NEWS - Thursday, January 23, 2003

Xbox Kicks Ass This Past Holiday Season

REDMOND, Wash. – One year ago, the Xbox™ video game system was the new kid on the block. Today Microsoft Corp. confirmed that Xbox was a top holiday seller and is now firmly entrenched in the number two market position in the U.S. and Europe. According to the NPD Funworld TRSTS December 2002, Xbox significantly widened the gap between the competition, established itself as the clear number two video game platform and brought the overall next-generation market share for Xbox to 24 percent. Xbox console sales in December had year-over-year growth of 48%, which was the highest among all next-generation platforms for the month according to the NPD data. On the other side of the Atlantic Ocean, Xbox also won additional market share, bringing the European share of Xbox to 19 percent (ChartTrack and GfK, November). “We are very pleased by the holiday results. Xbox is the next-generation video game system of choice and the clear number two across the United States, Canada and throughout the Europe,” said Robbie Bach, senior vice president of Microsoft and chief Xbox officer. “With the popularity of Xbox Live, more than 300 games in development and more than 200 titles on the market, we expect to continue to gain market share from long-time console makers.” December was the largest selling month for Xbox consoles ever, beating the previous record month; November 2001, by 43% (NPD TRSTS, December 2002). Also according to the data, December was the largest month ever for Xbox software sales beating the previous record month, December 2001, by 80%. Xbox also enjoyed a nearly 4.8 attach rate, the highest for any next-generation console after 14 months in the market. Moreover, Xbox sold the most software of any next-generation system after 14 months in the market. Finally, the Xbox Live™ service continued to be a major hit at retail in December, selling 70% more Xbox Live Starter Kits in the first two months than the PS2 network adaptor sold in its first two months. Clearly popular with consumers, the Xbox game portfolio has been a huge success both for Microsoft-published games as well as third-party publishing partners. Game titles are selling best on Xbox. Of the top 20 multiplatform titles, the Xbox versions are attaching on an average of 70 percent more than those for PS2.In addition, third-party publishers continue to fare much better on Xbox. Life-to-date, these partners have sold 56% more units on Xbox than they have for GameCube. "Tom Clancy’s Splinter Cell," from Ubisoft, is not only the number one Xbox title and number four title overall in the US market, it is now the second-highest selling Xbox title ever in the US. "Splinter Cell" outsold GameCube’s "Metroid" by 19% in the first two months of sales. “’Splinter Cell’ for Xbox continues to fly off retailers’ shelves across North America and Europe,” said Tony Kee, Vice President of Marketing, Ubi Soft Entertainment. “It’s been a phenomenal holiday for us on Xbox, and we are eager to replicate the great success of ‘Splinter Cell’ with more Ubi Soft games on Xbox.” “It was admittedly a challenging retail environment for the entire game industry this holiday, but Xbox overdelivered in every way. It was all we could do to keep our shelves stocked with the Xbox Live Starter Kit and copies of games like ’Splinter Cell’, ’MechAssault™’ and ’Ghost Recon,’" said Dan Dematteo, President of GameStop, Inc. “What’s even more exciting is that the demand for Xbox has remained strong even after the decorations have all been packed away.” Additional highlights from around the world include: Europe ● During the key retail month in December, Xbox outsold GameCube by 100% in the United Kingdom. (Source: ChartTrack, December 2002) ● Xbox has passed the million console mark in the UK, France and Germany alone. (Source: ChartTrack, GfK; December 2002) ● European gamers showed their support for Xbox in huge numbers, with near-sellout sales during its first European Christmas season. The "Sega Christmas Pack from Xbox," a limited edition Xbox Christmas offer that included 120 euros’ (80 pounds sterling) worth of free triple-A games from Sega, also proved a winner with gamers across Europe. Many stores sold out of stock before Christmas. ● The Xbox Live Consumer Beta and Test Drive program have been a great success, and momentum continues to build for the European retail launch of Xbox Live, which is on track for March 14, 2003. Japan ● After a very successful beta test, Xbox Live launched on Jan. 16 in Japan. Beta users, partners and several famous game creators comprised the guests at the Xbox Live party in Tokyo. Early response to Xbox Live in Japan has been enthusiastic, and many gamers are excited to play "Phantasy Star Online" on the Xbox Live service. Canada ● Xbox achieved significant momentum over the critical holiday period in Canada, selling faster than ever before. According to ACNielsen market data for November 2002, Xbox captured more than 32 percent of the Canadian next-generation console market -- its best month since launching in Canada in November 2001. Australia ● Xbox market share grew dramatically in Australia in the key months of November and December to nearly 40 percent and 35 percent respectively. Xbox market share growth was mostly at the expense of PlayStation2, which dropped from just over 70 percent to 60 percent. (Source: Inform, November and December 2002) ● During those same two months, GameCube’s market share plunged to just over 5 percent, and that trend is continuing in 2003. (Source: Inform, November and December 2002) Asia ● Xbox can now be found in more than 500 selected retail outlets throughout Hong Kong, Singapore, Taiwan and Korea. The excitement of the recent Xbox launches in Asia has been fueled by the launch of the "Dead or Alive 3" (DOA3) offer to usher in the Chinese New Year beginning next month as well as the online preorder campaign for the localized version of "Halo™" for Korean gamers that started last week.

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