the influential press at the time. He took the typical we’re Microsoft and we can shove our weight around attitude, which did not go over well with the press.”
Early Marketing Success
Beth Featherstone had joined Microsoft in 1991 as an international product manager in the hardware division. She was later promoted to worldwide group marketing manager. In 1996, with nothing but Flight Simulator and some simple Windows games, there wasn’t much for Microsoft to market on the game side, and the majority of gamers didn’t even consider Flight Simulator a game. Featherstone states that it was hardware, not games that finally broke through to the gaming market—specifically the SideWinder joystick, which was launched alongside Duke Nukem and became a favorite peripheral among shooter fans. She says that the ergonomic Microsoft Natural Keyboard also became popular among gamers. Featherstone credits David Hufford*, a young PR guy who worked for Waggoner-Edstrom, with turning things around. “David literally had to beg and call in favors to get the editors to meet with us on the joystick launch. We took a very humble approach and were able to convince them that the Hardware group really did ‘get gaming’”.
*As noted earlier, David Hufford later joined Microsoft’s public relations department, and at the time of this writing is senior director of Xbox public relations.
Shortly after Ed Fries took over the games group, Microsoft “removed” their head of consumer marketing and did not replace him for another six months. Featherstone, having grown bored in the hardware group and unhappy with its direction at the time, decided to seek the empty marketing position. “I was looking for a new challenge and they were looking for someone who understood the games market but could also navigate the Microsoft political and bureaucratic machine. My email name was “Bethfe,” and one of the hardware developers christened me ‘Iron Beth.’ I had a reputation as being fair but tough as nails. I was a good fit and took the job.”
Featherstone became a group marketing manager for PC games just before the launch of Age of Empires, and quickly discovered that the group she was taking over was sorely in need of supervision—and a good deal of reorganization. “Truthfully, going to that group was a bit like trying to manage a very large group of kindergarteners without any supervision. There was a lot of bad, immature behavior. Half my team needed replacing as they were in the wrong jobs. The other half needed support and political air cover to be able to perform well.” Over time, working with Fries and his senior staff, she was able to create a strong and effective team.
Initially, Featherstone had to face down an organization that did not understand the gaming market. One of her first challenges came when a new product manager, who had just relocated from France, was exasperated by Microsoft’s insistence that the game packaging be part of the Microsoft Home brand, and in addition, that they would not let the sword on the cover of Age of Empires overlay the branding bar. Featherstone had to take the case all the way to the top. “Battle number one,” she says, “get corporate marketing to understand that games were not going to sell under the Microsoft brand or Home brand. Not easy, but we won, and I had to go all the way to Bob Herbold, who at the time was the COO of Microsoft, to get the OK. Thank god Bob came from P&G* and was very savvy about consumer branding.”
*Procter and Gamble
Xbox, From 100,000 Feet
John O’Rourke had years of consumer marketing at Microsoft, having joined the company as an intern before the launch of Windows 3.1 and worked on the marketing efforts of consumer-oriented products like Publisher, Works, and Money. He also worked in the Microsoft Office division with Robbie Bach. When Bach took over the lead role in the consumer division, he recruited O’Rourke, who ended up in charge of all consumer marketing, which included PC games, but also Encarta/Bookshelf, the kids game division, mapping products, and eventually Microsoft Money. During the early, pre-approval phase of Xbox, O’Rourke also led some of the initial marketing research.
O’Rourke was looking at the marketing requirements of the proposed console “from a 100,000-foot view.” He was still working at what he calls a “thin, very conceptual level,” considering how much it would cost, what channel commitments would be necessary, and, in his words, “What does the go-to-market look like?”
One of the interesting perspectives O’Rourke describes is how to “t-shirt size” the marketing commitment required. In other words, was it going to be small, medium, or large? The questions he asked were:
• Is this going to be fifty million dollars or two hundred and fifty million dollars?
• How many people we are talking about here?
• What are the parts of the marketing mix that are going to be required to launch this?
• What will the teams look like? Regionally focused or one global team?
Of course, this was all pre-approval. Once the project was approved, his job title changed to Senior Director/Xbox North America (while Bach became Senior Vice President/“Chief Xbox Officer”), and his focus shifted entirely to Xbox. At that point he says, “…it really came down to taking it from the conceptual level into the real specifics of the marketing plan, the brand strategy, PR and media perspective, and the hype strategy to get the word out there, building excitement and anticipation for this great new thing.”
Marketing Challenges
Competitive analysis suggested that the effort to market a brand-new Microsoft game console system was going to be challenging, largely because of public perception of Microsoft. “We absolutely had to get a deep understanding of our gaming customer” says O’Rourke. “My point of view was very much about getting focused on what it was going to take to shift and to build the positive perceptions around what this Xbox thing could be, as well as understand the space and the consumer hearts and minds for where we had the opportunity to go. We learned that, as Microsoft, it was going to be a real challenge because people didn’t think of us as an entertainment company. They didn’t think of us as a consumer company. They thought of us as a business productivity and operating system company. As a result of this, there was very strong discussion and debate from a naming and branding perspective as to whether this console, at that point code-named Xbox, was going to be a Microsoft product or branded under another name.”
When Nintendo veteran Don Coyner, transferred from Hardware to work for O’Rourke, he took over the marketing and branding research. He went on the road early on to speak with retailers, seeking answers to some pressing questions. What would Microsoft have to do to be an effective competitor in the video game market? Did the Microsoft brand add value or did it detract? What would people expect from Microsoft if they released a video game console?
Of course, having spent years at Nintendo, Coyner already knew a lot about video game marketing, and shared his knowledge with the company, not always meeting with a receptive audience at the beginning. “I remember a presentation I did for Bill about who makes the decision to buy a console, and I was saying it’s really the kids’ decisions, and mom and dad basically take the order because they don’t want the kid to be disappointed on Christmas Day when they open the box and realize that they got the wrong console. And he was like, ‘That’s crazy. I don’t believe that at all. Aaarrrrg.’ And I was like, ‘No. That’s just the way it works.’ And he’s like, ‘That’s the stupidest research I’ve ever heard in my life.’ It’s not even research. It’s just a fact. And his best comment was that I was the dumbest person who’d ever been in his office.”
Nintendo: An Inside Look
For those who might be interested in getting a glimpse into how Nintendo worked, Don Coyner offers some insights based on his years there.
“When I worked at Nintendo, one of the things I never fully understood was that Miyamoto wanted to look at every package we ever did for his games—the packaging design—and he gave us feedback. When it came to TV advertising, they wanted to see commercials after we were done with them. We’d send them over. We cut about 130 TV commercials in my seven years there, and I think I only heard from Japan one time on a commercial they didn’t like. I had a $50-$60 million media budget and another $10 million for production, and their real passion was around the packaging, and not around the things that we were spending all this money on. I think that’s just the way stuff is built in Japan, that the package is much more important. I remember talking with Miyamoto, talking about the style guide for Mario because Mario was inconsistent in the early days. Sometimes he had four fingers; sometimes he had five. So I said, ‘Look, if we’re going to do a merchandising program, Mario needs to look the same. He can’t sometimes have a blue shirt and red coveralls and sometimes have blue coveralls and a red shirt. We have to lock it down for the style guide.’ I remember taking him through this, and he’s like, ‘OK. I guess that makes sense.’
“I still can’t believe Nintendo doesn’t license their content for other platforms. We pitched that to Arakawa back in ’93. Like, ‘We should make games for Sega.’ And they were like, ‘Absolutely not!’ And today, if they opened up that library to other platforms, they could be rollin’ in dough, but they are so determined that they need to stay in the hardware business.
“You never really knew how things happened. At NOA, when I was there, they were really very shut out of what was really going on. I mean Arakawa would talk for hours every night with them, but he was their main point of contact. So decisions would get made and you never quite understood. Is this because it’s a Japanese company? Is it because it’s a family business? Or a combination of both? You could never really tell what the real story was.”
Surveys
Coyner’s team did several distinctly different surveys. In one, they never mentioned Microsoft, but, after asking some standard demographic and game usage questions, described a new potential console called the “Apollo.” They directly compared Apollo to Sony’s PS2, Nintendo 2000 (which possibly referred to Nintendo 64), and Sega Dreamcast, and then asked a series of questions. Of course, the stats and qualities they ascribed to Apollo were actually all about Xbox. They did three different versions of the survey, changing key numbers to see how strongly potential consumers reacted to various elements of the systems. Apollo and PS2 were the strongest two systems, and in the results of this survey, they came out pretty close to each other, but far ahead of the other two systems.
In other surveys, they specifically asked people how they felt about the idea of Microsoft creating a video game console. Coyner remembers one of the most memorable responses. “Well, if Microsoft made a video game console it would blue screen all the time; it would take three minutes to boot up, and the best game they would have would be Flight Sim.” On the other hand, some people were more positive and believed that Microsoft would do well with “anything online,” that they would be good with the technology, and, possibly in reference to Sega abandoning their console division, that Microsoft had enough money not to bail on the project. On the negative side, was the question of whether Microsoft could provide compelling content.
This feedback was largely used to determine just how prominently they should feature the Microsoft name in the branding of Xbox. The decision was yes. Use the Microsoft name, but minimally.
In other types of surveys, participants would be given paragraphs of information and instructed to cross out the parts they didn’t like and underline material that they liked.
What’s the Silver Bullet?
From the beginning, people from outside the game and Xbox divisions tried to define Xbox in terms of what they knew, and what they knew was everything but games. Bill Gates wanted it to run Windows and thought it could do be used as a sort of Windows PC replacement that, oh, also played games. Kevin Bachus talks about how executives were always coming and asking, “What is the silver bullet?” In other words, what will Xbox have that PlayStation doesn’t? Bachus would tell them, “Our games are going to be better because we have better tools, we have better technology, we’re releasing this a year later. The games are going to look better, play better, sound better, and that’s why people buy consoles.” And they’re like, ‘Nonono. Everybody has games. That’s not a silver bullet. Like does it do photo editing? Bill Gates is a big fan of the idea, so maybe it can do photo editing. Like what about Internet Explorer? Like, do you run Office on the television set?”
Don Coyner also had issues with people’s visions of Xbox, and in this case he was dealing directly with Bill Gates. “When Gates said, ‘We need to put Windows on Xbox,’ I was like, ‘Are you kidding me?’ So my first job in planning was, ‘OK. Would you figure out if there’s a customer for this, and what they would do with Windows on Xbox? How would it work, and what would their expectations be? So we did a bunch of research, and I had to share that with Bill, too, and he didn’t take kindly to some of the feedback we’d gotten on that subject. But we killed it, so that was good.”
Bob McBreen remembers one of Coyner’s observations in the early days that helped shut people down who wanted to add unnecessary pet features to the console. “Don was a genius in the fact that he very early on targeted that our customers were angry young men. Any time we looked at any particular technology or feature, we quickly said, ‘Does this allow us to deliver the best product for angry young men?’ And so, what had originally been pitched as a Windows box quickly got thrown out the window as we said, ‘We don’t need this feature. We don’t need this feature. We need this, we need this, we need to improve that.’ And one of the biggest challenges we had internally was fighting people who would argue, ‘Oh yeah yeah yeah. It’s going to be a gaming machine, but it also has to be able to edit digital photos.’ And so, using Don Coyner’s target market of angry young men, we were able to quickly define the product features and technology.”
Coyner eventually left the marketing team to work directly under J Allard. “The engineering team was being asked to build a lot of derivative products for Xbox, like ‘put Windows in Xbox,’ or ‘turn it into a DVR,’ and things like that. They realized that they had no idea what consumers would think of that, so I went over to J’s team to be a product planner and help the engineering team prioritize and decide whether we should do some of that stuff or not.”
Branding the Console
Naming Xbox
How do you name your new console? The precedent for consoles wasn’t too inspiring. The Atari VCS—Video Computer System. ColecoVision. Intellivision. Nintendo Entertainment System. Sega Master System. Sega Genesis. Sony PlayStation… Sega’s Saturn and Dreamcast were imaginative, but there was a lot of precedent for boring names and not much history of highly successful consoles with clever names. However, calling it the Microsoft Entertainment System would definitely not cut it.
It’s very common for major systems in development to have code names. Windows 95 was called “Chicago”. The Atari VCS was “Stella” (named after Joe Decuir’s bicycle). Nintendo 64 was “Project Reality” and Sega’s Dreamcast was “Katana”. Microsoft’s first console was xbox, Xbox, X-Box, xBox or Xbox, depending on how people spelled it in the earliest days of its conception, but almost never does a codename become the final product name. So naturally Microsoft had to find a real name—the right name—for the thing they were building.
At first, they did a lot of conventional research. “We had a big list of potential names,” says O’Rourke. They did surveys targeted at hardcore gamers. “We tested different names against different associations for the console itself, and we did it in such a way that our testers couldn’t determine if we were Microsoft researchers or Sony researchers. They just knew that we were from the gaming industry and we were doing studies. As a team, we looked at every one of those big decisions because we knew we had to get this right. We knew we only had once chance. We wanted to make sure all voices could offer their points of view on that and, where possible, that we could have good market feedback and input into that, whether it came from the gamers, our partners, or the channel, or all three.”
Eventually, the naming team decided to hire what Bachus described as “a very very expensive naming company.” Naming pros. “They asked us things like, if it was a car, what kind of car would it be? Or, describe it like you would describe a person… that kind of stuff. So we answered all these questions, and they came back with a list of names and they were all terrible. They all actually sound like car names. The Allterra, the Lanca and that kind of stuff.”
They told the agency that the names didn’t work, and after some more specific feedback, the agency went back and worked on it some more. “So they come back, and they’re going to have a big presentation. (Actually, we got on a conference call.) And they say, ‘Ok, this name is going to knock your socks off. We’ve tested and tested and everybody loves it. So Microsoft 11X.”
At this point Brett Schnepf, who was on the call says, “I put the phone on mute, and I looked at Don and I said, ‘If they use the Spinal Tap analogy, we just fire them.’” And sure enough, the next thing the presenters said was, “It’s a great Spinal Tap analogy… It sounds futuristic; it’s like that whole Spinal Tap thing: it goes to 11. The X is mysterious.”
And that was when Bachus turned to Coyner and said, “Yeah I’ll get working on the Xbox trademark.”
Xbox was already a trademark of a NASDAQ-listed company called XBOX Technologies, but they were going out of business anyway. “We gave them a little bit of money, not much, but they were thrilled to get anything,” says Bachus. Apparently there was also a German porn sight, xbox.com, and a few other Xbox-related issues to clear up. Then there was the matter of marketing in Japan. “Xbox was a controversial name to some extent, because in Japan the letter “X” means “bad,” but we figured they’d get over that, and so Xbox was the name. Then we just had to figure out, was it X dash box, or do we capitalise the “b” versus lower case and all that kind of stuff had to be figured out. And then we were designing the actual device itself.”
Even after all the research, when Coyner took the decision to Robbie Bach and said, “I want to use Xbox. That’s the name we’re ought to go with,” Bach’s initial response was something like,” Nooo. Really? No, I don’t like that name. It’s so uhhh…?” Coyner explained the process they had gone through. “We’ve got names where people think we’re trying too hard; we’re trying to be too hip. I mean, look. We’re Microsoft. People know it’s Microsoft, so we have to do something that isn’t so out there, and we also can’t do something that’s really mundane. And when we talk to people about the name, X connoted mystery.” At the time, X-Files was very popular, and Coyner worried that they might be seen as copycats, “but really, when we gave that name to people, their reactions were, ‘That’s interesting because it’s X, and that can mean all kinds of things.’ And it is a box. And it’s short, and nobody thought we were trying too hard or trying to be too hip. So we’re saying, ‘Robbie. This is the right name.’ And he’s, ‘Well OK. If you say so.’”
For some insight into the methodology used to determine customer reactions, see “Microsoft Video Game System Name Evaluation” on page 308. And to see some of the actual names suggested by one particular agency, on page 400.
Picking the Logo
Anyone who has ever tried to design a logo for their business knows that it’s a challenging process. You may go through dozens, or even hundreds of designs trying to get it just right. At Microsoft, the logo decision was as critical as finding the right name.
One major decision involved how to use the Microsoft brand. Research had suggested that it was important, but should not be dominant. There were also remaining opinions about whether the Microsoft logo should even be on the box at all, or if it Xbox should be a brand of its own, or released under a completely different brand. “There were strong debates on both sides,” says O’Rourke, “and the decision we made was that there was tremendous value to having the Microsoft name on the box, particularly in the first holiday, for many parents that might be buying this thing. It added legitimacy that this isn’t a fly-by-night company that put out a console and is going to be out of business a year later.”
Once it was decided that the Microsoft logo should be present on the box, the next question was, how big? O’Rourke answers the question. “You can see the weighting of the Xbox logo was twenty times the size of the Microsoft logo, but it was there.”
Then there was the logo itself. There is a popular story that a creative guy named Horace Luke designed the Xbox logo, and that the color he chose—green—was just an accident. Don Coyner recounts the version of the story that is often told. “So the color green that we chose, his version of the story is that he was in a meeting with a design firm, working on logo stuff, and the only pen he had in his pocket was green, and that’s how we ended up with green.”
Coyner finds the story amusing, but inaccurate. “It sounds so, sort of hip to say it that way, but the reality of it was that we didn’t just randomly choose the color. That was my job.” First off, look at the competition. Nintendo used red and Sony used blue, so what other color would distinguish them? What color could they own for Xbox? “Green is a great color,” says Coyner. “So what would be a great color of green that would stand out at retail? And we did some work where we created some signs in different colors of green, and we put them 30 feet away in a retail-like environment, and the color we chose was chosen because it popped. You’d see it from 30 feet away. It’s a powerful color. It wasn’t as simple as, ‘I had a green pen in my pocket, and the rest is history.’
“My job was to decide brand name, decide logo type, decide colors, fonts, decide how Xbox would be written. If it’s capital X capital B, cap X small B. All that stuff. And the logo we ended up with, it was breaking through. It’s this idea of an X that’s breaking through the surface. And again, we were talking about raw power, and we did some shots where we showed this where it broke through and there was a noise sort of like an earthquake to try to connote the power. So that whole X and the way we treated it and the way it’s designed it was all about that vision.”
When asked about the legacy of DirectX and their branding, he said, “They may well have had things that looked the same. Alex St. John may believe that it came from DirectX, but having been the person who decided all that stuff, I can say that wasn’t true.”*
*Although the name Xbox was derived from DirectX initially.
Xbox Marketing Strategies
According to Robbie Bach, marketing concentrated on the hardcore game market. They were aware that people’s perception of Microsoft was a company with plenty of money, but not necessarily one that could deliver what gamers wanted. “That is why we focused so much on Xbox as a brand and on hardcore games, performance, and online as key attributes. Our strategy was to build that credibility with serious gamers and then expand from there over time.”
Beth Featherstone elaborates saying, “Halo was going to be the flagship game. We had to win the hearts and the minds of the hardcore gamers. We started out saying that this was not initially going to be a platform for the casual gamer. We don’t want to be Nintendo. We’re perfectly fine to let Ninten do have that space. They do it really well. We’re not going to go there initially. We’re going to concentrate on the hardcore gamers that are the early adopters that are going to drive the opinions… they’re the opinion leaders.”
Although not technically a marketing directive, Featherstone notes that another of the ways they would make the Xbox platform successful was to capitalize on Sony’s poor relationship with developers. “They were not nice to the game developers. They kind of shoved their weight around.” In addition to their unequal third-party deal making, they were very autocratic about game approval. She mentions one particular guy who was in charge of third-party development who would regularly kill any game he didn’t like. “We took the approach that we were going to be good partners with the game developers and that was going to help endear us to the opinion leaders and the hardcore network, and then the waves would ripple outward and we’d be able to get the more casual gamers.”
Who Controls the Message?
One specific area in which Coyner played a major role was in retaining a great degree of control over the Xbox message. Initially the Central Marketing Group at Microsoft told him to use Microsoft’s outside agency, McCann Erickson in San Francisco. Coyner didn’t believe that McCann Erickson understood the game market well enough and wanted to have more control over the agency they used. So took his case up the ladder, directly to COO Bob Herbold. “I asked if we could handle management of advertising, in particular, ourselves. He agreed and we did an agency search and went back with recommendations.”
According to John O’Rourke, “Don had short listed a number of more ‘boutique’ agencies that ‘understood gaming.’ We were going to go with one of them when we were pressured by CMG (the Central Marketing Group) to at least have McCann give a pitch for the business. We agreed to listen to a pitch—and surprisingly they did a GREAT job on the pitch. We ultimately chose them over the others based on their ideas/strategy and NOT because we were pressured to do so.” Coyner clarifies that they chose to work with the New York office of McCann Erickson, “and we got our own staff at the agency. I also did all agency management and direction (except media which continued to go through the central Microsoft media person).”
Xbox was a big step for Microsoft, and everybody involved knew it. For the marketing people involved, it might have seemed daunting, but the enthusiasm throughout the Xbox division was infectious, and the optimism was high. There were difficult moments, but they never succumbed to fatalism. O’Rourke remembers going home every day and waking up excited the next morning. It was at the same time the most difficult and the most exciting job he had ever had. “Most of it was because we were having to break many of the rules and go through these barriers for the first time. We had to be at our smartest and our sharpest. When we fell down, we had to get back up quickly. Having the intestinal fortitude, the drive, and the commitment to make it happen is what carried us from day to day. We never found ourselves in that navel gazing problem where you go into analysis paralysis. We had a bias for action.” He adds that it was a big help to have a great technology platform to support.
Marketing in Japan
Coyner had the unenviable job of trying to promote Xbox in Japan. He oversaw focus tests with simultaneous translation and talked with people about console design, attitudes, the concept of Xbox… “We spent a ton of money. We built out a huge team, relative to the size of the country. We didn’t have Square, which was a huge gap in the games lineup, and that was a major problem.” Coyner says that the reasons the focus group participants would give for not wanting to buy an Xbox would change based on the various criteria they were offered. For instance, “Initially, it was, ‘They don’t have Final Fantasy. I have to have that game.’ And then once we had it, it was like, ‘Well, they’re an American company. This is a Japanese thing. They will never understand the video game business. They just won’t.’” Coyner concluded that there was definitely a bias against an American-made console and a belief that an American company like Microsoft probably would never figure it out.
“It was very frustrating. Man, the amount of time we spent over there trying different things, and the amount of investment we made, how hard we worked with the team over there, with retailers over there.” One of the big questions was whether they could be successful if they couldn’t win over the Japanese market. “It was a real question. Also, the content is quite different—the stuff that really appeals to them. We didn’t excel at that stuff. We had content issues, no doubt.”
Coyner also visited third party companies talking about how they were positioning the console, and having worked for Nintendo for years, he was aware of the response he was getting. He said that somebody without experience with Japanese culture might have walked out of these meetings thinking that the meeting went really well, “but I’d walk out going, ‘Well, that was a disaster.’ And others are saying, ‘No. They said good things.’ I answer, ‘They said good things; they didn’t mean good things.’ When you hear a lot of the ssssssss… the sucking sound, you know you’ve got trouble. Having spent a lot of time with Arakawa over the years, who I adore, and a lot of other folks who would come over from Japan and talk to us, I could tell them that they thought we were crazy.”
According to Coyner, he heard a lot of excuses and criticisms. “They also said that the original console was too big. They hated the fact that it had a curved top because you couldn’t pile things on top of it. One of the reasons that we made the Xbox so you could stand it up as well as lay it flat was for Japan, because over there, they live in tiny apartments. They would frequently put the game console away when they were done with it. And they’d drag it out. The idea that it could stand on the floor… it was important that things could be vertical over there, and that you could stack on it. And Xbox design had the concave top, but you can still pile things on top of it. They had all kinds of excuses of why we wouldn’t be successful.”
On the following page are several examples of original artwork that J Allard commissioned from one of his favorite artists—Mark Kostabi—after the Xbox logo was finalized. Allard had them displayed in different areas of the Xbox offices.
