In its first 24 hours on store shelves, Microsoft's (MSFT ) epic video game, Halo 3, earned a record-breaking $170 million in sales. Halo 3's sales broke records set not just by other video games but by theatrical releases like Spider-Man 3 and the novel Harry Potter and the Deathly Hallows. Of course, the sales were no accident. Microsoft tied a huge marketing campaign to the game, and if the sales had come in less than $100 million, it would have been very tough for the company to swallow. Why is Halo 3 so important to Microsoft? That requires some explaining.
It started in November 2001, when Microsoft entered the crowded video game marketplace with its Xbox video game console. With stiff competition from Sony's (SNE ) Playstation 2 and Nintendo's Gamecube, Microsoft's Xbox was able to withstand the opposition thanks to a video game called Halo: Combat Evolved. Developed by Bungie Studios and published by Microsoft exclusively for the Xbox, Halo: Combat Evolved was the story of a futuristic war between humans and a team of aliens called the Covenant that is determined to rid the galaxy of the human race.
With its intriguing story and amazing state-of-the-art graphics and game-play controls, Halo: Combat Evolved not only sold more than a million copies in its first six months, it also contributed to sales of a large percentage of Xbox consoles as nearly half of the consoles were packaged with the video game. In essence, the game became a sales driver for the Xbox consoles.
For the 2004 sequel, Halo 2, Bungie Studios upped the ante, adding more peripherals including online play through it's Xbox Live service, which cost $49.99 a year. Halo 2 sold 2.4 million copies in its first 24 hours, earning as much as $125 million -- including millions in sales of Xbox Live subscriptions.
Marketing for both games was typical for major blockbuster video games, with ads in magazines and on Websites, as well as major television spots. There was even more of a push for Halo 2, though, which also included product tie-ins. For Halo 3, however, the last game in the Halo trilogy and the first made specifically for the two-year-old Xbox 360 console, Microsoft pulled out all the stops.
"When Halo 2 did what it did on day one, it really caught a lot of people's attention and changed a lot of people's perception [about video games]," says Chris Di Cesare, director of Xbox marketing and global partnership for Microsoft. "So when it came to planning for Halo 3, we looked at it as an event film from a category standpoint in terms of partnerships. So just like you would expect from an event film, you've got beverage, auto, fast food restaurants, and mobile. We approached it with those partnerships in mind. It's fairly unprecedented for a video game business to kind of go at it with that approach, but it's the bread and butter of what you'd see in any blockbuster entertainment launch."
To promote Halo 3, Microsoft has secured partnerships with Burger King for limited edition cups and fries, 7-Eleven for limited edition Slurpee cups, and Pepsi for a limited edition beverage called Mountain Dew Game Fuel. Pontiac has also joined in, providing 1,000 consumers with a copy of the game and one lucky gamer with an opportunity to win a limited edition Halo 3 G6 GXP Street car. In addition, Microsoft secured partnerships with Comcast, Samsung, IMAX, McFarlane Toys, and Best Buy and also released a Halo 3 limited edition Xbox 360 console and Zune MP3 player.
Of course, this marketing strategy wasn't implemented just to sell Halo 3 the video game and brand but also the Xbox. Released in November 2005, the Xbox 360 has been successful, selling out completely on its first day of release. But then came competing consoles like Sony's Playstation 3 and Nintendo's Wii last year. In the past month the Wii has surpassed the 360's total worldwide sales, 9 million to 8.9 million, according to the Financial Times. Sony has only sold 3.7 million Playstation 3's since its launch. This holiday season, Microsoft expects the 360 to end up on top once again.
"In any entertainment business having a blockbuster that not only has great results in its own right but helps the business as a whole, is an important thing," Di Cesare says. "There's no doubt that we're a platform company here at Microsoft and Xbox 360 is important to us and being that the Halo franchise is an exclusive for the Xbox 360, it definitely helps the business in platform sales."
Even though Halo 3 is the last installment of this trilogy, Microsoft will continue to push the brand into other endeavors. Next year, Microsoft will release Halo Wars, a strategy-based game that serves as a prequel to the trilogy. There are also novels, comic books, and graphic novels that remain on the best seller list. And then there are the action figures, the clothing, and the plans for a feature film to be executive produced by Peter Jackson. Jackson is also working with Microsoft and Bungie on a possible launch of a Halo-related game or spin-off to introduce his new video game company.
"Halo is much bigger than just a video game," Di Cesare says. "What makes any entertainment property standout is having a compelling story and a compelling universe that can translate into other mediums. Plus we have this vibrant community via Xbox Live where million of gamers are going to be playing Halo 3 for months, if not years to come. The community aspect, the tournaments, the events, around the game will definitely continue."
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