ANALYSIS: Kinect RRP

The price of Kinect has always been a crucial issue.

When the device was first unveiled last year, everyone from retailers and publishers to the all-important consumers began to wonder how much this ambitious technology would cost – especially as Microsoft began positioning it as akin to a new console launch.

The platform holder finally announced the price two weeks ago: 129.99 for the camera itself and Kinect Adventures.

It is considerably more than the sub-100 price point the High Street demanded in the wake of E3. And yet retailers surprised the industry by revealing the number of deposits received for Kinect so far has been higher than expected.

There have, of course, been some complaints – particularly from consumers online – but Grainger Games even claims the device could be the company’s biggest pre-order to date.

Microsoft are understandably pleased with the response.
Through the initially high price points of Xbox 360 and even it’s Xbox Live service, the platform holder has gained a deep understanding of its audience’s financial tendencies – and the first wave of pre-orders for Kinect show that this has not waned in any way.

We know our consumers are willing to pay for great experiences,” European VP of interactive entertainment business for Xbox Chris Lewis told MCV when the price was announced.

I am confident that this is what Kinect represents. I am in a very buoyant frame of mind for the coming Christmas and the holiday phase.

As long as we continue to offer consumers great, deep and compelling value, then they will keep flocking back to Xbox 360.”

However, there still remains some level of scepticism about the device’s price.

Some companies are less convinced that Kinect will capture either the core or mainstream audience in the way that Microsoft hopes – or at least, not around the controller’s launch this November.

Codemasters’ CEO Rod Cousens tells MCV: The price point will doubtless have been researched and influenced by its Christmas release window and the anticipated achievable volume from the Xbox 360 devotees who will want to be first in line for the latest offering.

Microsoft will be confident about selling all it can make this year. Although bundling Kinect with a game implies a standalone price target of sub-100, which is where it will need to be if it is to attract mass and establish itself as a platform.”

ShopTo owner Igor Cipolletta adds: If you compare the cost of Kinect to a full set of Wii or Move controllers, you can see that Kinect will work out as the cheaper option. But for the sole, hardcore gamer, it looks a very expensive option as a substitute for a joypad.

That said, Nintendo and Sony allow you to build up your multiplayer options by buying additional Wii Remotes or Move controllers as and when needed, whereas Kinect is a one-off cost.

Also, the RRP may have the unfortunate effect of deterring any impulse buyers.”

Microsoft is quick to assuage any doubts the industry may have, emphasising the consideration that has gone into Kinect’s pricing.

We researched it heavily,” Lewis says. As with most things, we do massive amounts of consumer research. Not only did we consult with retail and the media, but also the analyst community. We think this is great value.”

The firm is particularly confident that Kinect will sell well in the UK.

Lewis claims that in Britain the Xbox 360 boasts the highest attach rate of all the platforms available. He also reports that UK 360 owners buy more games every year than those in other territories.

While he was unable to give exact UK figures, the most recent NPD report gives the US attach rate as an average of 8.9 titles per console.

When 8.9 games equates to potentially over 400, a 130 price tag could be considered a fair deal compared to what gamers have spent on their Xbox 360 – particularly for a core audience.

For the unitiated, the mainstream gamers that have yet to purchase Microsoft’s console, and ultimately the wider audience the platform holder is targeting, Kinect will be available with Kinect Adventures and a 4GB model of the Xbox 360 S.

This new SKU is the spiritual successor to the Xbox 360 Arcade – a prime example of how Microsoft has tailored its hardware for a broader demographic.

Lewis said: The 4GB bundle gives families an immediate opportunity to jump straight in to the experience with everything they need, and we are really happy with the value it represents.

We always want to offer consumers choice – which I think we’ve demonstrated over the years.”

The fact is Kinect marks a new era for the Xbox 360, whether it plays out the way Microsoft hopes or not.

The device has been positioned and priced to not only reinvigorate the core market and provide new experiences for established 360 loyalists, it also marks the company’s biggest push towards the mainstream audience to date.

The groundwork has already been laid with the likes of Lips, Avatar games and You’re In The Movies, but it is up to Kinect to draw in the families, parents and young children Microsoft needs if it is ever going to capture the attentions of more than just 16 to 34-year-old males.

Lewis is well aware of the stakes, but his confidence remains unaffected. With the carefully targeted price point and the strong response so far, he believes Kinect will be instrumental in helping the Xbox 360 truly shine.

We see this as the year of expansion beyond the core gamer – an audience we are synonymous with,” he said.

In this stage in the lifecycle, Kinect represents the way in which we are reaching out and connecting with younger, older, female and more family-orientated audiences.

That’s not to say we are forgetting the core. From our point of view, we remain committed to that audience in terms of bringing full-blown, blockbuster games to that space: Halo, Gears of War, Fable, and so on.”

With price fears potentially quashed, one obstacle remains: educating the mass market.

Like so many gaming products, Kinect is not something so easily explained. If Microsoft wants to truly spread the device’s message, it needs to demonstrate the tech’s potential first-hand.

Fortunately, the platform is already working with retail, forging partnerships that will ensure that Kinect is effectively showcased in the run-up to Christmas – primarily with the UK Kinect tour announced last week.

We have to and will continue to offer trial opportunities,” said Lewis. What you probably saw from us at E3 was a huge opportunity for people to ‘jump in’ and try Kinect.

You will see a lot of trial opportunities with both our retail partners and indeed in our own way between now and when we come to market, as well as throughout the Christmas season.

Seeing and experience is believing. And we know that when consumers get in front of Kinect and it comes to life before them, it’s hugely compelling.”

Will Microsoft’s gambit pay off? It is too early to tell.
Since the mainstream are unlikely to be fully aware of Kinect, retail reports of a high early uptake suggest the device is already a hot property among the core consumers – even with its controversial price tag.

Now, all eyes turn to Microsoft and the High Street. With three months to go, the clock is ticking.