Popular games exec Phil Harrison delivered his first public address as a Microsoft VP at London Games Conference this evening, and gave the room a rapid tour around the new Xbox business strategy.
After admitting that the latest games industry headlines ‘have not been great to read’ he said: “I am more positive about the future of our industry than I have been in the 25 years I’ve been in games. There are more people playing than ever before, and paying more than ever before. We have much to be proud of and much to celebrate as we move forward into the new generation of our industry.”
POWER OF THE CONSOLE
He began his speech by delivering a defence of the games console, telling the attendees that despite the growth of mobile and browser games, the games console is still the most profitable platform to develop games for.
“Consoles are still very relevant in our industry,” he added.
“The highest generator of average revenue per user comes from the console market. The seventh generation of consoles currently sit in over 200m homes worldwide. This generation is bigger than any other generation by some margin.”
However, Harrison believes that the movement from retail to digital is now a formality. He brought up a slide that he used at this event three years ago which suggested that 2012 would be the tipping point where more money is generated via digital than retail. And said ‘although it is too early to tell if that prediction is right. That movement is happening.”
“As an industry we can either be victims of that transition, or we could help lead and drive that transition. And that’s the approach we at Microsoft are taking,” he said.
Harrison then ran through a few big numbers for Microsoft. He revealed that 70m Xbox consoles are now in gamers homes around the world, perhaps a comment against PlayStation, which recently stated that it has ‘shipped’ 70m PS3s worldwide.
He said that Xbox 360 has had the No.1 console market share for the last 22 months straight in the US and is enjoying ‘similar success’ in the UK.
“We are the only console to grow year-over-year," he boasted. "We are also innovating and introducing new business models, new types of content and new ways to play, which gives us the scale to invest in content for that audience.”
Xbox Live is critical to this, says Harrison, before revealing that the Xbox Live users consume 442 million hours of entertainment every week.
“Over the past 10 years I have been very envious of Xbox Live,” he continued. “It’s a fantastic achievement at Microsoft that it has invested in and pioneered.” It’s a ‘great compliment’ that people liken similar services to being ‘like Xbox Live’.
Harrison then discussed Xbox Music, Video and Television. Xbox Music is now ‘the second biggest download-to-own music service in the world” behind iTunes.
"Xbox in general is now the brand that represents all of Microsoft’s entertainment," says Harrison. "It is the concerted cross-company initiative that brings games, TV, music and film to their Microsoft devices.” It is no-longer all about the games.
But Harrison was keen to remind the attendees that core gamers is still at the heart of the Xbox business. He revealed that by combining sales of Call of Duty: Black Ops II on Xbox 360 with Halo 4, the platform had generated roughly $500m worldwide in a matter of weeks. ‘No other platform has generated that sort of entertainment revenue in such a short period of time,” he said.
He then discussed the company’s ambitious Halo marketing campaign, which included a free ‘multi-millon dollar’ live-action TV production called Forward Unto Dawn, the big glyph PR stunt above the Thames and 'we then took over a country’ joked Harrison, in reference to its live event in Liechtenstein.
“But this is just the start of the relationship with the audience with Halo.
“You then get access to a number of free episodes that are delivered to you to enhance the multiplayer. You will get maps that are introduced by a series of animated introductions.”
Finally, Harrison ended his talk but discussing Microsoft Studios. He described the development division as ‘multi-platform’, and pointed out that the teams are creating games for mobile, PC, browsers and more.
“We are no longer competing with the basic console companies, we are competing with the likes of Apple and Google.
“All of what we are doing is powered by the Cloud. Microsoft is now a devices and services company, and there isn’t an organisation that does that more concisely than Microsoft Studios.”
He then ran through the firm’s big UK studios – Press Play, Rare, Lionhead Studios, Soho Productions and the yet untitled ‘New London Studio'.
The New London Studio “is a new kind of studio,” said Harrison.
“It is a 21st century studio. It will not make retail products. It will make products largely based on Windows 8. We are hiring some incredibly smart people from the console industry, the Web 2.0 industry and the mobile industry. And it is interesting to see those three skillsets smashed together.
“I’m a firm believer in UK and European talent. We don’t always have to be based in Silicon Valley to be successful.”
And then came Harrison’s final pledge that the firm will hire 100 new developers in the UK and is currently hiring and seeking new development partners to grow content across Windows 8, Windows Mobile and Xbox 360.
Finally, in a Q/A session after his tak Phil Harrison addressed the discoverability issue on digital, and pointed to an improvement in showcasing games and the use of voice with Kinect as a good way to find content online.
And free-to-play evangelist Nicholas Lovell asked Harrison how important free games will be to the future of Xbox and the industry.
“We think that free-to-play is a great way to expose people to your product,” answered Harrison.
“But we also think that advertising is a great business model. We have a great advertising department within Microsoft. And we think that will be a valuable way to monetise users.
“We had a great experience with our first Xbox 360 free-to-play game Happy Wars, so we are making strides, but they are measured strides. But we know that is a viable business model for the future.”