What Challenger Brands Can Learn From Microsoft

Microsoft’s latest reveal is a prime Challenger Brand example for startup marketers.

After a long wait, Microsoft has revealed the price and release date of their next generation consoles, the Xbox Series X and Xbox Series S. What’s perhaps most interesting about the reveal though was the introduction of the Xbox All Access financing program. The initiative allows gamers to take home the console by paying no money upfront. Instead they will pay a monthly fee (with no added interest) across two years to take home the hardware instantly alongside access to Microsoft’s video game subscription service.

While the overall savings of going down the finance program compared to buying the console upfront and subscribing to the service are small, it introduces a bigger conversation around the future of financial models and approaches Challengers should be taking to business. By looking to sectors outside of your own and applying their approach and business logic to your offering, Challengers will be able to innovate in the same way Microsoft has here.

A Challenger Brand approach to Microsoft’s financial model

In this specific case, the new financial model borrows from both the cellphone industry – in paying for a device over two years with no upfront payment – and Netflix – in giving consumers access to a range of titles for a small monthly subscription fee.

With each model, the potential is huge. If you focus on streaming alone, according to Statista, Netflix generated a total revenue of more than $6.14bn (US) in the second quarter of 2020. The subscription model for games has been around for a while, offered by other companies including EA and Sony but the introduction of Google’s Stadia last year, which allowed gamers to pay a monthly subscription to stream games from the cloud across compatible devices, brought more attention to the possibilities of access over ownership.

By taking the business model typically associated with big brand cell phone purchases and fusing it with Netflix’s subscription template, Microsoft created something interesting.

How startup founders and marketing teams can apply Challenger Brand thinking to their next launch

The process of looking outside your remit to innovate has been utilized by companies in the past to great success. Companies like Rent The Runway have built million dollar brands by applying a sustainable, access-over-ownership mentality to the world of fashion. Our own client and online marketplace Browze is another. By harnessing the try-before-you-buy mentality adopted by brands like Zappos and Warby Parker, Browze offers a try-before-you-buy option on countless products.

For Challengers, this is an opportunity worth exploring and a worthwhile exercise in innovation.

How can you look at business models outside your sector to innovate your own? How can you be inspired by other industries, and fuse various approaches to offer something memorable?

The below visual is an ideal place to start.

For more on this approach and what Challengers can learn from approaching business through a process of sampling, check out our post: What Challenger Brands can learn from Dr Dre, J Dilla and DJ Premier


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