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Microsoft 'sMSFT +1.02% decision to shutter the Xbox Entertainment Studios division, as part of 18,000 layoffs announced on Thursday, has shocked and angered several top ad buyers, causing some to once again question the company’s commitment to advertising.
The decision to essentially get out of the original content business, first reported by Recode, comes just a few months after Xbox Studio head Nancy Tellem and her just-hired number 2 Jordan Levin courted hundreds of media agency executives during a NewFront presentation in New York. That event was noteworthy for two things: host Craig Robinson (“The Office”) was really funny, and Xbox had few actual shows to present to buyers.
Still, there was plenty of excitement about Xbox’s promise as an original content vehicle, as many saw strengths that few in the Web video world could match (such as millions of passionate gamers who already consume lots of content on TV screens via their Xboxes). The company had recently been pitching the studio’s in-production shows hard to advertisers, and had planned to undertake a road show of sorts to various agencies and brands next month, said people familiar with the matter.
While Xbox will still offer movies and TV shows, ad buyers saw original content as appealing, partly because much of the video entertainment offered on Xbox isn’t ad supported, instead being offered for sale or rental. As a result, the abandonment of the original content strategy makes top ad buyers feel like the rug has been pulled out from under them.
“Unfortunately it does feel like that,” said Steve Carbone, managing director and head of digital and analytics at MediaCom. “It puts us in a difficult space because we have been pushing Xbox’s program. It really makes us wonder if the commitment is there.”
Vik Kathuria, Global Chief Media Officer at Razorfish, said the move felt short sighted, given Xbox’s potential. ”It’s insane given that’s where the media business is headed…with one end focusing on programmatic and the other on original high-end content. Confidence will be hard to earn back after this.”
That could affect confidence in a broader range of Microsoft initiatives, possibly undercutting efforts by CEO Satya Nadella to win over marketers. He has been making direct overtures to advertisers in recent months, hosting frank question and answer sessions during which he openly sought criticism while admitting the company hasn’t always been focused on advertising. More recently, advertisers say they’ve heard a renewed commitment from the groups sales team on Xbox, Bing, and even the often ignored Web portal MSN.
According to several buyers, the company has been emphatic in telling advertisers that it is committed to the Web portal, and actually plans to invest in the site’s technology and content partnerships. Part of that investments will go towards a major redesign aimed at making MSN loook a lot more like Windows 8, built for a more visual, touchscreen/mobile device world.
The decision to essentially get out of the original content business, first reported by Recode, comes just a few months after Xbox Studio head Nancy Tellem and her just-hired number 2 Jordan Levin courted hundreds of media agency executives during a NewFront presentation in New York. That event was noteworthy for two things: host Craig Robinson (“The Office”) was really funny, and Xbox had few actual shows to present to buyers.
Still, there was plenty of excitement about Xbox’s promise as an original content vehicle, as many saw strengths that few in the Web video world could match (such as millions of passionate gamers who already consume lots of content on TV screens via their Xboxes). The company had recently been pitching the studio’s in-production shows hard to advertisers, and had planned to undertake a road show of sorts to various agencies and brands next month, said people familiar with the matter.
While Xbox will still offer movies and TV shows, ad buyers saw original content as appealing, partly because much of the video entertainment offered on Xbox isn’t ad supported, instead being offered for sale or rental. As a result, the abandonment of the original content strategy makes top ad buyers feel like the rug has been pulled out from under them.
“Unfortunately it does feel like that,” said Steve Carbone, managing director and head of digital and analytics at MediaCom. “It puts us in a difficult space because we have been pushing Xbox’s program. It really makes us wonder if the commitment is there.”
Vik Kathuria, Global Chief Media Officer at Razorfish, said the move felt short sighted, given Xbox’s potential. ”It’s insane given that’s where the media business is headed…with one end focusing on programmatic and the other on original high-end content. Confidence will be hard to earn back after this.”
That could affect confidence in a broader range of Microsoft initiatives, possibly undercutting efforts by CEO Satya Nadella to win over marketers. He has been making direct overtures to advertisers in recent months, hosting frank question and answer sessions during which he openly sought criticism while admitting the company hasn’t always been focused on advertising. More recently, advertisers say they’ve heard a renewed commitment from the groups sales team on Xbox, Bing, and even the often ignored Web portal MSN.
According to several buyers, the company has been emphatic in telling advertisers that it is committed to the Web portal, and actually plans to invest in the site’s technology and content partnerships. Part of that investments will go towards a major redesign aimed at making MSN loook a lot more like Windows 8, built for a more visual, touchscreen/mobile device world.