1. The 360 doesn't really have a user base that is drawn towards these types of games. So unless this brings a lot of new stuff to the table it's not going to draw consumers attention
And how is MS going to attract a user base that enjoys these types of games if they don't
offer these types of games? It's a chicken and egg situation, except that in this case you need the egg to hatch the chickens from. MS doesn't want to be isolated to 'hard-core gamers' but wants everyone with an interest in gaming using their platform. If they want to make stronger headway out of the NA market, they
need to diversify, which is what this is.
2. I don't believe this game will offer anything new to the table
With one major exception - it's on MS's platform. So if you're looking for a singing game on a next-gen shooter platform, perhaps the shooting for the guy and the singing for the missus, the choice is now a $500 PS3 or a $300 XB360. Without this game the choice is a $500 PS3 full stop.
EDIT: I've noticed a trend with M$ in which they identify a market trend (in this case music/karaoke games) and then try to buy their way into it and 9/10 times it ends in failure. You'd think they would learn but no they don't.
I've noticed a trend with all markets, and that's when someone has a success, other companies try to emulate. It tends to be known as 'jumping on the bandwagon'. You can point to
any of these console companies and see where they're copying ideas from each other. I will agree that MS's business model stretching back down the years does seem to be more reaction than innovation, but it's done them well. And seriously, what do you think they should do? Just accept defeat and stop trying?
'Looks like people want diverse singy, party games, which we haven't got yet. May as well just chuck in the towel' ?
As for the actual game, postioning sounds weak - LIPS is such a lame name! - and I don't expect MS to support it much beyond a cursory offering, because they haven't done,
unless they're serious in their talk about chasing new markets. I feel this is a make-or-break title, not so much because of what it is, but in how MS support it and the idea of diversifying their catalogue through first-party creations to pursue broader markets.