Xbox president Don Mattrick said during your E3 press conference that 360 was going to be No.1 worldwide over the next year. How do you hope to achieve that?
We are No.1 in North America. Don was quite rightly proud to talk about 55m units sold. The momentum we have at this relatively late stage in the generation defies the normal logic of a lifecycle. In EMEA we grew around 20 to 25 per cent last year. To meet our global ambition of No.1 status during the course of next year, we have to be No.1 in Europe.
Now we enjoy great success in the UK, we have been successful right from the outset and we continue to do fabulous work in the UK. We are No.1 in a number of countries around Europe, but not right across as an aggregate. That has to change, we are committed to making that happen and we will grow again next year.
Why do you think Xbox is still growing, even at this late stage in a console lifecycle?
We see it as about halfway through. But yes you are right, Xbox is defying the normal curve you might expect. There’s no doubt that Kinect put a huge shot of adrenaline into the arm of the business. What we are now seeing is massive swathes of families and younger audiences flocking to it. As you saw at the press conference, we are now in line with what we projected at E3 2010.
What share of Kinect’s sales does the UK and Europe make up?
We don’t break out the geography in terms of numbers, that’s an area that’s probably a bit of frustration to you. But the UK is a huge market for us. Certainly our Kinect performance in Europe is in line with the size of the market. To an extent, in the early stages when shipping Kinect, demand was out-stripping supply, and we moved to an allocation process.
It was only really after Christmas that the staggered start began to unravel so we could see naturally where we were. We are seeing a predictable and healthy connection with Kinect and the console in the UK. We are also seeing, which is really heartening, other parts of Europe pick up their market share in line with the growth ambition we have for next year.
There were a number of core Kinect games during your press conference. Was it really important for Kinect to start involving the core gaming audience?
We were deliberate about the fact that the first Kinect experiences were focused on the family and younger audiences, with Adventures, Kinectimals and Sports. The latter, by the way, has sold more than 3m units. That has done really well in Europe. And Dance has sold 2.5m copies. We were deliberate in our strategy to bring those experiences first. But we have said over the last few E3s that we will bring complementary and integrated Kinect experiences to core games.
What you won’t see is us contriving that. What you will see is us using Kinect to enhance the experience and not detract from it. I don’t think our core gamers will tolerate anything else from us.
The other thing is we are seeing cross-pollination. We are seeing people come to Xbox now because of the new user interface or Kinect. But once they are into the Xbox world they are finding they like the core games as well. That healthy cross-pollination is giving us this growth that Don mentioned.
EA Sports is now on board with Kinect, but I think it is fair to say they struggled to succeed on Wii. What makes Kinect different?
It is great having Peter Moore on stage talking about sports, it doesn’t seem that long ago he was on stage talking about Xbox working for us. He is such a close ally on what we are doing with the Xbox business and it was a great opportunity. With FIFA, hey, football is a religion in Europe as we know. And as I said earlier, the key is to make sure the Kinect elements that are built into that game enhances it, enriches it, and makes FIFA different and exciting. You can be very confident about that.
How challenging is it to balance the demands of your core audience with the needs to reach the family and kids audience?
I think we are on a journey for growth and we are unapologetic about the fact we want to appeal to those audiences you described. The key is not to alienate any of those whilst also trying to appeal to them. And about targeting marketing and understanding our audiences, we are getting way more savvy about the partnerships that will enhance that kind of appeal.
What did you make of the moves Sony and Nintendo are making with Vita and Wii U?
As you can imagine are keep a close eye on our colleagues, and they are our colleagues. I know you guys see us as arch-rivals, which of course we are, but we are also colleagues in this industry and we do talk to one another. So we have high respect for both our competitors. We watched both of their press conferences. I still believe we are in an enviable position. I wouldn’t trade places with anybody. We are hugely well placed with Xbox Live and how that connects to phone and PC and TVs, and all the service provision that goes with that puts us in a fantastic position.
Doesn’t the fact Nintendo and Sony are upping the ante with new hardware put pressure on you to do the same?
We can completely update the UI through software updates. We can improve the fidelity and accuracy of the camera to the point where we have finger tracking in Kinect. They are examples that we can continue to develop and evolve this really flexible platform to offer people what they want without forcing them down a new hardware path. We have 55m units out there. People will pay for things when they see great value in them, but they don’t want to be forced down a path without seeing that great value. And that’s everybody’s challenge, not just ours.
You are proposing a more seamless integration of your services across PC, console and phone with the upcoming Windows 8, but is this really advantageous? If someone has trouble with their Windows Live account or Hotmail it can then have a knock-on effect across all services, including Xbox Live…
The benefits of a seamless, one online relationship across multiple devices of choices outweighs any risks you might describe. We would work hard to make sure anyone in that situation gets back to the right place.
Equally, we are unapologetic about our mission to drive piracy out of our business if we can. Live is a great opportunity for us to identify piracy, which is a big challenge for our whole industry. It is bad for the whole industry. And we would like to protect folks that are actually making an investment in us and our own IP.
The recent troubles with PSN have put online services in the spotlight. Why do you think consumers are targeting digital services?
I don’t know. It is hard for me to put myself in the psyche of someone who could do that. But for us the important thing is to continue to work on making sure consumers feel comfortable, relaxed and confident in the online environment. We have 35m people on Live, we care about them a lot, every single one of them is important for us. There’s good rigour around our own security.