It's the kind of news at the kind of time that Microsoft must be brooding over: the blogosphere is rife with meltdown messages from Xbox users all over the country. Extended play--the kind associated with new blockbuster titles like Halo 3 and Call of Duty 4--leading to system crashes, overheating, and frustration.
We knew there were problems: Microsoft copped to the issues over the summer when it set aside $1 billion and extended Xbox warranties by 3 years. But now, with these new titles available, and so many new players spending so much more time on Xbox play, Microsoft's sense of "mission accomplished" may have been premature.
Now enter gamer Randy Nunez who filed a 14-page lawsuit in Southern California against both Microsoft and game developer Bungie Studios, seeking class-action status, complaining that Halo 3 is actually incompatible with the console. So incompatible that every time he loads and plays it, his Xbox crashes. The suit claims that both Microsoft and Bungie "failed to acknowledge the propensity of Halo 3 to freeze, lock up and/or crash Xbox 360."
I spoke to one of the attorneys on this case, Garrett Wotkyns, who told me, "We have a number of consumers who have contacted us, in addition to Mr. Nunez, who have returned the game three, four, five times, encountering the same problem. That to us, we would respectfully submit, is the kind of issue ripe for class-action adjudication." He adds that, "This was the biggest game release in history. And if you're talking about a problem of the sort my client has experienced, or at least alleges he experienced, with game release of that size, you're obviously talking about a very big problem."
These high profile complaints come at a particularly difficult time for Microsoft and the Xbox. The company is locked in a pitch battle against Sony's PlayStation and Nintendo's Wii, both enjoying soaring sales last week as I detailed in a post yesterday.
I reached Microsoft and as you might expect, the company isn't commenting on the suit, but does point out that 3 million people have "enjoyed Halo 3 since its launch," and that We have received overwhelmingly positive feedback from fans worldwide for “Halo 3” and expect it to be on the top of many shopping lists this holiday season."
That might be the case, but Wall Street will be watching these issues very carefully. Brendan Barnicle at Pacific Crest Securities tells me, "It's obviously a concern because Xbox, although still not material to earnings, is material to the multiple that Microsoft gets. And certainly impacts the stock. So from a stock perspective, it's certainly something we have to watch. From a fundamentals perspective, not a whole lot of impact on the financials. It is a concern."
