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The Ugly, Profitable Details About Xbox Live Advertising

An anonymous reader writes "In an editorial at Penny Arcade, Ben Kuchera writes about how Microsoft's subscription-based Xbox Live platform has become an advertising cash cow — to the detriment of users who already pay for the service. Quoting: 'People who don't play video games would be forgiven if they turned on an Xbox 360 and didn't realize it was a device used to primarily play games. The first screen you see on the Xbox 360 Dashboard is often a mixture of ads for all sorts of goods and services, and many times games are in the minority of ad slots. The latest redesign increased the ad space that can be sold to advertisers, and that in turn increased this problem. Let's be clear, it is a problem. Game discovery is terrible in the current design of Xbox Live, and the usability of a system that used to be about games is suffering in order for Microsoft to make money on ads. Sadly, this issue isn't going away: Ad sales simply bring in too much money to ignore, and revenue is growing. ... I contacted Microsoft and asked how much advertising revenue impacted the profitability of the Xbox 360. "We don't share this information publicly but we can tell you that, since 2010, the advertising business has grown 142%," I was told.'"

40 of 204 comments (clear)

  1. So, basically ... by Anonymous Coward · · Score: 4, Insightful

    With Xbox Live you pay to receive ads. With PSN, you don't pay a dime and still get online gaming.

    While I'm acting smug as a PS3 owner, who doesn't have to put up with Microsoft's bullshit, I have to wonder just how much longer Sony's offering will last.

    1. Re:So, basically ... by masternerdguy · · Score: 4, Funny

      You are absolutely right my friend. I find it amazing that people will pay money to receive ads. This is why we need a non profit FOSS console that doesn't do this crap.

      --
      To offset political mods, replace Flamebait with Insightful.
    2. Re:So, basically ... by hbean · · Score: 5, Insightful

      Lots of people pay for cable, and there's a ton of ads on it. Just saying.

      --
      "Give someone a program, frustrate them for a day... Teach someone to program, frustrate them for a lifetime."
    3. Re:So, basically ... by Rijnzael · · Score: 3, Insightful

      I doubt Sony is going to see what Microsoft is doing as anything other than a precedent and road map for future endeavors. The only reason PSN is free is because they wanted to overcome the shocking price of the initial PS3 models and wanted to take a chunk out of Xbox Live's market share. Xbox Live is profitable, PSN is not. If PSN ever reaches comfortable profitability, you can bet they'll be doing exactly what Microsoft is. They're just as much about screwing the customer as any other company (anti-piracy rootkits anyone?).

    4. Re:So, basically ... by Anonymous Coward · · Score: 2, Insightful

      I'm not sure this is a perfect metaphor (though I don't know much about advertising in cable). In order to relate TV to Xbox live, you have to consider that the cable provider = Xbox live service, and cable channels = video games. With the cable advertisement system, advertisements are run on a per-channel basis, with time slots sold by the channel. The difference here is that the advertisements aren't coming in through the analogous video games, but through the provider itself, Xbox.

    5. Re:So, basically ... by Nadaka · · Score: 2

      There are ads that load in when you connect to PSN. However, most of those ads are for games/videos you can download from PSN.

    6. Re:So, basically ... by h4rr4r · · Score: 2

      There are ads sold by the cable provider as well.

      Either way this is why I will not pay for cable. I will not pay to see advertising.

    7. Re:So, basically ... by DrEldarion · · Score: 2

      That exists, it's called a PC.

    8. Re:So, basically ... by Belial6 · · Score: 2

      It has always surprised me that someone like ASUS has never sold a complete system that had a Console Mode. As the component manufacturer, they could guarantee extended availability of a specific model. If they included something like a linux distro that booted directly to a modified XBMC that was set up to boot games, and then return to the launcher with a standard keypress, they could be a console manufacturer over night. They wouldn't need to sell at a loss, as PC hardware that is on par with the current gen consoles could easily be had for a couple of hundred dollars. They wouldn't need to do special runs because the hardware would be standard PC hardware. They could sell the exact same parts to people who want to buy regular PCs. This would also make everyone one of their 'consoles' have a 'Boot to Other OS' feature that let them boot into Windows.

    9. Re:So, basically ... by Mad+Leper · · Score: 2

      Of course, we're all aware that not a single case of a supposed PSN stolen credit card being used illicitly has ever been reported.

      The XBOX Live FIFA hack is a much more lucrative source of funds, thousands of accounts stolen and no end in sight...

    10. Re:So, basically ... by stms · · Score: 3, Interesting

      I'm surprised no one else has posted this yet. There's been a pretty big recent success with a FOSS console on kickstarter with the Ouya Console. Why was that modded funny it would be awesome if there was a successful FOSS console I certainly hope the Ouya is a success.

    11. Re:So, basically ... by Superdarion · · Score: 2

      Well, people are already working on it. It's called OUYA and sounds good to me.

  2. Filter it. by Anonymous Coward · · Score: 5, Informative

    I was really annoyed with this when they first updated the console so the home screen was overrun with ads. I simply blocked their ad sub domain on my router. Problem solved.

    1. Re:Filter it. by Anonymous Coward · · Score: 5, Informative

      rad.msn.com
      msnvidweb.vo.msecnd.net

    2. Re:Filter it. by Dahamma · · Score: 4, Interesting

      What makes it even more annoying is that there were *2* primary reasons for the Xbox Dash redesign:

      1) make it 100% Kinect-accessible
      2) promote content more (much of it paid) and increase advertising space

      So, they changed the fairly decent previous Xbox Dashboard to something designed around products I don't want to see and a UI navigation mechanism I don't want to use. For the vast majority of users out there who just want to use a controller to play a game or watch a movie, it's a major step backwards in usability.

    3. Re:Filter it. by demonbug · · Score: 2

      What makes it even more annoying is that there were *2* primary reasons for the Xbox Dash redesign:

      1) make it 100% Kinect-accessible
      2) promote content more (much of it paid) and increase advertising space

      So, they changed the fairly decent previous Xbox Dashboard to something designed around products I don't want to see and a UI navigation mechanism I don't want to use. For the vast majority of users out there who just want to use a controller to play a game or watch a movie, it's a major step backwards in usability.

      Hmm, reminds me of a certain other MS product... what's it called... oh yeah, Windows 8.

      Hey, let's redesign our UI specifically for an interface that 95% of our customers don't use! Brilliant!

  3. What exactly is suffering? by jeffy210 · · Score: 3, Insightful

    So what is exactly is suffering for gaming? Has the hardware been gimped? Can you not just pop a game in and play it? The XBox is being slotted as a media platform, not just a gaming platform and it seems to be doing that rather well, just look at the sales. Just because it's not the uber-hardcore gaming machine you're expecting does not make it bad. If you really want that go build a PC. But as long as it plays games and you still have access to game content, all while providing additional entertainment and media options, I fail to see the issue.

    To be honest, I use mine mainly for Netflix and other media related options. Occasionally I do play a game, so it fits perfectly for me. It's no longer just a "gaming console".

    --
    ------
    "And may your days be long upon the earth."
    1. Re:What exactly is suffering? by Baloroth · · Score: 3, Insightful

      Well, besides the fact that it can interfere with your ability to find actual content (as others have pointed out), it's also the "frog in boiling water" problem. While it may not interfere with your ability to do what you want now, I have no doubt MS is looking at the possibility of doing things like playing unskippable ads before you can play DVDs or games, or adding ads into games (or even movies) on the fly. Anything they can do to make even more money. And so long as people have a good deal already invested in the platform (in the form of locked-in games and whatnot), people won't switch away. Whatever MS can get away with, they will do, eventually.

      --
      "None can love freedom heartily, but good men; the rest love not freedom, but license." --John Milton
    2. Re:What exactly is suffering? by thetoadwarrior · · Score: 3, Interesting

      Anyone with half a brain knew the 360 was another attempt at a set-top box to dominate the living room but you can't blame people for being upset when MS specfically aimed the system at "core" gamers and have now turned it into something to appeal to their mothers because it turns out those gamers aren't profitable enough in their eyes.
      br / Also it's pretty fucking poor as a media machine. A desktop serves that job better. For starters the xbox is never going to have to space to hold all my ripped music and DVDs. I own easily at least 500 DVDs and some blu-rays. I need some serious space for that. Not some toy whose sole purpose is to drain my wallet.

    3. Re:What exactly is suffering? by Dahamma · · Score: 2

      The focus on content/ad placement and Kinect gesture/voice support throughout the entire Dash (and all media apps) was a major step backwards in usability for navigation and discovery for the vast majority of users. Welcome to Metro...

    4. Re:What exactly is suffering? by scot4875 · · Score: 3, Insightful

      Big fuckin' deal. I've had an HD TV for nearly 10 years; HD is a nice bonus, but it doesn't make a bad movie good, and the lack of it doesn't make a good game bad.

      --Jeremy

      --
      Jesus was a liberal
    5. Re:What exactly is suffering? by RightSaidFred99 · · Score: 5, Funny

      Yes we will get off your lawn grandpa.

  4. For Xbox 360 users ... by LordNimon · · Score: 4, Informative

    Here's a method you can use to block some of those ads:

    http://www.reddit.com/r/gaming/comments/n5831/how_to_block_xbox_dashboard_ads/

    It doesn't block all of them, but it does block most of the animated, generic ads that aren't related to gaming.

    --
    And the men who hold high places must be the ones who start
    To mold a new reality... closer to the heart
  5. Dashboard Devolution by decipher_saint · · Score: 4, Interesting

    I didn't own an original XBox, so I don't have a frame of reference but I've noticed that since I bought my 360 in 2008 most updates to the Dashboard have been working hard at making it more difficult to find my games or my home media.

    In fact, with the latest batches of updates (Metro-like?) I've found it very difficult to get to games I want to play in my library, to the point now that I forego the GUI and go straight to the "quick play" option (which is basically just an alphabetically sorted list). And browsing my home network has been completely removed in lieu of streaming (yuck, no thanks).

    I think Microsoft could learn a thing or two from Valve, Steam is pretty easy to use but is also a ad delivery system, I can find everything rather easily in Steam and I find it a lot less annoying than the 360 Dashboard, also Steam has sales for games that don't suck, and that makes me want to spend money but hey, that's just my opinion...

    --
    crazy dynamite monkey
  6. Re:Overstated by h4rr4r · · Score: 3, Insightful

    That does not matter. I will not pay to receive ads. If there are ads on the system the games had better be free.

    Same reason why I will never have cable, and would cancel netflix in an instant if they ever showed a single advertisement on streaming.

    The screen space would be better used by being blank.

  7. Cable TV anyone? by NalosLayor · · Score: 5, Insightful

    Not to point out the rotting dead fish in the middle of the room, but this is exactly what happened with cable TV, and yet there is no real outrage on that front any more. I'm not saying it's the right thing...or even "acceptable" but customers seem to never balk at ads, and content streamers never turn down a revenue stream. It feels almost inevitable.

    1. Re:Cable TV anyone? by h4rr4r · · Score: 2

      So do what I did, cancel cable.
      Tell them why.

      Netflix has no such advertising and is cheaper. Hulu has the advertising but is free. I will pay for Hulu+ the moment it goes advertising free.

    2. Re:Cable TV anyone? by Anubis+IV · · Score: 2

      I think the lack of outrage has been mitigated in recent years by the introduction of timeshifting devices (e.g. VCR and Tivo) that also allow you to skip ads, as well as alternative sources for content that either display less ads (e.g. Hulu) or no ads at all (e.g. Netflix, torrents, other P2P, etc.). Instead of outrage, people are either working around the problem or are voting with their wallets and leaving cable in droves.

  8. Having purchased a 360 less than a month ago... by Anubis+IV · · Score: 3, Interesting

    I have to say that the 360 has been one disappointment after another when it comes to the console itself. The games are fine, as is the media selection, but after coming from a PS3 and Wii, the 360 doesn't even feel like it's designed for people interested in gaming or media consumption at all, which came as an utter shock to me, since everyone I know seems to enjoy theirs for those activities (and Sony isn't exactly known for quality products these days either). There's so much cruft and unnecessary nonsense between you and whatever you want to do on the 360 that it's extremely exasperating to do trivial tasks that are incredibly simple on the PS3. For instance, the only way I'm aware of to simply watch a video that's been downloaded to the local hard drive is to:
    1) Navigate to the Videos tab
    2) Select the option to view my video apps
    3) Launch one of the video apps, then wait for it to load
    4) Once it loads, navigate to my local videos
    5) Find the one I want then play it

    (I'm eager to be corrected by someone more knowledgeable, since I would love to know an easier way to do something so simple)

    And several of those steps involve navigating past tabs filled with image and video ads mixed in with actual content in a Metro-ish UI style. In contrast, on the PS3:
    1) Go to the Videos tab
    2) Find the one I want then play it

    And the only ad that you can't disable is some text scrolling in the top right corner (and it's oftentimes actually useful information related to sales or game launches in the PSN Store).

    At least Microsoft had the good sense to not have the audio enabled automatically on the video ads that are constantly showing in the dashboard. Even so, it's rather jarring when you accidentally scroll over one of them and suddenly get blaring sound as they respond to the controller's focus on them. I don't know what the numbers are, but, at least to me, it feels like the majority of the UI elements in the dashboard are actually ads of some form, without only a few useful things present. Unfortunately, since they've mixed them all together, it's rather difficult to discern at a glance sometimes.

    And don't get me started on the fact that even though I can watch Netflix on my iPad, iPhone, Apple TV, Mac, Windows box, PS3, and Wii without having to pay anything extra, I have to be a Microsoft LIVE Gold subscriber if I want to watch it on my 360.

    1. Re:Having purchased a 360 less than a month ago... by newcastlejon · · Score: 2

      For instance, the only way I'm aware of to simply watch a video that's been downloaded to the local hard drive is to: 1) Navigate to the Videos tab 2) Select the option to view my video apps 3) Launch one of the video apps, then wait for it to load 4) Once it loads, navigate to my local videos 5) Find the one I want then play it

      (I'm eager to be corrected by someone more knowledgeable, since I would love to know an easier way to do something so simple)

      Allow me.
      1. Press the guide button
      2. Scroll right to the media tab
      3. Select video player
      Downloaded videos are at the top of the list. It seems as though they've replicated much of the old-style NXE menus on the Xbox guide.

      --
      If God forks the Universe every time you roll a die, he'd better have a damned good memory.
  9. No indie games on PS3 by tepples · · Score: 2

    What's the PS3's counterpart to Xbox Live Indie Games (not Xbox Live Arcade)?

  10. Re:Xbox live membership by vux984 · · Score: 2

    Honestly as an avid Xbox 360 gamer and user of windows [and slashdot reader] I enjoy the product but am disappointed that a service I pay 60 dollars a year to maintain is still trying to squeeze money out of my pockets

    Ok... I get joe consumer buying an xbox, but why you? Why not use an htpc/gaming pc? You can get most of the xobx games for windows, you can even use an xbox controller if you want, no subscriptions for basic multiplayer access, the games on windows tend to come out a few $ cheaper, and drop in price much faster than the console version.

    Sure the PC is a little more complex to setup, but you are here so i assume that's not an issue. Its a little more money upfront, but again you are here, so i assume you could spec and build decent gaming pc on the cheap if budget was a concern. And you'll make up the price difference on no subscriptions and savings on games in the long run.

    You also pick up the full flexibility of having a PC. Hard drive as big as you like, bluray drive if you want one, MAME etc if you are into retro games. Humble Bundles, GoG, Steam deals...

    So I'm curious what the appeal of the xbox is for you?

  11. Product placement by tepples · · Score: 4, Funny

    Same reason why I will never have cable, and would cancel netflix in an instant if they ever showed a single advertisement on streaming.

    Add The Wizard (1989) to your queue. Watch it. Realized you just watched a 90 minute infomercial for Virtual Console on Wii. Cancel Netflix.

  12. Re:to the detriment of the user experience by Fallingcow · · Score: 2

    I live in terror that one day Sony will realize how much money they could make if they ran their store more like Steam--how many games they could sell if they cut the normal prices a bit and ran occasional steep sales, how easy it would be to kill Redbox by allowing me to rent movies I can't find on Netflix at a competitive price (instead of the current you'd-have-to-be-insane-or-stupid-to-pay-it rate that amounts to half the cost of the damn DVD just to "rent" the digital file), no more points bullshit (do they still do that? I haven't looked in so long...), etc.

    If they'd done that a couple years ago they'd likely have seen a few hundred dollars from me instead of the $20 or so I've spent with things the way they are. I'd buy more digital copies of games "new" during sales rather than doing what I usually do now and buying the discs used, and I might actually use their movie service.

    Thank god they haven't figured that out. They could have gotten a lot of money from me, the bastards.

  13. No public Minis SDK by tepples · · Score: 2

    This article claims that it's too hard for a startup to become licensed to develop Minis. It's not like the iOS App Store, where anyone with $300 a year ($600 per 3 years for a Mac and $100 per year for a certificate) can release software.

  14. Blocking Xbox Ads by SeanDS · · Score: 2

    I have blocked the ads on the dashboard by having my router block the following sites:

    msnvideoweb.vo.msecnd.net
    rad.msn.com

    Unfortunately, it retains the ads provided by Microsoft themselves, which are, I think provided by the same domain as the actual Xbox Live services (i.e. unblockable if you want to continue using your Xbox online). Also, you still have the god awful presence of Bing Search in your dashboard, whether you like it or not. I cannot find a way to remove Bing like it is possible to remove other crapware that Microsoft installed along with the latest update (like the 'Zune' app - why the HELL would I ever want that?).

    One thing's for certain, I'm going to stick with PC gaming (or more specifically, Linux gaming) from now on. Consoles are steadily going from being a platform for games, with pretty graphics you might otherwise not be able to get on a PC, to a direct line into your living room for the big media companies to sell you more shit. I block ads on websites, and the text-based ones that get through are never clicked. If a website's 'sign up' process gets in the way of the information I want, I either don't use it or I give them a temporary email address. I use price comparison websites to find the best price, then go to the seller directly rather than clicking through. I hate companies that make money without performing any real innovation online, and I try hard to avoid letting them make any money from my online presence. Microsoft first and foremost.

  15. This is better by SuperTechnoNerd · · Score: 2

    See when you don't pirate, pay lots of money for games and hardware, do everything you are told like a good little boy. You get rewarded with beautiful ads. Isn't it so much better when you follow the rules?

  16. Re:Not new, not special by CanHasDIY · · Score: 5, Insightful

    There are ads that load in when you connect to PSN. However, most of those ads are for games/videos you can download from PSN.

    Same thing goes for Xbox Live. I'm an XBL user and I didn't really notice the change that much, because it's no different than what Google is doing with Android Market and what Apple does with its iOS and Mac App Stores.

    It's completely different.

    Apple and Google relegate their advertising to their app stores - you know, a special place specifically designed for you to go and buy stuff? It would be the same thing, if every time you turned on your Android or iDevice, you were smacked upside the head with ad after ad, but that's not the case.

    Also worth noting, Apple and Google don't charge you for the privilege.

    --
    An enigma, wrapped in a riddle, shrouded in bacon and cheese
  17. Re:Not new, not special by sarysa · · Score: 2, Insightful

    The thing is, the default setting if you have a disc (XBL gold or not) is for that disc to play. If that disc has multiplayer and you're logged into XBL, multiplayer just works -- you're not force fed advertisements at any time. Messages are primarily sent through the little Xbox-button menu which is usable both in and out of game. Achievements can be browsed this way as well, and friends can also be searched this way. No ads there either.

    The point I'm trying to make is the Xbox Live landing page is typically for users who are looking for something else. It's not all that different than Google Play (I used the outdated name earlier) or App Store if you really think about user behavior. You pretend to spend $200-300 on a phone (in reality it's thousands over two years) and when you're looking for content, you're first shown featured content -- not a bland search screen or category listing. The console's core purpose of being a gaming device is no more compromised by the Xbox landing page than smartphones are by their respective market pages. I mean, it sucks that you can't go and put your Arcade games/indie games/netflix/whatever on the landing page, but I don't remember ever being able to.

    If Silver members see the ads/featuring then it's really not all that bad. You can buy $1000 worth of content on the App Store and the featured content isn't going to change.

    Not that anyone's claimed this, but I'm not a M$ employee, just an amateur devil's advocate.

    --
    Charisma is the measure of someone's ability to lie with a straight face.
  18. Re:Not new, not special by VGPowerlord · · Score: 3, Informative

    The thing is, the default setting if you have a disc (XBL gold or not) is for that disc to play.

    I have a disc in my 360 now and I never changed the default settings for game discs.

    Lets see what happens when I turn it on.

    Xbox 360 logo... Choose a profile screen... signing into Xbox Live...

    OK, I was deposited at the Main Menu's "home" tab with 7 boxes. They are:

    1. Upper-left corner: Small box, Alan Wake (the disc currently in the console)
    2. Lower-left corner: Small box, Quickplay (for accessing my XBLA games)
    3. Left-center: Large box the switches ads every 2 seconds between "Comic Con is On", "Crackle's The Unknown" (tv series?), "Call of Duty: Black Ops II", "Quantum Conundrum", and "Xbox Live Good, Better, Gold"
    4. Right-center-upper: Small box, ad for MLB & More
    5. Right-center-lower: Small box, ad for Arcade Sale
    6. Upper-right corner: Small box, ad for Kinect
    7. Lower-right corner: Small box, ad for Netflix

    My empirical evidence says you're wrong.

    Oh, and if you're referring to what happens when you put a disc in, the main menu has likely already loaded and you've already seen the ads.

    --
    GLaDOS for President 2016! "Well here we are again. It's always such a pleasure." -- GLaDOS, 2011