INTERVIEW – Chris Lewis, Microsoft

Why was now the right time to drop the price of your hardware?

Xbox 360 is a now a real mass market entertainment proposition. Through this price point, we can reach and introduce a much broader array of consumers to hi-def gaming.

We had to hit and surpass key milestones before we dropped 360’s price. We had to get a level of momentum we’ve now achieved: We’ve taken 42 per cent revenue share of next gen-games market – including hardware, peripherals and software, as well as the stunning performance of Live. We’re attaching games at high level – we’re now at north of seven games to every console. That’s considerably more than our competitors and something we’re immensely proud of.

On top of that, we’ve worked our way to a 17.7 million units worldwide installed base – and Europe is a critical geography within that figure. The ability to continually drive cost through the console is what has allowed us to open up the price of the system now.

Is this a reactive move – or has it always been a long-term plan?

We’ve always had a deliberate view of strategy that we had to secure the core gamers in the first instance.

Having done so and performed in a way we’re very, very proud of with our core content, such as Halo 3 and Bioshock – which both had record-setting attach rates – it’s time to widen the net even further.

We have a real appetite to appeal to the broad, mass market and to target the whole family. Titles such as our sports games, Scene It! and Guitar Hero – which has become a preferential experience on Xbox 360 – has already proved that, and we have lot more coming in that space this year. We’ll continue indexing in order to broaden our appeal in this space.

Does this mean you’re moving away from the core gamer?

Not in the slightest. We’re really excited about our core games line-up in 2008. There’s GTA IV, with the exclusive content you can only get on 360, Fable 2, which I’ve seen and looks simply stunning, and plenty more besides.

Then, of course, there’s Gears Of War 2 this Christmas, which promises to be a real defining moment for the industry. There’s no doubt in our minds that we’ve got the best games.

How would you respond to those that say the 360 is too complicated or ‘hardcore’ for a family audience?

The number of people that have signed up to the Live service so far is testament to the fact that there are a broad spectrum of consumers enjoying our service. That can only grow as we expand the likes of Live Arcade and Live Video Store. We’re listening hard to what casual consumers want as you see us release more and more content that appeals to a broad audience.

It’s important for us to bring broadly appealing content to the system to keep growing its accessibility. I’ve seen what’s coming – and there’s a lot. We’ll have north of 1,000 games on 360 by the summer, across Live and boxed product. Casual gaming, if we can call it that, is very important for us.

From everything I’ve seen at the moment and the success we’re enjoying in the broad space with Xbox 360, people are enjoying picking up the games and playing them.

Congratulations on your promotion. What’s the thinking behind your new role, managing online, development, publishing and hardware in Europe?

We’ve led our industry in developing and publishing great games on a platform that is equal parts hardware, software and services. We’ve led in driving growth for our partners at record rates. Now, it is our mission to fully deliver on our promise for Xbox 360 to be the console of choice for everyone in the family. And no territory is more important in this drive than Europe. This re-alignment allows us to work more efficiently with our global organisation and enhances our ability to reach our business goals.

You’re very proud of your attach rate record. Why do you see it as so important – and is there any danger that you can be ‘caught’ by Sony or Nintendo in this arena?

It’s how we know that when people get their hands on Xbox 360, they love the experience. It’s good for our publishing partners to see the appetite our consumers have for their content. In that regard, it’s an even stronger catalyst to more development and more excitement around the platform.

We have the best games to appeal to the core and the masses. In terms of what the competition is doing, it’s perhaps best you discuss it with them. We’ve got some fabulous content coming that I think is going to expand on our attach performance.

As larger content comes to Xbox Live, would you consider a new SKU of the console with more storage capability?

If that makes sense, then yes. We’ve got no particular announcements to make right now, other than to again say we keep our ear very close to the ground in terms of what consumers want. It’s phenomenal how Live has ballooned. If that requires us to think differently about storage and content then you’ll see us do that in the right time and the right way to feed that demand.

Do you pay any attention to criticism from online fanboy communities?

We do keep an eye on those sort of sites, of course, because those guys are savvy and give us steers to what they’re looking for. They’re also usually early adopters. But we try and balance that from the broader feedback we get from more everyday consumers.

Some of these communities have made noise about Microsoft’s first-party line-up not being as strong as in previous years. Will your yet-to-come announcements blow this idea out of the water?

I actually think we have a good balance when it comes to first-party software. Think of the next iteration of Fable and Gears Of War – both of which will blow the minds of gamers.

GTA will be a critical game for us. We have exclusive content for GTA, whilst other platforms don’t. Historically, we might have over-indexed slightly on first versus third-party releases if you go back a couple of years. I’m not sure that always steered us to the phase where we needed to be. We’re much better balanced now.

Sony has been singing recently about projections of catching your installed base. Will this price cut put a spanner in the works?

I genuinely wouldn’t change places with any other platform right now. I love the fact the competition’s high – the people that benefit are the consumers. We’re pushing our competitors to constantly vie for the best quality and optimum experience. That’s great. The race is far from over.

MCVUK.COM EXCLUSIVE: Are you looking at more family-friendly peripherals? What about a motion-sensing controller?

History shows that we have always focused on creating the best experience for consumers. We have no announcements at the moment, but we’re always looking at new ways for people to connect. The excitement around our wireless controller is a good example of how we can surpass expectations in this area – the attach rate for that has been nothing short of amazing. We keep our minds open about the kind of experience people want to have.

MCVUK.COM EXCLUSIVE: Do you still feel that Xbox Live is streets ahead of what Sony and Nintendo are doing?

I genuinely do. When we first brought Xbox to market, we the online experience at the heart of the architecture. And everything we talked about is happening now. We’ve been so successful with Xbox Live because it’s what consumers want.

It’s seamless, it’s easy to use, it’s not an intimidating experience, and it’s efficient across different device types. It really does offer an amazing array of content – trailers, arcade games and more. Even things like intelligent matchmaking.

Those kind of things are precisely what people want. And they have a hunger for it we can meet. It’s what we’re good at. Because we set out with it at the heart of what we were doing with 360, we’re continually revise and reiterate that process. We’re in a great place to continue offering a great experience in a way the other platforms just can’t do.

MCVUK.COM EXCLUSIVE: Will there ever be a Blu-Ray peripheral for Xbox 360?

We never wanted to force consumers down any particular DVD playback route. We felt that HD-DVD was the right format for an accessory, but we always felt very strongly that we should never make that an integral part of Xbox 360 because we wanted to give people the choice. My own view is very clear and I know it’s shared by other people in Microsoft is that the future’s digital downloads now.

The broadband proliferation is amazing – people’s appetite to download movies through Video Marketplace is testament to that. The future is about people taking their digital content on an online rather than physical media. We have no plans to do anything at all in terms of further or additional playback peripherals. My own sense – and a lot of the analysts would feel the same way – is that online is the future. And we’re very well placed to take advantage of that.

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