INTERVIEW: Microsoft

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Xbox 360 is suffering a bit of a year-on-year dip so far in 2010. Why is this and what are you doing to reverse it?

In the face of price drops, new form factors and massive marketing expenditure by the competition, Xbox 360 still grew full-year market share in EMEA from 2008 to 2009.

In November, we also celebrated selling 10 million consoles into customers' homes in EMEA. Our games attach rate remains the highest in the industry, by an increasing margin, which makes us both an enviable platform and a great partner for publishers and retailers alike.

We have seen some slow down in the market generally this year overall – plus, we are now at that time of year when people start to anticipate E3 news and forthcoming announcements and launches in the lead up to Christmas. From my perspective though, when I look at our line up of games, services and entertainment innovations including our eagerly anticipated Project Natal, there has never been a better time to buy an Xbox 360. I am very confident we'll see significant momentum, volume and excitement over the course of 2010 and 2011.

You've described this year as ‘the biggest year for Xbox' – what does that mean?

For us that means three things. Great entertainment, great games and great experiences. 2010 is important for the games industry as a whole, as consoles continue the transition to becoming fully-fledged entertainment hubs. Much of that transition is being driven by Xbox through the work we've been doing around social networking, music, HD films and TV on demand.

This year is also filled with our biggest year of exclusive blockbuster games. New releases and sequels from some of the biggest gaming franchises such as Splinter Cell, Crackdown 2, Mass Effect 2 and Fable III will be available exclusively to Xbox 360. Then of course there's Halo Reach, of which it's fair to say there's a significant amount of anticipation for.

And then there's Project Natal. Ten years ago we launched the original Xbox, and ten years on we are launching Project Natal, which will free people from the controller for gaming and entertainment. It will work with every Xbox 360 and when you get to use it across different games and entertainment experiences it really is revolutionary. We've all seen similar things in films set in the future, but that future is here and will be on the shelves for Christmas. So all in all, it's a very big year for us.

Out of all the territories you look after, which ones have been performing particularly strongly and which ones need more attention?

We don't break out figures by country, but the UK continues to be a very strong market for us with the highest attach rate in the world. In terms of our focus for the next 12 months, I'm keen to get as many countries as possible onto Xbox LIVE and expand this unique and compelling service. We know our customers want it, and we want them to be able to access not just an unmatched global gaming service, but also get them access to our broader entertainment offering. It's just a question of making sure we can deliver the experience they expect of a premium service.

In the past you've secured exclusive DLC content for the likes of GTA and Modern Warfare 2. How has this strategy been for Microsoft and is it something you'd like to continue?

Downloadable content is great for gamers and developers as it extends the life of the game for the community and allows them to introduce new features, develop the story further or just bring new maps or items into play for multiplayer experiences. We want Xbox gamers to have the best experience possible, so where we can bring them exclusive content that their friends on other platforms would love to have – we'll continue to do so.

Every week we seem to run a story about a publisher wanting to be a leader in the digital games market – Sega, Capcom, EA Sports and so on. As a digital platform holder, do you feel there is enough room for them?

These publishers have excellent line-ups that they want to bring them to market on a digital platform and we have the best platform for gamers. Ultimately the market will decide on what makes it and what doesn't.

Will there be enough consumers to satisfy the costs? I don't know, and of course not everyone can be a leader, but we do know that people are willing to spend money on digital games and content and we have more than 23 million people on Xbox Live so that's a big market for publishers. Quality is paramount of course, and as I have said many times, the ultimate beneficiary is the consumer as the bar for this quality goes up and up.

So you're confident Xbox Live is ready for an onslaught of new games?

Yes. Xbox Live is a great example of a cloud-based service that already serves millions of people and moves countless terabytes of information every day. Microsoft and Xbox are one of the few businesses that can really deliver on the promise of the cloud today.

Just as a small example, we've served over two billion hours of Halo gaming since launch and in the last three years more than 100 million songs have been downloaded for music games via Xbox Live. That's not including any other multiplayer, digital game downloads, DLC for other games, HD video and TV. I'm confident we are ready.

Do you believe future generations of hardware will be solely digital, or was the PSPgo's struggle a warning that core games consumers aren't ready for that?

The move to the cloud will mean that more and more content, games and entertainment will be delivered digitally. That's not to say that we will see packaged products disappearing anytime soon, but I think the ‘buy once, play anywhere' offering is compelling for consumers and Microsoft is in a position to offer that across Xbox, PC and phone.

Personally I still value having something tangible when spending money on a product, but I also recognise the role of digital distribution of content as it becomes a parallel and complimentary way of consuming digital experiences. As we get more comfortable with our content living in the cloud where we can access it easily, when, where and on whatever device we choose, then I think trust will improve and the convenience factor will drive digital adoption.

What can E3 attendees look forward to from Microsoft?

This E3 will be unlike any E3 we've ever had before. As you may have heard, our traditional news briefing is on the morning of Monday, June 14th where you can expect to hear more about Project Natal. Additionally, we will be hosting a can't-miss exclusive Project Natal World Premiere Experience, inspired and produced by Cirque du Soleil, on Sunday evening which is designed for all ages.

Project Natal is a focal point for Microsoft. How do you expect it to extend the Xbox 360's life span?

The best games are at the heart of any great console experience and we are committed to delivering on that promise, but Project Natal enables not just great gaming, but a whole new entertainment experience. I'm confident that our 30 million current owners will be as excited about it as we are. There is nothing like Project Natal currently available in games and entertainment, and the scope for development is enormous.

Are you concerned you've arrived late to the motion-sensing party?

Project Natal is a completely new way to control your games and entertainment, making you the controller. This isn't just motion sensing, this is an interface that will recognise you when you are in the room, it will respond to your voice and gestures and enable experiences that just haven't been possible before. It's difficult to describe how natural and immersive an experience Project Natal is, and this is just the very beginning of the development journey.

PlayStation and Nintendo are placing emphasis on 3D. What are your thoughts on this technology?

3D games are available today on Xbox and will continue to evolve. You can buy a 3DTV and wear glasses to play games like Avatar and Batman: Arkham Asylum. Of course, as 3D adoption grows, we'll support more 3D games and entertainment, but the spotlight for Xbox 360 is focused on creating breakthrough social experiences that everyone can enjoy and play together.