The birth of couch social networks
A few years ago, when I lived in a small studio in New York's East Village, I discovered that online social interactions are a lot more fun and meaningful when you are doing something together. If you are socializing in person, doing something together is a given, even when the activity is as simple and mundane as sitting at a bar ordering drinks. However, in the online space, socializing is for the most part an exchange of information, whether it's email, IM, sharing photos and so on.
The eye opener was not a computer, but rather a gaming console; my Xbox and its Xbox Live service gave me one of the most enjoyable and active social experiences outside of live interactions. It also provided much needed relief from living in a closet-sized space by transporting me into far away, war-torn lands of the future, racing tracks or soccer stadiums via games that connected me to other people around the planet.
Shortly after release in 2001, Xbox allowed console owners to play with friends or strangers from all over the world while being able to voice chat, almost unintentionally giving birth to the living room social network. Yes, PCs offered that type of activity long before consoles, but Xbox was connected to my big screen TV, and instead of crouching over a small PC monitor, I could sit back and relax on my couch for hours and voice-chat with my friends here in the U.S. and back in Italy, while playing my favorite games. It was immediately addictive.
TV screen takeover
Six years after the introduction of Xbox Live, 17 million users around the world have adopted the service as their couch social network dedicated to gaming. A recent NPD study revealed that online gameplay in 2008 was up 25 percent over the previous year, and Xbox Live users are doing a big chunk of it. Beyond gaming, Xbox 360 has become the box to turn to for a broad range of entertainment on a TV screen. What began as a system solely designed for gamers to play and connect has developed into a broad entertainment platform that offers its users games, movies, TV shows, music videos, demos, original programming -- and even new and interesting advertising.
The reigning champion
Xbox Live users are avid consumers of all digital content, to the tune of 550 million downloads of gaming and entertainment content, including 60 million songs/tracks for music games like "Guitar Hero." Netflix was adopted by over 1 million people on Xbox Live shortly after launch late in 2008, which is 10 percent of the Netflix userbase. Hollywood and broadcasters paid attention early on, and so there are over 45 movie studios and TV networks, including Warner Bros., Paramount, MGM, ABC, Disney, and Lionsgate, that support the platform.
There is so much content available to users that Xbox Live can now claim to be the leading provider of on-demand, high-definition content in the U.S., providing more than twice the number of hours as leading cable operators. With all this content, time spent as well as transactions on the service have also increased dramatically and, according to Xbox, is up 84 percent (year over year, in 2008). As there are more and more things to do and experience, Xbox Live is taking increasingly more time away from TV viewing. In fact there are more men 18-34 today playing console games than watching any of the TV broadcast networks.
What's in it for advertisers?
The ad opportunities on Xbox Live have also grown with the service. Initially, the ad units were limited with no real opportunity for interaction. However, the offering has grown to include standard IAB sizes that can drive you to branded landing pages, called branded destination experiences (BDEs). For an increasingly large number of brands, the BDEs have become a microsite designed for the large high definition TV screens. BDEs allow brands to showcase their products and services via long form videos in high definition but also offer unique content for users, such as new maps or cars for their games, or branded wallpapers called themes for their TV screens.
Almost every category, from autos to entertainment, apparel and package goods, have experimented, and often returned with bigger ad presence on the service. The HD delivery of long-form content on a big screen TV has given Xbox live an advantage over similar PC based offerings and results have been not only positive but in many cases superior to the same campaign online. The addition of roadblocks, day-parting and geo-targeting has made the service almost as flexible as an online buy, with the added benefits of a bigger stage for delivery -- the TV screen in the family room.
ROI
Results are fully measureable, from impression delivery to response rates, number of downloads/streams and so on. However, there are some limitations that need to be ironed out. For example, there is no way for a user to access the BDEs without clicking on the ads, and traffic to the branded pages depends on the ad units. Once the campaign is over, the user has no way of visiting that page, although the content can still be found in the Marketplace, where Xbox lists all content available for download. Many of these issues are being addressed with the help of the feedback from forward-thinking advertisers who are making an investment on the platform, and improvements and fixes are being implemented via frictionless software updates.
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