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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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July 14, 2008 10:29 PM

E3: The European campaign

Posted by Benjamin J. Romano

Too often, we focus on the video game (and Internet search) competition in the U.S., to the exclusion of the rest of the world. But on the games front, the battle for Europe during the current console generation is more interesting and perhaps more up for grabs than in the U.S.

And if Microsoft Xbox boss Don Mattrick wants to back up the claim he made today -- that "Xbox 360 will sell more consoles worldwide this generation than PlayStation 3" -- he'll have to win in Europe.

Billy Pidgeon, a longtime games industry analyst with IDC, set the stage for this part of the console battle in an interview last week:

"European expansion is really important now. The U.S. is going as expected. Sure, there's still market share to be decided over the long run, but before, in previous cycles, you had to wait until North America and Japan had matured a bit before you would go whole-hog into Europe. But now, because of economic issues like the Euro, but more so because ... the [game] launches, so far, have been worldwide, the story that people aren't seeing is the struggle for market share in Europe."

To wit, "Final Fantasy XIII," the blockbuster title that until today was going to be a PlayStation 3 exclusive, will be available simultaneously in North America and Europe. Another potential blockbuster title, "Resident Evil 5," is coming out Friday, March 13, 2009, simultaneously in North America, Europe and Japan.

Microsoft and Nintendo come into the current-generation console battle in Europe as the underdogs. "Historically, PlayStation 2 has been the dominant presence in Western Europe," Steve Bailey, games analyst at Screen Digest, a London market research firm, said in an e-mail.

At the end of 2007, more than 22 percent of Western European households had a PS2 compared with 2.9 percent for Nintendo's GameCube and 3.7 percent for Microsoft's original Xbox. So far, Microsoft's one-year head start has helped the Xbox 360 gain a narrow lead over the PS3, but Screen Digest's forecast has Sony's console coming from behind and overtaking even the Nintendo Wii by 2012.

Percent of Western European homes with console at the end of 2007, and forecast for 2012:

Xbox 360: 2.7 percent, 6.1 percent;
PS3: 1.9; 14.8;
Wii: 3.7, 14.6.

I asked John Schappert, Microsoft's corporate vice president of Xbox Live Software and Services, about the company's European strategy for Xbox, and how he thinks it's going.

"I think we showed our aggressive stance with Europe when we lowered our price right before 'Grand Theft Auto IV' launched," he said. "We saw a huge up-tick in sales there. We still lead Sony in sales in Europe. 'Grand Theft Auto' is No. 1 on our platform in that territory. ... We have out-of-stock situations in Europe, which is wonderful because it's in demand. I wish we could get more hardware to them."

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