Microsoft will on Tuesday reveal plans to cash in on the second version of its Xbox games console, with the help of an online marketplace where users can download games and music videos.
The software group's Home and Entertainment division, which lost nearly $4bn (£2.3bn) in four years of developing and marketing the original console, is hoping Xbox Live Marketplace sales where users will be able to choose from up to 400 items will help move the division into the black.
Microsoft earns revenues from sales of the Xbox console and the games its studios produce as well as royalties from other games publishers that use the platform. The Xbox Live service, where more than 2m members worldwide play each other over the internet, also brings in subscription revenues.
Microsoft users will be able to download complete games from November 22, the day of the launch, although these will be relatively unsophisticated titles such as Bejeweled and Zuma as well as backgammon and card games. The online store could be used to provide full console games but the leading publishers are not ready for such a step and Microsoft would risk alienating retailers. Aaron Greenberg, marketing manager for Xbox Live, said: “Our arcade will deal with smaller games; we are not disrupting the retail channel. “That's the focus right now, we have a great relationship with our retail ecosystem.”
The online market will offer free interactive demonstrations of popular games such as the latest Electronic Arts' Fifa soccer title and a King Kong game based on the new film.
There will also be new music videos from rock bands Franz Ferdinand and Audioslave.
The Xbox 360 will in effect open another channel through which Microsoft can sell and deliver digital entertainment for the home. The console already contains a Media Center extender technology that allows video and music to be played from computers running Windows Media Center software on a remote television using a wireless connection to the 360.
The company is also launching Microsoft Points in a bid to overcome the fact that many people do not have credit cards. Consumers will be able to buy a card worth 1,600 points for $19.99 at shops in the US and then use the points to buy items such as a scenario for the Amped 3 snowboarding game costing 150 points or a gamer picture for 20 points.
Downloading an arcade game such as Bejeweled 2 costs 800 points, or about $10.
The services and cards will be available for the North American 360 launch next week and international versions should be ready when Microsoft launches the console in Europe on December 2 and Japan on December 10.