Product Extension Proposal

Executive Summary

The purpose of this report is to provide an external analysis of emerging trends in the electronic gaming platform category before making recommendations on how Microsoft can extend the existing Xbox product line with a view of increasing overall company profits. During our analysis we have been careful to consider utilizing existing resources at Microsoft's disposal so as to lessen the financial strain of introducing new technology and equipment. Avoiding cannibalization of existing product lines has been a strong focus.

Our report begins by analysing the emerging trends in Australian gaming, initially examining the overall gaming industry, so as not to stifle creativity, before turning our attention to electronic gaming platforms, more specifically, the Xbox product line. From this analysis we were able to draw the conclusion that Australian gamers seek consoles with greater portability and greater multitasking ability. We were also able to conclude that the number of female gamers has increased, and continues to increase, to the point where nearly half the gaming consumers are now female. Subsequently, gaming industries are now creating stronger female characters and feminine story lines within their games. Microsoft's Xbox may already meet the male gamer segment; however, we identify an area of opportunity by appealing to female game consumers and to consumers of portable gaming devices. We then narrow our focus by analysing three emerging trends being: physicality (portability), multitasking, and the increase of female gamers.

Based off of Nielsen's (2011) yearly comparison study of three thousand consumers, it was identified that video streaming on gaming consoles is on the rise while the number of people watching physical media is dropping - a growing functional necessity for consoles. Extending the current Xbox product line to cater for this segment of consumers will enable Microsoft to appeal to a current gap in the market, therefore remaining ahead of competitors and broadening Xbox's target consumer.

Increasing physical and portability features is currently a need not readily met and has the potential to capture a growing market. To meet this, Microsoft's Xbox, in summary, should:

• Introduce a portable gaming device (as in Playstation's PSP and PSP Vita, and Nintendo's 3DS).

• Ensure R&D considers the challenges that lie with the introduction of a new gaming platform such as: appearance, Digital Rights Management (DRM), and the development of high-performing technological specifications.

• Incorporating a cross-play feature between the base console and the portable gaming device.

• Immediate synchronization with other personal technological