Focus: Microsoft's Peter Moore at TGS (Part 1)

Peter Moore: I think this has been a great week for Xbox 360. It's been a tough couple of years here, where we've struggled in the Japanese market. Our focus has been on building up to this week, where we're now here at Tokyo Game Show, where Japanese gamers and in fact gamers from around the world can finally get their hands on the Xbox 360 and play what I believe is 14 games, playable on the show floor.

Today is consumer day, it's a wild and crazy day at Tokyo Game Show. I'm very excited to hear the feedback from the Japanese gamers who are right this moment playing Xbox 360 games.

I think it's very important that you focus locally in each market for what you think the game is that's going to drive the platform - not only on day one, but in the six or nine months beyond that.

When I think about here in Japan, we have a great deal of focus on titles like Ninety-Nine Nights, Everyparty... A long-term focus on huge titles like Blue Dragon and Lost Odyssey. I then move to Europe and I think titles like Perfect Dark Zero, Kameo and Project Gotham Racing 3 are gonna be very important.

I think about our partners such as EA with FIFA - in America, Madden NFL football. Ubisoft with Ghost Recon 3 and King Kong. Activision with Call of Duty 2. Back here to Japan, Ridge Racer from Namco, Dead or Alive 4 from Tecmo... We should have such a wealth of titles in the early going that it's going to be very difficult for us to actually decide which ones are going to be worthy of the investment, because they all are. I think that's a great position to be in.

Well certainly here in Japan, clearly deeper role-playing games are very important, and games that are developed by Japanese developers for Japanese gamers is something that we've invested in heavily. Having the talent of Sakaguchi-san, Mizuguchi-san and Okamoto-san all focusing on the Xbox 360 platform, all in their own unique way, is important.

As for Europe, you can't take Europe as one nation, as it were. UK gamers have a different focus than German gamers and certainly different than French gamers. When we look at the genres, I think that there are very few - maybe football and racing - that pan all of the nations.

I think of France and I think that a game like Kameo will do extremely well; Germany's different because there are restrictions and there are issues in Germany regarding violence that are very different than anywhere else in Europe. So from the point of view of how we will focus, it's almost country by country in Europe.

Then finally in the USA, I think that the ability for us to be able to bring an incredible number of titles - with NFL football obviously at this time of year being very important, but also the titles I mentioned like Ubisoft's Ghost Recon 3, Activision's Call of Duty 2. These all will supplement our first party titles.

What's important to also note is not to get too hung up on what's out on day one, but look into the future of a few weeks after the launch and then a couple of months after the launch. It's very important that we have a constant flow of great new titles in all of the regions that are relevant to that local gamer, and speak to that gamer in the voice that he or she expects to be spoken to from a branding and a tonality point of view.

I think that new intellectual property is something that a), we've proved that we're not afraid of doing, and b), is vitally important if you're the first party for the platform. Clearly, Halo didn't exist, Jade Empire didn't exist, Fable didn't exist, Project Gotham Racing didn't exist, Forza Motorsport didn't exist. This is brand new IP we've invested in and we'll continue to invest in going forward.

At the same time, in this next generation we can leverage all of that, but you will see announcements - beginning at X05 - of new intellectual property that we're willing to invest in. We believe it's our responsibility as the first party at Microsoft Game Studios to innovate on this platform. We take that responsibility very seriously. Development resources will be applied against that to make sure that we continue to push the envelope. At the same time, fan favourites that appeared on the Xbox will certainly have the potential to appear - sequels if you will - on the Xbox 360. I think that if you can get that blend right, of new IP and favourite IP coming together, it's a very powerful combination.

You know, I think the days of an icon - Mario, Sonic the Hedgehog, Crash Bandicoot - I really think that for those platformer icons, those days are over. Many would argue that Master Chief is an icon for Xbox, but that is not our intention. I really don't think we need an icon.

I would rather focus on the fact that the icon for Xbox 360 will be an incredible wealth of games, a spectacular online experience, an unbelievably unprecedented digital entertainment experience of how you connect your devices, how your digital experience in the living room is enhanced by having this machine.

I think that having an icon of a character that represents the console... I really think those days are in the past.

Certainly the prices of games will be set in the local market by the publishers of games. That is the perogative of the publisher, to set the pricing. I recognise that as we look at the power of this console and the ability to generate high definition visuals, 5.1 multichannel sound, widesreen 16:9 aspect ratio... You're now looking at an incredibly cinematic experience that gamers can enjoy, but there's a price tag attached to that from a development point of view.

Our goal at Microsoft, unlike probably any other company in the world, is to support the people who develop for our platform. That's the way the Windows platform was built and that's the way that we're building the Xbox platform. Our ATG - the Advanced Technology Group - goes in and helps developers all over the world get through problems in development, and perhaps more importantly, we're developing tools that will allow developers everywhere in the world to be able to bring their games up faster as well as less expensively, to be able to compete in this next generation of high definition gaming.

Each game is unique, so there's no formulaic "it's going to cost 40 per cent more" - that, quite frankly, sounds like a lot. Also, it's not linear that if it costs 40 per cent more to develop, then it's going to cost 40 per cent more to the consumer. That simply doesn't work.

Our goal at Microsoft is to provide tools for the developers to keep their costs under control, while at the same time delivering a next-generation experience. I think you're going to see country by country pricing strategies; I think the gamer has to understand that they're getting an incredible experience in the next generation.

I can't comment about our partners' pricing. We've already announced one price, for Perfect Dark Zero, which is $49.95 in the USA and $59.95 for a collector's edition. One of the strategies that I think we need to do as an industry is to give the consumer more value for money, like Hollywood has done with DVDs. Not only do you get the game, but in the case of Perfect Dark Zero for example, you get another DVD that takes you behind the scenes, that interviews the developers, the geniuses behind the game at Rare. It looks at outtakes, it looks at footage, it looks at all of the development strategies that went on to be able to bring the game to market.

I think that our experience with the Halo 2 collector's edition indicates to us that if you're giving more value for money to the consumer, they are very happy and willing to pay an extra few dollars for the game itself.

I think that over the life cycle of certain games, the other thing that will become important is premium downloads that enhance the game experience in the future so that you refresh that game, so that somebody who has invested $50 and has played the game for thirty or forty hours then has the opportunity to get more levels and maps and characters and what have you for maybe another five dollars, and add another twenty to thirty hours of enjoyment and experiences with the game.

So I think you'll see developers and publishers working on some of those strategies. I can't comment on price for our partners - that's not my job. But I think consumers will get excellent value for money for what they're going to be paying in the next generation.

What we looked at over a year ago now is what we believed our yield, our capacity constraints would be, and what were the three key times that we needed to get in for the holiday season that we had committed to delivering to.

The US has to come first because Thanksgiving is such a critical period of time in the shopping season for the holidays, so the US date of November 22nd is pre-Thanksgiving. We then look at the European market - it's very critical to be there in the first week of December when our experience tells us the Christmas season really gets going.

Here in Japan it's a little later - primarily because the culture here is the Christmas bonus season. That, this year, will be delivered to workers on December 17th, so the launch date here of December 10th allows retailers to get stocked up in anticipation.

While I'm not going to talk about quantity, we've clearly developed a strategy that gives us a critical mass of consoles in all of those three regions, gives us the right number of games and the right quantity of games and peripherals to support that, so retailers have a full outlet.

Clearly, we're going to be sold out in many stores during the Christmas holiday period - but unlike some of our competitors in this space, our goal is not only to deliver what we think will be a great quantity on launch day one, but to do constant replenishment week after week from the factories here in Asia to the worldwide retailers as we get closer to Christmas, and then of course beyond. The idea is to get a critical mass of consoles, games and peripherals to the worldwide retailing base - that will of course go very very quickly - and then to replenish that inventory as we get closer to the holidays.

To compare what the PSX was, which was a hardware-based digital entertainment device for the TV, versus what the Xbox 360 is... The beauty of what we deliver is software-based, the UI, the ability to connect other devices and have it act as an amplifier for those devices, not for the device itself.

The other thing is, this is at least half of the price of the PSX, if not more than that. We're at 37,900 Yen, I think the PSX was $700... I don't think there's any comparison between the two devices.

The digital entertainment experience in Xbox 360 is based on incredibly brilliant software, the user interface, the ability for you to connect your MP3 player, your digital camera, connect to a PC... It's not about the device itself, it's not built to be a convergence device that has huge storage.

We don't believe that this is the hub of the home. The PC is the hub of the home. That's where you should store your digital data. That's where you should edit and manipulate, utilising a keyboard and mouse. That's where you have your two-foot experience as you lean forward. This is a ten-foot experience. This is about enjoying it, amplifying the experience - taking it from the PC, whether it's recorded television, digital photographs, streaming music... Utilising things like the visualiser here and bringing it to life.

It's not about hardware, it's about a platform that is a combination of hardware, software, and services. There is no comparison between the Xbox 360 and its digital entertainment applications and the PSX.

Do you understand the difference there? That thing was, I think, about 700 bucks - it was based on huge hard drives, having PlayStation embedded... This is about the software. It really is about the software. I think... Can you remember what the PSX retailed at?

It was expensive, it was like 700 and something dollars. It was built as a device, with huge hard drive, with PVR, with PS2 embedded. This is about the software. This is about the utilisation of the applications, and connecting things that you already own. That's the difference.

Well I certainly think that the guy that's got the 19 inch TV that's 4:3 aspect ratio, that's three years old, four years old, five years old, in his bedroom, is not going to have the same experience as the guy that's got the 42 inch plasma that's high definition ready, that's got the 5.1 multichannel Dolby surround - but he's going to have a much better experience than he's ever had.

It is quite frankly our belief that when we built this, we're starting to look at not only 2005 when we ship it, but 2006, 2007, 2008, when we think - we know - that high definition televisions are going to come radically down in price.

Look, I'm looking at the investment that Sony, Samsung, Panasonic, JVC, Sharp, are all making in Asia in building out these massively huge, multi-billion dollar, thin-screen factories for plasma technology, for LCD and DLP. You don't make that investment and keep it an exclusive device. You bring the price points down to allow the average Joe to buy that device, and that will be happening very quickly. Our latest information is that by 2008, there will be over 100 million high definition televisions available in the world, and being bought at an amazing rate.

I also believe, particularly in Europe, that the broadcast of the World Cup in high definition - the German authorities announced 32 cameras per game, all in high definition - will be one of those catalysts for the adoption of high definition prior to the World Cup finals. I always tell the story of remembering, being a kid growing up in England, my dad buying a colour TV - which was a huge deal in 1974 - to watch the World Cup in colour. We were all fed up of watching Brazil in yellow, and England in white, but on a black and white screen they all looked the same - and all of a sudden you went and watched a game in a pub or something in colour, and that was like, wow.

I believe that when people see some of the later qualifying games in high definition... Somebody in a pub will buy a high definition TV, people will go and watch it, and the people watching will say, "I gotta have one of those." It's those catalysts, those advances, that tip the scale to high definition.

I can guarantee you that this year in the United States, the big retailers will have hi-def ready TVs for under $600, maybe even under $500.

I think people get it. I think there are very few people who haven't already seen HD. There are enough HDTVs... You walk into any Best Buy, and that's just talking USA. If I go to England and I walk into a Dixons, I think I can see HDTVs in there. I can go around the world and simply walk into a retail store and get an HD experience.

The incredibly interesting thing about this is that retailers will be using the HD broadcast signal from the Xbox 360 to sell high definition televisions. It's very simple to connect thjs console, in a retail store, in the TV section - and immediately this year, showing 720p, 16:9 aspect ratio, 5.1 multichannel sound, interactive experiences. Right now, that's been the biggest drawback - that you can't get that hi-def TV signal into retail stores.

I think the communication is simple - watch it, pick up your jaw off your chest... Once the pricing comes to where it has to, to justify the billions of dollars companies are spending in building the factories, I think the floodgates open. I really do.

Well, HD puts more challenges on a developer, because you're now dealing with shaders and textures and lighting that is incredibly realistic - so it is a little bit more challenging, but our goal from the get-go with the devkits is getting the developers up over that hurdle very quickly. As you can see from the games on the floor here in Tokyo, they've managed that very quickly. I don't have any worries about that.

Xbox and Xbox 360 are the official consoles of the FIFA World Cup 2006; we of course also have worked with FIFA to develop the FIFA Interactive World Cup. We will be making some announcements at X05 in Amsterdam in October regarding our plans for the World Cup - but you can rest assured, with the commitment that we've made to FIFA, and the ability for us to be able to show off this platform exclusively at the World Cup finals in Germany, we will take full advantage of that.