The Xbox 360 launch introduced the first important seventh-generation video game console. It was Microsoft's second attempt at making a console, following their 2001 release of the original Xbox.

Viral advertising and alternate reality games

The promotional campaign for the Xbox 360 started on March 30, 2005, with an interactive game called OurColony. From March to April, OurColony.net presented challenges to its users, giving out cut-out images of the console and game screenshots as prizes. On May 12, 2005, the interactive game section of OurColony was closed. Visitors then saw a promotional video hosted by J. Allard. People who participated in OurColony received special access to information and previews of the Xbox 360 before it was released to the public.

The next online marketing campaign from Microsoft was OrigenXbox360.com, launched on September 27, 2005. The website, hosted by talking rabbits named Boss and Didier, allowed visitors to join contests. The first contest was a raffle that required participants to answer three questions about the Xbox 360 to win a chance to attend a pre-launch event. Later contests included a Halo 2 tournament and a competition to design a "Gamertile" (a player icon). The website used flash animation of a bonsai tree and calm elevator music to create a peaceful atmosphere, which was sometimes interrupted by sudden bright and colorful scenes featuring the host rabbits.

In October 2005, Microsoft launched another online marketing campaign called "Hex168" (168 is 360 in hexadecimal). This campaign, created by the Marden-Kane advertising agency, began on October 13, 2005, when members of the TeamXbox forums were directed to Hex168.com through mysterious messages from someone named "Lutz." The website showed images that seemed to suggest strange conspiracy theories but sometimes included hints about the Xbox 360. The campaign was later revealed to be a U.S. contest offering 360 Xbox 360 console bundles to winners. Winners were invited to attend the Xbox 360 launch party in Palmdale, CA, and received VIP access to games, food, and special areas (all without cost). The website was archived on April 2, 2006, by the Wayback Machine.

Announcement

The official showing of the Xbox 360 happened on May 12, 2005, on MTV in a program titled MTV Presents Xbox: The Next Generation Revealed. The event was hosted by actor Elijah Wood and included a musical performance by the band The Killers. It also showed a preview of the game Perfect Dark Zero and featured appearances by Tony Hawk, Ryan Cabrera, and the crew of West Coast Customs, who customized an original Xbox. The Xbox 360 was also on the cover of TIME Magazine's May 23, 2005, issue. The article was written by Lev Grossman and showed Microsoft CEO Bill Gates holding an Xbox 360 unit. In the article, Gates said, "It's perfect… The day Sony launches (PlayStation 3), and they walk right into Halo 3." Microsoft executive Robbie Bach later explained that Gates meant, "Philosophically, the point Bill was trying to make is that we're not just going to ship and not have great stuff coming up." Gates later clarified that Halo 3 would be released when the game's developers, Bungie, were ready. Microsoft chose a November 2005 release date not to be first in the market but because they believed Sony would launch the PlayStation 3 around the same time.

The Xbox 360 and some playable games were displayed at E3 2005. The demos ran on "Xbox 360 Alpha Development Kits," which were Apple PowerMac G5 computers. These were used because the PowerMac G5 and the Xbox 360 share the same PowerPC processor design. Microsoft stated that most games were running at about 25–30% of their full power because they were not on actual Xbox 360 systems.

Release dates and pricing

On August 18, 2005, Microsoft announced the prices and models for the Xbox 360 at the Games Convention in Leipzig, Germany.

Titles

On November 22, 2005, customers in the United States, Canada, and Puerto Rico could choose from 18 games that were released with the Xbox 360. In European countries, 15 games were available when the Xbox 360 launched on December 2, 2005. Japanese customers had only 7 games to choose from when the Xbox 360 was released on December 10, 2005. This difference is partly because it took more time to translate and adjust the games for different regions.

In North America, the most popular game was Call of Duty 2, which 77% of customers who bought the Xbox 360 also purchased. It was followed by Madden NFL 06 and Need for Speed Most Wanted. The most successful game developed by Microsoft was Perfect Dark Zero. In Japan, the top-selling games were Ridge Racer 6 (29,891 copies sold), Perfect Dark Zero (14,897 copies sold), and Need for Speed Most Wanted (6,842 copies sold).

Sales by region

Before the Xbox 360 launched, some reports said Microsoft might limit the number of consoles available. However, there is no evidence to support this claim. Microsoft stated they sent all consoles to stores as quickly as possible. Evidence shows that Microsoft had all consoles ready for sale at launch and was making as many as they could. However, they did not produce enough consoles to meet all customer demand. This allowed them to launch earlier than expected but also caused shortages.

Soon after the launch, people began reporting technical problems with the Xbox 360. Some said the console crashed, others said the hard drive stopped working in certain situations, and some saw error messages during games or noticed the console overheating quickly. Because of overheating problems, Microsoft added three years to the warranty for the Xbox 360, which cost more than 1 billion U.S. dollars. The manual warned users not to place the console on soft surfaces or in enclosed spaces to avoid overheating. Microsoft said these issues were expected with a large release and that the number of reports was small compared to the number of consoles sold. They also said they would investigate the problems and offer phone support.

The Xbox 360’s cooling system was not strong enough for many users. Playing for long hours or using the console in tight spaces caused overheating, which damaged the chips over time. Engineers later explained that the problem was not about reaching very high temperatures but about repeated changes in temperature and usage, which weakened the cooling system. When the warranty sent a repaired console, it often made the problem worse because fixing the chips was not perfect. Many users had repeated failures. Some people used third-party cooling solutions, like heat pads connected directly to the power cable. Eventually, the cooling system was redesigned, and the overheating problem became less common after 2007 or 2008.

High demand for the Xbox 360 caused some owners to sell their consoles for much higher prices soon after buying them. eBay became a popular place for these sales, with thousands of consoles listed for auction. It was reported that 40,000 units appeared on eBay in the first month, which would mean 10% of the total supply was resold.

According to the NDP Group, North American sales reached 326,000 units in November 2005. In Canada, all 32,100 units available for launch were sold. By the end of 2005, Microsoft said it sold about 23,000 units. By early 2008, the Xbox 360 had sold 9.15 million units in the U.S.

Analysts believed Microsoft did not meet its original goal of selling 2.75 to 3 million units in the first 90 days after launch. Microsoft later lowered its estimate to 2.5 million units for the first 90 days, though its 6-month sales estimate stayed the same at 4.5 to 5.5 million units.

The Xbox 360 launched in Mexico on February 2, 2006. Stores like Walmart, Blockbuster, and others began selling consoles, games, and accessories. Some stores sold the console for 6,000 Mexican pesos, which was about $550.

Microsoft confirmed 300,000 units were available for the European launch. Like in North America, many consoles were sold on eBay for more than twice their retail price. Shortages led some customers to criticize retailers and Microsoft. Some retailers blamed Microsoft for not providing enough consoles during the holiday season. By the start of 2008, the Xbox 360 had sold six million units in Europe.

In the U.S. and Europe, the Xbox 360 had strong sales, but in Japan, sales were very slow. By April 2, 2006, only 103,990 units had been sold. Some believe this was because popular Japanese handheld consoles like the Game Boy Advance, Nintendo DS, and PlayStation Portable were more popular. Others said the absence of games like Dead or Alive 4 and Enchant Arm at launch, or a marketing strategy focused on style rather than affordability, affected sales. A game called ToHeart2 XRATED, which was released one day before the Xbox 360’s launch in Japan, may also have influenced sales.

Famitsu’s editor-in-chief, Munetatsu Matsui, said the absence of Dead or Alive 4 was the main reason for slow sales. He noted that over 60% of his readers planned to buy the game. The Xbox 360 sold 62,135 units in its first two days in Japan, which was less than half the sales of the original Xbox in its first three days in 2002.

Initial predictions for the Xbox 360 in Japan were optimistic. A game called Ridge Racer 6, which received the highest rating from Famitsu, was expected to sell 500,000 copies. This number was similar to the sales of the original Xbox in Japan by November 2005. Microsoft Japan’s executive, Yoshihiro Maruyama, said he expected the Xbox 360 to sell one million units in Japan by the following year.

To encourage sales, some retailers offered discounts on the Xbox 360 if customers signed up for a 2-year broadband contract, similar to phone deals in the U.S.

On the launch day, Capcom announced a game called Lost Planet, which was exclusive to the Xbox 360 and featured actor Lee Byung-hun.

The Xbox 360 gained popularity after the release of Blue Dragon. On October 19, 2006, all 10,000 preorders of Blue Dragon bundled with a limited edition Xbox 360 Core system were sold out in Japan.

The Xbox 360 was launched in India with 100,000 preorders. At first, it had tough sales, but numbers improved after the PlayStation 3 was released. Industry experts estimate the console sells about 3,000 units per month in India, which is 12.5% of all gaming hardware sales.

Sales increased briefly after the release of Halo 3 and Grand Theft Auto IV, though the latter seemed to help the PlayStation 3 more than the Xbox 360 in India.

It is estimated that the Xbox 360 has sold about 250,000 units in India since its launch in September 2006.

Xbox LIVE launched in late 2006 and was not widely used at first. However, it later became one of the console’s main features. As of September 2009, India was the only country where the Xbox 360 Elite was not available.