Microsoft eyes '09 market-beating Xbox sales

SINGAPORE Wed Dec 17, 2008 10:49am IST

Visitors try out new software for Microsoft's video game console Xbox 360 at the Tokyo Game Show 2008 in Chiba, east of Tokyo, October 11, 2008. REUTERS/Yuriko Nakao/Files

Visitors try out new software for Microsoft's video game console Xbox 360 at the Tokyo Game Show 2008 in Chiba, east of Tokyo, October 11, 2008.

Credit: Reuters/Yuriko Nakao/Files

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SINGAPORE (Reuters) - Microsoft Corp expects its Xbox game console sales to outpace broader market growth next year, a senior executive said on Wednesday, projecting optimism despite dampened consumer spending.

Although the global economic slowdown has hit consumer demand, Microsoft expects the overall video game industry to continue growing next year as more people choose to stay at home, said Alan Bowman, Asia general manager of Xbox operations.

Industry watchers expect the sector to grow in the 20 percent range this year, though Bowman declined to give specific forecasts for 2009.

"Outpacing the market is a key measure, but we've also managed to broaden the market to include people who have never played video games before," Bowman, who is based in Sydney, told Reuters in a phone interview.

"So what is really driving our growth momentum right now is how we are broadening our consumer base to include not only hardcore gamers but also individuals who would have previously not thought about buying a game console."

In Asia, market research firm GfK said Xbox shipments in October grew by 53 percent compared to September after Microsoft cut the price of the console to less than $200.

No figures were available for the same period last year as they only began tracking the market late last year.

Bowman said current shipment volumes had reached such high levels that the company could afford to depend on volume to rake in a profit despite the lower prices.

"We're looking at some really great levels right now, so that allows us to pass on cost savings to our customers."

The Xbox outsold rival Sony's PlayStation 3 in Japan in September, its first monthly unit sales win in Sony's home base.

However, it still lags behind Nintendo's Wii console, which sold over 2 million units in the U.S. in November.

Bowman said he was confident the Xbox's current growth momentum would continue into the Chinese New Year shopping season on the back of its lower price.

Chinese New Year, which takes place in late January 2009, is the peak shopping season for most countries in the greater China region and many retailers in east Asia typically chalk up their best sales during that period.

Microsoft has sold about 25 million Xbox 360 consoles worldwide since its introduction in late 2005, compared to 14.4 million units for Sony's PlayStation 3 and 30 million of Nintendo's Wii units, which both came out in late 2006.

While video game developers such as Electronic Arts Inc have warned recently that their profits and revenue will fall short of already low-forecasts, Bowman said Microsoft would continue to invest in software and game development.

"Game development is the core of what we do," he said. "Microsoft is a software company by heart, and we will continue to work with our partners and by ourselves to develop new software for the market."

Bowman also said there were no concrete cost-cutting measures being implemented to deal with the current economic downturn, but that the company is "constantly evaluating our options".

"Any global company needs to be mindful of their costs and money, but that's a combination of good internal controls and effective cost management," he said.

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