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Friday, May 14, 2004 - Page updated at 12:52 A.M.
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Northwest stock contest 2004 | Consumer affairs

A talk with Xbox chief Robbie Bach

By Kim Peterson
Seattle Times technology reporter

SUSAN GOLDMAN / BLOOMBERG NEWS
Robbie Bach, senior vice president of Microsoft's games unit, speaks earlier this week at the 2004 Electronics Entertainment Exposition in Los Angeles.
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LOS ANGELES — Xbox chief Robbie Bach is in the middle of one of the busiest weeks of his year. The 2004 Electronics Entertainment Exposition — the annual convention of the video game industry — runs through today at the Los Angeles Convention Center. On Monday night, Bach announced that Electronic Arts would produce sports games and other titles to run on the Xbox Live online gaming service. On Tuesday, Sony announced it would cut the price of its PlayStation 2 (PS2) console to $149, matching the price cut Microsoft made to Xbox in March.

Bach talked with the Seattle Times yesterday about the industry, Xbox's place in it and layoffs in the division. An edited version of his comments follow.

Q. What's happening with cross-platform gaming? When Madden 2005 comes out, will you be able to play against people playing their PS2 online?

A. The first thinking we've been doing about cross-platform online play has been really between thinking about Xbox and Windows and trying to understand whether that makes sense. It turns out it's possible technically certainly, but there are some things you have to think about. The Windows machines have different performance characteristics, Xbox has a certain performance characteristic, and you don't want to have a competition where someone has an unfair advantage based on the hardware they have.

It is something between Xbox and Windows that we are absolutely evaluating. We're trying to get feedback from publishers and developers to see whether they think it would be a good experience.

The likelihood that you'd see Xbox-PS2 cross gameplay you think is low. Not a lot of incentive for us to enable them to take advantage of the great work we've done online.

Q. Could it ever happen? A. In theory, technically, lots of things are possible. Whether the ecosystem would evolve in a way in which that made sense for us, much harder to tell. I'm skeptical.

Q. We didn't hear much about the next Xbox. When are you going to show it?

A. We haven't decided what the timeline will be, and we're really being very focused on this generation because we have a great product to sell. We really want to focus on what we're selling today. Xbox Live is big, the Electronic Arts announcement is big, "Halo 2" is big. We've got a great lineup.

Q. You've had some developer layoffs. Can you talk about that?

A. When we first started Xbox, we had about 350 people doing games for Windows. We didn't have any console game developers. Wedidn't know how much support we were going to get from the other publishers, so we had to make sure we had a lot of first-party content, because we have to fill all these genres and categories. We put something like 40 or 50 titles in development. The group grew, and grew, until I think we had a little over 1,200 people. We're now down to about 1,000 because the strategy really changed over time. When we got to that point we started looking around and started realizing, wait, we've got tons of third party support. We shouldn't be the bulk game provider. Third parties can do a much better job of fueling all the genres and categories. That's their specialty. That's what they do well. What first party needs to do is to be focused on producing titles that absolutely show off the platform, whether that's Windows or Xbox.
 
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So that means doing games that perhaps are a little bit more ambitious, a little bit more epic. They probably have larger development teams per game, but in total it means we've decided to do fewer games because we're not providing something in every category. As we worked through that strategy, it just meant we needed a few less people. The good news is that I think a lot of people have been able to move to other parts of the group or other parts of the company, so we've managed to keep a lot of great Microsoft people in the company. But inevitably, as you adjust your strategy, there are changes that you have to make.

Q. So many people have come here wanting to hear just the tiniest bit of information about, they're all pumped up about it. Has it been hard not to talk about it at E3?

A. No., it's interesting. I think there were some people who thought maybe we might hint at stuff or thought maybe me might show stuff, but we didn't talk about it at the Game Developers' Conference and I think that sent a pretty strong signal to people that we weren't going to be talking about it. Again I think why most people come here to the show isn't about hardware, it's really about the games. As long as you've got the great game content, people are walking away from our booth super excited and very satisfied.

Q. I've heard the console called Xbox Next, Xbox 2, what's the name?

A. We haven't announced the name for anything. You'll hear 10 names.

Q. What interest and commitments are you seeing from developers on the next Xbox?

A. The best context to talk about the future of gaming really from Microsoft as a whole, not just from Xbox but including Windows, is to talk about the work we're doing with developers around XNA. XNA is this platform development system that we're working with third party tool vendors, our own internal teams and our publishing and development partners to create. And the idea there is to really enable the people to produce better games in less time and more efficiently and really enable the game developers to focus on gameplay, and not what we would call plumbing. We've been very straightforward with people that that is the future software platform for all the work we're doing.

Q. What's reception is XNA getting?

A. I think the reception's been along a couple lines. One, developers are actually thankful that somebody finally stood up and said, "Hey, development expenses are getting too high." That's a hard thing to do. In one way, nobody wants to hear that message but it's just a fact. So they were happy that somebody stood up and said it, and they like the basic framework for how we want to help them deal with it. People understand the message that software and tools really can make a difference. We've seen it in every other business we've been involved in, and we don't think video games are going to be any different.

The neat thing about XNA is it isn't a product that ships and you wait two years and then it ships again. We do development kits once a month. XNA is going to be one of these things that evolves over time. It's going to be around for a long long time.

Q. An analyst report recently speculated that Xbox will be profitable in 2006. What's your take on that?

A. There's been speculation about our lack of profits and our profits since we got into the business, so we can add that to the list of speculations. The bigger point to note is it's all about the question of how we want to make the tradeoff between building installed base and investment. It's our view that as we think about in the foreseeable future, continuing to build that installed base is going to be important. Are we trying to run our business better? Yeah. Are we running it better? Sure. Is the fact that we're selling a lot of software good? Yeah, all those things are good. But in the end right now it's most important for us to continue building the installed base. And Ultimately that and how things evolve into the next generation will determine our ability to make the business a great business. We think we've done a great job in the marketplace; obviously we still have work to do on the pure financials.

Q. Sony's PSP game device could compete with the Portable Media Center Microsoft is launching later this year. How do you see it playing out?

A. Well I think the PSP is an interesting product because really what Sony's doing is they've decided to go compete with everybody. It competes with the iPod. It's going to compete with Portable Media Center, which isn't just Microsoft, it's Microsoft plus all the hardware partners who are supporting that. It's going to compete with Game Boy SP, Game Boy DS. They've really taken on Microsoft, Nokia at some level, Apple, it's pretty ambitious.

On the Portable Media Center side we're very focused on the things that we know go together, and that we can create a device that's compelling at the right price point for music and movies, with the right storage media, with the right model for enabling people to get movies to it easily, all those kinds of things.

PSP, they run the risk of trying to be a little bit of all things to all people and then end up being great for a small audience.Movies to get to the PSP are going to have to be in a proprietary format, so how's that going to happen? Am I going to buy my movies a second time? I don't know. People look at durability. It's got a beautiful screen on it, but is that going to survive the rough-and-tumble world of a portable device. So I think they have some real interesting product ideas but some real challenges, and creating an all-in-one device is hard.

I think their experience with PSX in Japan would point that out. They have this device that's a PS2 plus a DVD player plus a DVD recorder plus a few other things. And I think their early feedback on that is it hasn't sold very well because people aren't sure what it is. I think PSP certainly is going to have that challenge. And I'll tell you, Nintendo will put up a very impressive fight. This is the heart and soul of the company. And we all know Apple knows how to compete. So it will be interesting.

Q. Why isn't Xbox doing a portable player?A. We see the first logical places to enter that market were telephones, which we've done with Smartphones, the work we do with Pocket PC and now the work we're doing with music and movies. So we try to think of things along this scenario of where do we think we can add the most value to the consumer.

The other part of the answer is it's a huge commitment. It's just another big business. It's a scale of investment on the scale of what Xbox has been. Nintendo has 95, 98, 99 percent market share, so it's going to be an expensive investment, whatever you want to do, and you have to decide, where do I want to focus my energy? And we believe we're on absolutely the right path with Xbox. Xbox is on its way to being a market leader, so our focus is going to be on driving that market leadership.

Q. Do you think Sony's price cut will cut into Xbox sales? A. We knew when we made our price change in March that at some point in time Sony would match that price. That's the weird thing about price cuts — you can get some advantage but people can decide to sell at the same price you do.

The price cut was important to us for completely different reasons. This is the first time we've stepped up and done a price cut on our own and driven the marketplace, and done it in a leadership way. If we had tried to take a price cut a year ago by ourselves, people would have said, "Oh, Xbox must be in trouble." You didn't hear that from anybody.

The other thing that's interesting about it is Sony's original plan, at least the feedback we got from our retailer and from everybody else was that they weren't going to lower price probably until the fall. They looked at what happened in the marketplace and decided they had to respond to what we're doing. I think that's a very telling remark about the dynamics of the progress that we've made in the marketplace.

Q. Talk about broadening your audience. Are you now broadening your audience from the hardcore gamer to the mass market?

A. We're certainly well into that point from a number of different perspectives. Certainly and most obviously at a price point of $149 you do reach a much broader audience, and people who tend to be more casual.

Sometimes people think broader audience means kids. That's one aspect of broader but it's only one. Broader, we think more in terms of how they engage with games. Are they a heavy user, a moderate user, a casual user, how many hours do they play, those types of things. And we're starting to get into the audience that I would say has a more casual approach to their gaming habits. That affects pricing, obviously, but it also most importantly affects content.

The big thing for us is making sure we're producing the casual content that attracts them. One of the things we announced Monday night was Xbox Live Arcade, which is the classic card and board games that people know, puzzle games, games like Dig Dug and Galaxian. Those appeal to a more casual audience.

Q. What are we going to get from "Halo 2"?

A. I think it provides a more complete gaming experience than almost any game I've ever seen. It may be the most complete gaming experience available. What I mean by that is if you're a single player playing, it has a very engaging storyline. The story elements of it are very powerful. Its an exciting game just in that element, and that alone would make it a great game.

You'll be able on Xbox Live to play "Halo 2" in a variety of different online types of games, and that really rounds out and creates a much more social experience.

The other thing I think about "Halo" that's significant, and I don't know how this happens in life, but it does, it's a pop culture game. We think we have a cultural event possibility with this, where people are going to look at Nov. 9 and say, "Wow, that's the day." The preorder activity we hear six months out blows us away. It's the largest numbers we've ever seen.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com

Copyright © 2004 The Seattle Times Company

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