LAS VEGAS--The current-generation console battle between the Xbox 360 and PlayStation 3 will be fought on the traditional hardware and games front lines. However, the two consoles' broadband connectivity has opened up a new front in services, particularly in video content distribution. Microsoft already offers select movie and television show downloads from the Xbox Live Video Marketplace, and Sony officials have indicated that similar offerings are coming to the PlayStation Store. (Nintendo has not announced any plans to bring video content to the Wii, the third force in the current console war.)
IPTV--digital television distributed over the Internet--looks to be the next push for both Microsoft and Sony. Sony kicked off CES by announcing that it was prepping a television IPTV module for summer release, and Bill Gates announced that Microsoft was
GameSpot: What has the consumer reaction been to Xbox Live Video Marketplace? Have you identified anything in the system that you need to tweak or address?
Chris Satchell: The reaction has been really positive. People are really getting into the system. The response was so big that we found out very quickly that we had to add a lot of servers to the system just to cope with the demand. What's really interesting, what we've heard from our partners, is that at the moment we're the number two service for downloads for movies. iTunes is number one; we're number two. But in high definition, we're number one. This [Xbox Live Video Marketplace] is the main place people are downloading. They like the fact that we're adding more servers and that will make downloads faster.
GS: Is the IPTV feature going to be a dashboard update?
CS: How we're doing it at first is we're working with telecommunication partners who are intending to deliver an IPTV service and saying, "Here's a different kind of box you can use. Instead of just having a standard set-top box, use an Xbox 360. It gives you new services to provide your customers, and for gamers it gives them a really cool combination of next-generation television and next-generation gaming."
I think where you'll first see it will be in partnership with these telco partners who are doing IPTV. Now, later on, we're looking at, "Well, should we do an update to allow people who've got just an Xbox 360 to get to some of the same services rather than having to get it from a telco?" We're looking at both, but first you're going to see it from our partners.
GS: If Microsoft chooses to make IPTV available to all Xbox 360 owners, will upgrading be as simple as a dashboard update?
CS: If we do open it up so that our current users can get to the service, we're not quite sure how we'll deliver it. Of course, we have a great system with [Xbox] Live, so it's entirely possible that we could do it as an upgrade. It's entirely possible we could give it to you on a disc and you could just install it. There are all sorts of ways we can give it to you. Obviously our preference normally is to do everything online because that's where people are at.
GS: This might be too early to ask, but are you guys discussing how much this will cost?
CS: An IPTV and Xbox service, how much would it cost? Really, that's for our partners to define because they're likely going to bundle it in some way, kind of like when you go to Comcast and go, "Hey, I want my Internet phone, I want my Internet, I want my movies," and they do packages. [IPTV and Xbox 360] will probably be the same type of thing--that's really up to our partners and not us to set price. What we're providing is the next generation of technology and giving them something that nobody else is: full gaming with this incredible television service and the Live network as well.
GS: All this cool HD stuff that you're talking about starts to take up space. The 20GB for a lot of people is already starting to fill up. Seeing how Microsoft has been great about responding to customer needs on the Xbox 360, can you speak to larger-capacity hard drives?
CS: That's not really something we're looking at today. We're very open to feedback on it. As we produce these services, if we see an increase in pressure that's something that will be interesting to look at, but there isn't any announcement today about any new configuration that may or may not be happening.
GS: What can you tell us about the HDMI-enabled Xbox 360 rumors that have been going around?
CS: We're always working on prototypes and new technologies and just playing with stuff in Redmond to see what's interesting. I think at the moment we have the widest available connections on the system. If you want to get great HD, I think we've got a good solution for that. In the future it's interesting to see where standards evolve to. I think one of the problems that the whole industry, us and entertainment, are facing at the moment is we're in this world where standards are evolving very quickly.
We have different high-definition standards for discs that we know are competing at the moment. We think HD-DVD is going to be the right way to go, but really it's all about choice in that system so that's why we're offering these sort of services with downloads--skip that whole "format wars" problem. With other standards, audiovideo standards, they're evolving very quickly as well. We're obviously keeping an eye on that and saying, "What are the future standards and how do we give consumers the right choice for that?"
At the moment, everything you might have seen is just looking at our experimentation back in Redmond, not really a product that we're thinking about announcing.
GS: We did a screenshot comparison feature comparing the Xbox 360 to the PlayStation 3 last December. We expected the PS3 games to look the same as or better than the 360 versions since the developers had more time and the PS3 offers more theoretical performance, depending on who's talking. However, we found that that the majority of the games looked better on the 360 even though many of the games were released several months before the PS3 versions. What do you think happened there?
CS: I think there are several factors that feed into it. The first is that I don't think we have a less powerful system. In fact, especially in the area of graphics, I think we actually have a superior system. What's really important is the developer tools we give people so they can exploit it. If you give people great developer tools, rather than struggling to get a game working, they can focus on the creativity. That's something that's in our DNA at Microsoft: great developer tools. That means not only is there more power there, especially on the graphics side, it's much easier to use and it's actually tailored to gaming. What you're seeing is people who have great technology to support them, great tools, and they're able to make great-looking games.
I've got to admit that I wasn't surprised when I saw the screenshot comparisons. When you see something like Gears of War, I don't think there's anything you can compare against it. It is the best-looking next-generation game. What's even more exciting, of course, is that I get to see some of the things going on in first-party Redmond that are going to be released in 2007, and there's some amazing stuff going on. There's still so much capacity to use in the system that people are starting to get into now, so when you look at the big upcoming releases for this year, things like Halo 3, what you're really going to see is what true next-generation is. Gears of War has really paved the way, but there are going to be titles next year, with our tools, with the power of our system, that are just going to make people amazed over what a next-generation console can do.
GS: You guys beat your 10-million-unit sales for 2006. What's your next goal and when will you hit it?
CS: One of the things we're really focusing on for this year, for the end of our fiscal year, which is June, is to make sure we have 6 million people on Live. Getting that mass of people on there just makes the service so much more interesting. One of the things that we looked at recently was an interesting stat: Gold users average 21 friends each. The more people you get on there, it's easier to find someone you want to play again and again. With the sales figures, what we're looking at is trying to hit a target of 15-16 million by the end of our fiscal year, and we'll set new guidance after that. We're on the right trajectory, we're happy with our 10.4 million in sales, obviously, and now it's just onwards and upwards from here.
GS: Are you guys watching how Nintendo is doing with the Wii, and do you find any of it inspiring?
CS: I think the Wii is really interesting. The control is amazing for some games, but for other games, I don't think it's working as well. I think it remains to be seen just in the long term how much people will enjoy playing a really broad spectrum of games with it.
One of the things that I think Nintendo is doing very well is they are taking IPs they have and they are exploiting them on their new system. People love Nintendo IPs, but also it's new game types and bringing in the whole family. This is something that we started to do last year with Viva Piñata, which is a very different type of game from what you normally see on Xbox, and we want to continue that on. The first time Guitar Hero II will see its next-gen premiere is on Xbox 360. Again, it's sort of a very different way to play. You're starting to see it on Xbox Live Arcade. We brought in retro gaming. We have some new, simpler game types.
I think you'll see us build on that to say, "What are interesting experiences for the family, for younger gamers, for people that don't want to play our traditional brand of a very hardcore, intense gaming experience?" We've started on that path, and you'll see this year and next year us really expanding on that to give a broader set of game experiences.