To attract younger users and families to the Xbox 360 platform, Microsoft has released a new console bundle with five games and added new content to the Xbox Live service. The moves are meant to help Microsoft compete against Nintendo's Wii, which has outsold the Xbox 360 nearly every month since its release.

Replaces Core System

The Xbox 360 Arcade console replaces the Xbox 360 Core System. Like that low-end edition, Arcade has no hard drive, and it carries the same suggested retail price of US$280 or £200 in the United Kingdom.

Unlike the Core System, however, Arcade comes with the following:

• A 256 MB memory stick that can be used for storing saved games and content from the Xbox Live service
• An HDMI high-definition video output, previously available only on higher-priced Xbox 360 models
• A wireless controller (the Core System included only a wired controller)
• Five preinstalled "casual" games from Xbox Live Arcade, such as Pac Man International (Namco) and Uno (Carbonated Games); such games are designated "casual" because they're easy to learn and appropriate for all ages.

The console goes on sale in Oct. 2007 in the United States and the United Kingdom. Other regions are expected to be announced later.

On the same date that the Xbox 360 Arcade was released in the United States, the Xbox Live service added new downloadable content for younger users, including more than 50 episodes of Looney Tunes cartoons, three programs from the Nickelodeon Channel, and two new Xbox Live Arcade games based on popular cartoon characters.

The releases are meant to counter the popularity of the US$249 Wii, which has sold approximately the same number of consoles as the Xbox 360, despite being released a year later, according to videogame industry tracking site VG Chartz. The Wii's lower price and unique motion-sensitive controller are partly responsible for its success. However, the Wii may also benefit from a perception that it's more appropriate for a broad audience, while the Xbox 360 and Sony's PlayStation 3 are perceived as being for hardcore gamers—typically young adult males.

For example, nine of the top ten selling Xbox 360 titles (according to VG Chartz) are first-person shooters, combat-oriented role-playing games, or sports games, all of which require significant time to learn and tend to appeal to young adult males. While Microsoft Game Studios has developed some games that appeal to a more diverse audience, such as Kameo and Viva PiÑata, these games have sold relatively poorly. In contrast, six of the top ten Wii games are broad-appeal titles that are relatively easy to learn and play, such as Wii Play and Mario Party 8.

By including and promoting new content meant for a younger audience, Microsoft might attract some buyers who previously would have ruled out the Xbox 360—particularly parents considering a game console for younger children. Moreover, the new Xbox Live content highlights the Wii's lack of a comparable online service offering downloadable content.

Xbox 360 Arcade is featured at www.xbox.com/en-US/hardware/x/xbox360arcadesystem/default.htm.

Xbox Originals and Live Promotion

On Dec. 4, Microsoft will launch Xbox Originals, which will let Xbox 360 owners download games for the original Xbox console, such as Halo and Fable, through Xbox Live. The games will cost 1,200 Microsoft Points (about US$15).

In addition, a Nov. 15 promotion celebrated the fifth anniversary of Xbox Live: all members were entitled to download a free game from the Xbox Live Arcade, and members who joined in 2002 got 500 free Microsoft Points. Microsoft claims 8 million Xbox Live members, and the online service is a major competitive advantage over Nintendo and Sony, whose consoles have online connectivity, but lack a similarly comprehensive online service.