A little over four months ago, Shane Kim was thrust into the limelight at Microsoft Corp. Not that his 14 years with the company were without their highs and lows, but certainly the Work Application and Back Office Groups (where he started) can't compare with the highly visible, hardscrabble turf of the console and PC game beat. For most of his time at Microsoft Game Studios (which he joined in 1996), he worked side by side with Ed Fries, the high-visibility studio head, early evangelizer of the Xbox, and signer of checks that put some of the industry's most widely known developers in the Microsoft camp (FASA, Bungie, Rare). However, when Fries left Microsoft in early January 2004, Kim got the nod from chief Xbox officer Robbie Bach to fill in for Fries--temporarily. Recently, Bach made it clear he was anxious to hand over the general manager reins entirely to Kim, and he did so shortly before E3.
GameSpot spoke with Kim on the second day of E3. As is typical with high-level staff among exhibitor companies, Kim hadn't spent much time on the show floor. Still, he knew exactly what he'd be looking for from that first foray--just as he knows what he wants from his own games.
Shane Kim: I believe that the best content comes from the best artists, and so one of the key parts of our strategy is to make sure that Microsoft Game Studios is the best home for the best talent in the industry.
GameSpot: However, the organization seems not above canceling projects if they dont meet certain expectations.
SK: We have to be the ones who are getting customers really excited with exclusive, breakthrough, showcase content for our platforms. Get customers excited, which in turn gets third parties excited, etc., etc. That bar is really, really high. The customers are becoming much more sophisticated. But the bar for first party is even higher. And so, you know, were going to take chances, were going to place a lot of different bets, were going to bet on the teams and titles that we think can break through. Sometimes it doesnt work out for whatever reason, but you have to be willing to make those hard decisions so that the things that you really do believe in can break through.
GS: So how do you stay in touch with users' expectations?
SK: Sales is one way. Anybody could look back at the fourth quarter of last year, last calendar year, and see what happened. There were a lot of great titles, really good titles, but very few that were able to break through. And I dont think it was just because they all hit at the same time. I think that customers really have a lot of choice, and they chose to get behind things that really were compelling to them.
GS: What was your reaction to those sales figures?
SK: I think a lot of people in our industry are focusing on doing fewer, but bigger and better titles. I dont think that thats a strategy thats unique to us. But were really determined to execute that well. And the second thing that we do [is] have a very significant investment in gameplay testing. When were developing titles, were obviously not only just doing quality assurance from a software standpoint, but we bring in lots of gamers throughout the entire development cycle who are telling us what they like and what they dont like about the games.
GS: The process asks of them what?
SK: Is it playable, is it not playable, how deep can they go, where are they running into problems--so that helps us tune the games. We get a lot of real-time feedback. This is not focus groups where we're testing concepts. People get their hands on the games and tell us what they like and what they dont like. Generally speaking, the talent is pretty in tune with what customers want, what theyre saying about their own franchises, and what theyre saying about titles in general.
GS: How do you manage that feedback?
SK: Well, that group is staffed by well-trained specialists in evaluation of different ideas--psychologists, Ph.D.s--so they understand the science of evaluating consumer response well. What were able to do is apply that expertise to different stages [of the game's development]. Obviously in development, we can pick different places there. We also can bring concepts to that group, and they can help us understand with their feedback. We have this huge database of people who love being able to contribute to game ideas who are happy to come in and tell us what they think. I think the important thing is to have a system in place and a willingness to listen to customers. Thats what we try to do.
GS: How do you judge games in progress to determine whether you should continue funding them or not? Whats that process like?
SK: Were talking about art, not science. OK? [At] Microsoft, especially, weve got a lot of engineers who would love things to be very, very precise. But its very important for people to realize that at Microsoft Game Studios, what were doing is creating art. And the process of creating art is an artistic process, not a scientific process. We bring a great heritage of being very good at program management and process management. But by the same token, you know, we have to make sure that youre leaving the room for creativity. So, its very difficult. I mean, theres a lot of great ideas that never get made into--that never get finished into--a great game. Theres so much that goes into actually producing something, especially at the epic scale that were talking about these days, to be successful. And then it comes down to a lot of times working with the dev partners too, because theyve got a lot of that expertise and experience. And we also take feedback from customers. We just throw it all together and really try to understand where we are on the game and its chances for success.
GS: How important is converting nongamers of Microsoft Game Studios products into the fold?
SK: For interactive entertainment to become truly a mass market form of entertainment, we are going to have to evolve as an industry more, [and generate] more entertainment thats targeted at different demographics, different customers. We have a lot of experience actually, already in this, because again, the Zone studios, theyre the ones who created a casual content for MSN, MSN Messenger, and now Xbox Live with Xbox Live Arcade. Thats a great example of developing that content and delivering it for that customer.
GS: But is there other content that could appeal to an even wider audience?
SK: Absolutely. I think weve just started to scratch the surface of whats possible. Even in core games today, things like story and character development have become so much more important. Halo, right? Halo is not just a run-and-gun first-person shooter, but it has a very, very rich world behind it. Were just starting to scratch the surface of what youre going to be able to see both in core gaming as well as interactive entertainment for a much broader audience. Im not smart enough yet to figure out what thats exactly going to look like, but Im actually very hopeful for the future.
GS: Turning to E3, whats the message this year from the Game Studios?
SK: Speaking for Microsoft Game Studios, I think [it's]: Take a look at our titles. I think we are executing well on the first-party mission and responsibility, to be honest. Obviously Halo 2 is a big blockbuster. Its the game that launched the Xbox, and its the most anticipated game across the entire industry. People are pretty blown away by it. So, Halo 2 is a great example. But the rest of the portfolio Im really proud of. Weve got Fable from Peter Molyneux, Forza Motorsport, which is a big announcement for us which adds to the racing heritage and family that weve already got in place with Project Gotham Racing and Rallisport Challenge, which are two successful franchises for us. Youve got Jade Empire from BioWare, MechAssault 2...those are all games getting a lot of buzz.
GS: Any connection between the cancellation of your sports titles and the EA deal with the Xbox Live group?
SK: Cancel is the wrong word. We decided were not going to release new versions of the XSN and sport titles this year. Since I came into the position in January, weve been taking a very hard look at our entire portfolio of teams and titles and trying to decide which do we really believe are going to meet that bar. Frankly, we need to do better in the sports area. Now, as a platform, were very, very fortunate because weve got great partners in Electronic Arts and Sega. So sports is an important category to Xbox. And of course bringing Electronic Arts to Xbox Live--that helps a lot too. So were going to take a hard look at what were doing in sports and try to make sure that were doing it well, but frankly, even if we were doing XSN in sports, I can tell you that EA wanted to bring their titles to Xbox Live. Xbox and Xbox Live wanted to have EA titles on Xbox Live. At the end of the day, regardless of the philosophical or business differences that may have been real or imagined, people listen to the customers because the customers who love the EA franchises believe that they play better and look better on Xbox--they want to be able to play them on Xbox Live.
GS: If the EA/Xbox Live alliance proves to be successful, would you be incentivized to keep the sports titles on hiatus indefinitely and possibly allocate those resources somewhere else?
SK: Well, Im actually not thinking about it that way. Im looking at sports and trying to determine, is there something unique and compelling that we can do thats exclusive to the Xbox and Xbox Live platform. Thats something that were really spending a lot of time trying to figure out. Were going to continue to invest in it because we believe that sports is a huge category.
GS: I presume the sports group has been depleted some in the area of manpower?
SK: No, the sports studio still exists, absolutely.
GS: Will you be tracking PSP sales to see if--to judge if entering the handheld space might be appropriate?
SK: Only from a casual interest standpoint. Were very focused on Xbox and making Xbox win. You look at the things that were doing, were furthering the leadership that we have in online with Xbox Live, with XNA, and with the first-party titles that were delivering. So itll be interesting to see Sony and Nintendo slug it out there, but frankly were focused on Xbox.
GS: Given the costs associated with a sophisticated E3 presence, how do you measure the return on that investment? What do you look for from these three days in LA?
SK: [It's] probably best to have the marketing guys talk about that.
GS: Then as a game guy? What do you look for from the show?
SK: This is our stage, right? To showcase our titles and get people excited. Whether its customers or the press or retailers, its an opportunity for them to see what our lineup looks like and also talk to people about our commitment and the different things that were doing across the entire program. Its not just about the titles; it's about XNA and Xbox Live for us too. Its a great stage for us to talk about all those things and hear peoples feedback in a forum where they get to compare us directly against everybody else. And so far the feedbacks been really positive.
GS: Is there any debate in terms of there being a commitment to Japan? And what about the Chinese market? Everyone seems to be very curious about China.
SK: Theres absolutely no debate about our long-term commitment to the Japanese market. We made that investment and commitment a long time ago. And were certainly learning a lot from this generation about how we can be more successful in the future. If you know anything about Microsoft you know we tend to take a very long-term view on these things. Its an important market to us. Were going to be there, and were going to be successful.
Another part of Microsofts heritage--one of the key factors for our success as a company--is its rapid and aggressive expansion internationally. I think youve seen us do that with Xbox as well, where we move very aggressively into the Asian territory, bringing Xbox Live to multiple markets in Asia. That demonstrates a real commitment and an interest to being successful in Asian markets, perhaps where other competitors have not been successful. I dont have anything to announce about any additional territories, but you can...Im sure you can understand that markets very interesting.
GS: Microsoft has huge cash reserves. Does that allow you to be especially creative, especially daring?
SK: Look at the entire Xbox program. Thats a significant investment that very, very few companies can undertake successfully. You not only have to have the resources, but you have to have the willingness to invest those resources, and I think weve clearly demonstrated that weve got that willingness.
Everything from the console itself to Xbox Live to the investments we made in ramping up Microsoft Game Studios...all of that taken together is a tremendous investment.
GS: Deep pockets are good.
SK: I think its a great competitive advantage for us to have Microsofts resources behind us. Were not a Wall Street-driven company. So we dont have the same pressure to release a game to make quarters...to make a quarters earnings. So we can afford to be patient, take our time, give the creators the time that they need to make sure that they deliver the best title possible. [But] were responsible as well. The company didnt become as successful as it has been by being stupid, so I would say were intelligent about the risks that we take, and were intelligent about the patience that we have.
GS: When you walk the show floor, what are you looking for?
SK: Im going to go see where the crowds are and what people seem to be lining up to see and are getting excited about. [After the show,] well be doing a group debrief with people who have had more opportunity to walk around.
GS: What do you see as the most significant impediment to getting people to play games on an Xbox or their PC? What vies for consumers' time?
SK: Well, entertainments been around forever.
GS: But games havent.
SK: Theres already lots of existing forms of entertainment, and people entertain themselves in all sorts of different ways, so in a way, were competing with that. But in order to compete effectively, at least with the broader audience, youve got to create interactive entertainment thats compelling to them enough so that they wont watch Sex in the City. Or they wont curl up with a book. Or at least theyll take some time the way that they used to do something like that and apply it toward interactive entertainment. The key we have is interactivity
GS: Thanks, Shane.