Interpreting that Xbox 360 Live statistic

by Vladimir Cole { Jan 5th 2006 at 1:00AM }

During the Bill Gates keynote address at the Consumer Electronics Show in Las Vegas yesterday, Microsoft announced that over half of all Xbox 360 owners are using the console's Xbox Live service. If this is true, the company has increased the usage of Xbox Live service tremendously from the estimated 10% usage rate for the original Xbox.

Careful, though, because these statistics are tricky. Here are some factors to take into account in interpreting this stat:

THE EARLY ADOPTER FACTOR. Because of product scarcity issues that we've blogged about extensively, only those who were willing to go to great lengths to obtain an Xbox 360 were successful at getting one this holiday season. The average consumer does not camp out overnight for a console. The average gamer doesn't pay $700 for a $400 console on eBay. As a result, the earliest owners of Xbox 360s are significantly demographically different from the millions more that will end up owning an Xbox 360 by the end of 2006. Early adopters are significantly more likely to sign up for Xbox Live than is the average consumer. We think that Xbox Live is a tremendous differentiator for the Xbox 360, but expect this penetration rate to fall as more mainstream consumers finally obtain Xbox 360s.
THE SHINY NEW TOY FACTOR. Because the Xbox 360 is a brand new toy, no verdict on Xbox Live has been crystallized yet. Consumers are still trying it out, still assessing it, and still actively trying to determine if it's worth it. It'll be interesting to see how many of these early users choose to pay for the service for a year or more.
TRIAL ACCOUNT FACTOR. How many of those 50% users are using Xbox Live Silver (the free version)? How many of those customers are signed up to Xbox Live Gold on a trial 30-day basis? It's too early to tell how many of these people will convert to paying members. It's not fair to compare the percentages across the two systems until the Xbox 360 has seasoned a bit.

What we're encouraging here is healthy skepticism with regards to overly simplistic data trotted out to prove success. As noted above, we're extremely excited about the Xbox 360 service and can't wait to see how it evolves over time.

[Update: fixed minor punctuation issue.]

[Update: eliminated extra word "arcade" from first paragraph.]

Reader Comments (Page 1 of 1)

BrutalMutant @ Jan 5th 2006 2:08AM

Awesome.

peeweejd @ Jan 5th 2006 8:26AM

regarding point 3: if I were to get a new uber expensive console that came with a free 2 month trial of xbox live gold I would use it. Hell, why not get 2 months free and then drop the bomb on the full smash subscription?

Evil Inside @ Jan 5th 2006 12:14PM

Considering the basic Xbox Live Silver package is FREE, allowing every Xbox 360 owner a large amount of downloadable demos and other content compared to the amount available to Xbox owners, it's no suprize that so many 360 owners are using it.

It's nice to see Microsoft is finally delivering on what they promised Xbox Live was going be.

I were to buy a Xbox 360 today, I wouldn't buy any games since there are so many demos and Arcade titles available.

portnoy @ Jan 5th 2006 1:48PM

This is a great number no question. I agree the service is doing well. Its dangerous to make loud noises about the current market penetration though. Based on all the factors joystiq mentions, its very likely that this 50% number will decrease with time. When this happens microsoft will be put in the position of explaining about the fact that LIVE is decreasing in penetration. Just as the current simplification can make LIVE look more successful than it is, a simplified view later down the road will make LIVE appear to be losing steam when in reality its just equalizing over a broader user base.

Nossy @ Jan 5th 2006 2:40PM

WOW, don't you guys think that 50% is quite low? I think Microsoft understated because a year from now they don't want to explain why the percentage of Live user have dropped dramatically.

Actually I'd EXPECT that about 80-90% of 360 owners have a Gold account. Why you ask? You're probably laughing and calling me an idiot right now. But really, given the fact that anybody who has got their hands on a 360 is probably considered a hardcore Xbox fans, why would you wait in line overnight for the console? Or why would you pay $700 for a console (which by the way the extra $300 spent could've gave that person a 6 years membership to Live)?

Anyway my point is that right now many people who owns the 360 and actually uses the system to play video games are hardcore Xbox fans who I expect to be the first who will adopt to LIVE. So if only 50% of the hardcore 360 owners are on Live, that means the other half of hardcore 360 owners don't want online gaming, or are holding on to their 12-months subscription card they got with their bundle for Halo-3.

Joystiq makes some very valid points, but I think those points will apply as the system becomes more available and the not so hardcore gamers buy the system. But right now, don't you guys think 50% is low? I guess Sony doesn't need a unified online gaming infrastructure to be successful huh?

Xboxer @ Jan 5th 2006 7:09PM

People also seem to forget that many of the early adapters of the system were already Xbox Live subscribers. I have been a Live subscriber for over two years (just renewed again 1/1/06). The first thing I did when I got my 360 was move my Live account over to the new system.

And yes above, the 50% number seems low because of what you said plus my thoughts on it.

Curry @ Jan 6th 2006 6:18AM

Nossy, you're making a few fundamentally wrong assumptions, and I'll only highlight the biggest 2.

First question: how many Xbox 360 owners actually have a home network capable of connecting more machines than just their internet computer?

Second question: how many of the people having a home network are willing to fork out 80 dollar for the WLAN adapter or purchase 30 metres of CAT5 UTP cable to connect their study to their living room where the X360 is located.

I'd have been surprised if the answer to either of those questions was over 50%, making the grand total 25% at highest.

So if the currently claimed 50% is correct, they're doing an awful good job. I suspect there's a lot of people though who just connected in the study for 15 minutes to try and download a demo and then put it in its permanent seat under the TV never to go online again. But hey, those count as well ;)