David Hufford Q&A, Page 2

GS: There was some confusion regarding the "Halo online" announcement made at E3 2002. Is Bungie developing an Xbox Live version of Halo, or did the announcement pertain to an entirely new product?

DH: An entirely new product. The Halo guys are at work on the next version of Halo right now, and they'll be talking about it in the near future. It's a "ground up" approach. When we acquired Bungie a few years ago, they were very clear with us that their original vision for Halo was to bring it online, and now what they're going to do is take that initial vision but apply it to the next version of Halo, so it will be the product that they always wanted to deliver.

GS: How important is a game like Counter-Strike for the Xbox Live service?

DH: Star Wars Galaxies, Counter-Strike--they're all huge. Counter-Strike is obviously huge because of the strong community behind the game on the PC. But it's also huge because it's going to change the way the business and the economics are done. Selling an original game and then building expansion packs on top of that and letting the community take charge of the content really helps build loyalty to a particular game and platform. We're confident that same sort of phenomenon can take place with the Xbox.

GS: Does that mean Microsoft will encourage developers to incorporate downloadable content into their games?

DH: Because of the hard drive, developers and publishers are free to deliver downloadable content, but it's really up to the developers how they want to use the platform. We're very open to allowing them to do whatever they want, and we'll have to see what happens.

GS: Along the same lines, what are your thoughts on Dead or Alive Xtreme Volleyball? The game is getting quite a bit of attention, so is Microsoft worried about any possible backlash?

DH: [laughs] As a platform provider, the worst thing we could do is put the clamps down on the guys who make the content. They know what's best for them and they know what's best for the people who play their games, and that's why there's a rating system involved and that's why there are parental controls built into the Xbox. It's there to let the parents decide what's appropriate and what's not appropriate for their kids to play. So, Tecmo's going to push it to the limits the way they always have, and in the meantime, they may get a few people a little overly excited. But at the end of the day, they're going to deliver what gamers want, and that's what we absolutely endorse.

GS: Anything else you like to add?

DH: Since our price drop, we've sold 52 percent more consoles than the GameCube in the same period of time, so we really feel like we're creating some distance between us and them. With 200 games coming by the end of the year and the launch of Xbox Live, we think we're going to be able to keep it up. Obviously, they have some great games that are launching and they'll have a great season too, but I think the good news for everyone is that it's a great time to be in the video games business, and it's a great time be a gamer.

GS: Thanks for your time, David.