Microsoft Interview Summer 2006

Microsoft bigwigs Shane Kim (the games guy), Todd Holmdahl (the product guy) and Richard Teversham (the marketing guy) take time out with us to talk in-depth about Xbox 360 strategy and plans for the future.

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Kikizo: How are you going to be targeting female gamers?

Holmdahl: I think we're tapping into that market already with some of the casual games you see in the arcade, Hearts of Backgammon, some of those things, Jewel Quest... it's a very important market for us. The core demographic, you know, I think we're going to have DDR out on our product, certainly looking at some of these other games you're talking about... we haven't announced them yet, but it's something we consider on a daily basis, when we do our content strategies.

Todd Holmdahl, Corporate VP, Gaming and Xbox Product Group

Kikizo: What else are you now doing to attract a more mainstream audience, on Xbox Live?

Kim: Well a couple months ago we launched the Xbox Live Artist of the Month program, where exclusive music videos will be made available on Xbox Live; we did a partnership with different directors, we had exclusive movie trailers from various studio partners. It's really about making Xbox Live a broader entertainment network, bringing content like movie trailers, music and music videos, in addition to the gaming content. And that is designed to attract and appeal to a broader audience, not just gamers.

Kikizo: Could that be sort of an internal conflict with Microsoft's Media Center?

Kim: I think it's about providing choice. You know, not everyone's going to have a media center, and not everyone's going to have an Xbox 360. We do provide integration between the two for those scenarios, but I think that will be a good problem to have, when you have that kind of overlap.

Next, Live Arcade is already proven to be really important. There have been more than four million downloads of Xbox Live Arcade games already with an amazing 20% conversion rate from those files. It's been a huge success and exceeded our expectation there. Now as we add new classic arcade games and new content like Lumines Lives, we're adding classic casual games like boards games, and new types of games from smaller, independent developers. Xbox Live Arcade is going to continue to grow in leaps and bounds. And when you add the Live Anywhere vision to it, now you'll be able to take those games very near in the future, and be able to deploy those on multiple platforms very easily. If you're a game developer, you can reach an even bigger audience than we have on Xbox 360 and Xbox Live.

Kikizo: How useful has the Core bundle been in picking up new gamers?

Teversham: Our message is "games for everyone." It's a really, really important message, that we are going to a much wider audience than we had before. The first lot of people that we're going to get are what we are calling "next-gen intenders." These are people who say they are going to buy next-gen. And we know that every day that ticks by that the competition's not on the market, more and more of them... increase their propensity to buy Xbox 360. And what else, on top of that, will make them buy an X360? Games, games, games.

So what we're doing is saying, "Hey family! We've got Pinata! Hey, there are games from Ubisoft, there are games from all these other people that appeal to a family audience." For the hardcore gamer, we've got games for you, you know, Gear of War or whatever, for people who like sports titles, you know, Pro Evo. And that's without counting the Live Arcade games. All the publishers and developers, they're beating down the door to get their games on Marketplace. It's going to bring in the retro gamer, the dad who used to play in the arcade - they'll start playing it. It'll be another reason to buy it.

Kikizo: Yet the Live aspect isn't what PC online games are associated with, MMO crazed...?

Teversham: Yeah, the interesting thing about Live is that, if you say "online gaming", everyone goes "World of Warcraft! Ah! That sounds very... scary to me." And that's why, in reality, Live is NOT about online gaming. Live is about connecting friends together for an amazing experience. Friends are the key thing. It's not about playing millions of games around the world, it's about playing with your friends when you're not sitting together. The analogy we use is, if you go to nightclub, and you're on your own, and you've never been there before, it's kind of scary. Because you know, where are the drinks? All these people are having fun, and I'm on my own, and... ugh! I don't like it. If you go with a friend, you gain confidence, you like it, it's simple, you have the confidence to go off and then explore.

So with Live, you know, we've got to make sure it's very easy, not just about playing on private connector gaming. There's also having high scores. Like when I'm playing Zuma, I can see that, you know, I'm actually number two on my friend's list, and that's exciting to me. It's about communication, the video camera, talking to each other - Live isn't solely about playing together, there's a lot more. Even if you're playing Oblivion, on your own, Live gives you the opportunity to get armor for your horse...

Kikizo: If you pay...

Teversham: Of course - but there's enough stuff out there, on Live, that you could spend a whole month just downloading stuff for free. But yes, you need to pay, because that's microtransactions, tiny amounts of money. People like doing it, because it gives them a new experience within the game. We're dedicated to the best gaming experience and I think that's becoming our competitive advantage.

But also, I really do think that by having X360 in the market, we've changed the dynamic, that... if we hadn't been here, you know, would PS3 be launching this year? Dunno. Would they have 2 SKUs? Would they have a hard drive, would they have a network? Whatever happens, we have shown innovation and leadership. And, you know... I'm not going to say it's complementary for them to copy us, because it's irrelevant. But, I think that, you know, we are showing the way in many places. We've only been on the market, from day one for maybe four, four-and-a-half years now, and already there's 24M Xboxes worldwide. It's not bad for a new startup.

Kikizo: Is there a chance Arcade and Marketplace will become so strong that it will damage the sales of traditional boxed games?

Holmdahl: We actually think it's a very complimentary experience. On the one hand, you have this new set of games that are just smaller games that can be easily accessed through Live, and you know, the core gamer likes to play it as well as a broader audience. The other things that it does for the titles that are bought at retail - it gives it the option to do the premium downloads, the extra content. They have another opportunity to be in touch with the consumer that they normally don't have. Usually they're releasing some every two years or so. Now, they can continue to touch that consumer every three months, six months, or whatever. That's a huge thing for the consumer and a great thing for the publisher, and the developer too. I think it actually complements both sets of situations. Great experiences beget more great experiences. So if they have a great experience in this game, they're going to want to have great experiences in other games.

Kikizo: Live Anywhere on a mobile device, it's a bit like an Xbox handheld isn't it? When are you going to admit that you are making the actual Xbox handheld?

Kim: I don't know anything about an Xbox handheld, but it is about making all the cell phones that are out there - not just Windows Mobile phones, but the Java and Brew handsets as well - into even richer gaming devices, since you can connect now into a unified gaming service. I think Microsoft is uniquely positioned to be able to do that across those platforms. It's one thing to say, "hey, we can build connectivity between a PS3 and a PSP", but that's very different from saying "we're going to create a unified gaming service across Windows PCs, mobile handsets, and Xbox 360. They're talking about "how we're going to get try to get where Xbox Live is today", and what we're talking about is a clear vision for where Live Anywhere will be in the future.

Kikizo: How useful is XNA in crossover development between the Xbox 360 and Windows Vista?

Holmdahl: XNA is going to be product that allows us to help game developers develop games effectively and efficiently. It'll not only help developers move games from Windows platforms - from the Vista platform - to Xbox 360, it'll also allow them to move within the mobile space too. Certainly, it's a lot more than middleware. It's a framework that does a couple things for you. It's a framework that allows you to efficiently manage your assets, and be able to see where all the dependencies of your assets are, a framework that allows you to build product easily and not spend as much time on the build side of things. And then what it does, it allows you to take the code that you've written and essentially, with very very few modifications, be able to move that code from one platform to another.

Kikizo: Do you see any problems with the other format holders in the mobile space? You have Symbian, and Linux coming up on cell phones - do you think that gaming crossover will help you win market share there?

Holmdahl: I believe, what we're going to do is help make it so the game developer can spend more time on creating content rather than doing all the plumbing. And by doing that, whether it be mobile, PC or Xbox, it's a good thing. That's going to allow them to develop with less money, it'll allow them to develop higher-quality games, it'll allow the games to get out on the marketplace quicker.

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