Waiting game for Xbox 360 in SA

Microsoft is halfway through an evaluation process to introduce its Xbox 360 gaming console to the local market and a number of distributors are aiming for the rights.

Cindy White, Microsoft SA`s entertainment and devices manager, says the evaluation process has passed two milestones and another two are still to be tackled before the final nod is received from the corporation`s Seattle head office.

"We are in the process of evaluating a number of things, including market economics, distributorships and loyalty to Microsoft products," she says.

White declined to disclose the potential distributors, but ITWeb has learnt that some of the companies vying for the contract include a joint venture between hardware distributorships Axis and Reviva, motion picture company Nu Metro (whose main rival, Ster-Kinekor, distributes the Sony PlayStation), hardware manufacturer Mustek, and a music distributorship.

"SA is ready for another console game after the market has been dominated by one supplier [Sony] for the past seven years," White says. "Timing will also be critical, because we will have to factor in when our main competitor would introduce its newer versions."

Microsoft`s Xbox 360 debuted in November to rave reviews and huge demand overseas. In Europe, the allocated supply ran out in 10 days and Microsoft had to appoint a second console manufacturer.

White says the local launch will be determined by the availability of consoles for the South African market.

"Australia`s launch will only happen in February," she says.

Market structure is another factor that affects the decision to launch Xbox in SA. Margins for the hardware are small and Microsoft and its associates make most of their profits through customers continuously buying new games.

Until recently the rand/dollar exchange rate made this prohibitively expensive for the local market. However, the strengthening of the local currency against the US unit has meant the regular importation of the games has become more viable.

Fay Amaral, head of Nu Metro`s home entertainment division, echoes White`s view that SA is ready for another console game and that the currency exchange rate is making this more viable.

"We don`t have the local capacity to manufacture these games and we also have to contend with international copyright laws that add to the cost of the games," she says.

Stefan Rabe, Reviva MD, says the margins on the sale of the consoles "should be good, although they won`t set the world alight. The attraction for distributors and resellers is the market presence they will gain from distributing Xbox."

The Xbox 360 is designed for online gaming and White says Microsoft is working to ensure South African users will have a similar experience as their overseas counterparts.

"Telecommunications is a major factor and we are working with our telecoms partners in this regard," she says.

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