Xbox bellies up to the bar

Microsoft on Monday announced a marketing partnership with Budweiser to promote its Xbox video game console, part of its push to find new ways to grab sales during the critical holiday season.

Under the deal, Budweiser brewer Anheuser-Busch will help the software giant rotate 300 Xbox demo units through thousands of bars in the United States between now and the end of the year. Patrons will be invited to play Xbox games and to register to win promotional items from both companies.

While some analysts have said Microsoft needs to focus on younger consumers to reach a mass-market audience, the new promotion is another indication the company intends to continue courting older, hardcore gamers.

Michael Goodman, an analyst for research firm the Yankee Group, said that's a wise choice, especially as Microsoft prepares to launch Xbox Live, the online gaming service for the Xbox. Online gaming will be the key element that sets Xbox apart from Sony's PlayStation 2 and Nintendo's GameCube consoles, and the service will naturally appeal to older gamers, he said.

"It's going become an important differentiator for Microsoft--until now, they haven't had that," Goodman said. "The big differentiator has been (games titles), and Sony really has the edge there."

While the Nov. 15 launch of Xbox Live is unlikely to make a big contribution to Xbox sales this year, other factors--including a new bundling promotion--should keep Xbox in the game, Goodman said.

"There are a number of factors that are going to play into this holiday season," he said. "I think the bundling is certainly going to help them in terms of building their installed base, and that?s their priority. It's typical Microsoft strategy to take a loss to build markets."