Microsoft's Chris Lewis and David Gosen

Microsoft's key EMEA execs on the importance of online, the benefits of being a software company, and reaching broader audiences.

The initial shots at this year's E3 Media and Business Summit were fired by Microsoft, kicking off proceedings with the first press conference of the event.

Shortly afterwards spent some time with key European execs Chris Lewis and David Gosen to unpack some of what had been talked about in that press conference.

Q: There was a lot of emphasis on online in the press conference, particularly with the big five core titles all referring to multiplayer, often co-operative play - is that the key message for Microsoft this year?

Chris Lewis: Without doubt. In my opinion, I'm excited about all of it - I'm biased, because I'm responsible for Europe, so I love anything that I think will truly break us through in Europe in the way that I know we need to, and expand on the success we've had.

So if we look across what I know, and what we're all excited about, for me it's almost like the reinvigoration. It's almost like the afterburners have kicked in terms of what we're doing with the user interface now.

People talk about innovation and the fact that we've done that, and it's not predicated on buying a new Xbox 360 - it's a downloaded piece of software that comes through the Live service, and wow, you're into a much brighter, much easier to navigate, frankly less techy environment there.

And if I think about my own kids, how much easier it's going to be for them to navigate around, look at this, play that game, invite their friends to this - the avatar thing: fabulous.

So for me, to your question, that's the real sweet spot of what it is that we're talking about. That, plus the fact that we've got this schizophrenia to do really well in the core space, and continue to invest there while not alienating the broadly wider audience that we have to get to - we have to get to because of our ambition to do as well as we aspire to do.

Q: Neil Thompson talked last year about the importance of services rather than hardware, and the key differentiator between Microsoft and Sony is that one has its roots in software, the other in hardware. Essentially, there's a point here that software is easier to update and evolve on a regular basis than hardware?

Chris Lewis: I would challenge you on the word "easy" - and I'm not trying to be smart, but I'm saying make no mistake, innovating and reinvigorating the online experience in the way that we do is incredibly non-trivial. It's hugely complex.

Q: But in the next three or four years, you're not planning on releasing an entirely new generation of console, for example…?

Chris Lewis: I don't think this lifecycle needs to end that shortly, or abruptly, or that imminently and I think my point about the online piece - it's actually right at the centre of what Microsoft does really well. We are a great software services company, we spend a lot of money on R&D and that's kind of the sweet spot of what we do.

So for us I think it's genuinely our unique selling point, and to an extent I think it's one of our best kept secrets - we don't talk enough about Live. And if I talk about EMEA again, our Live community in EMEA is going to balloon really quickly now as a result of some of the things you saw in the press conference.

Because before it was a slightly intimidating, a little bit dark, frankly not always that easy an experience to get into - all that's just changed. For me, that's the key - continuing to innovate in the space, and I think there are some very long cycles left in this generation of consoles.

I think the market has very readily accepted there are three great solid players. We all compete with one another and the ultimate beneficiary is the consumer, I really believe that, that the quality bar just goes up and up and up as people bring more to the market.

Q: One of the key targets for the Xbox project has been to chip away at the platform exclusives that Sony's previously boasted, whether it's the likes of Pro Evolution Soccer, or Grand Theft Auto. Now the Metal Gear Solid franchise has ended, and the Final Fantasy XIII announcement has been made, has that process reached its logical conclusion?

Chris Lewis: I think you're right in terms of the really significant beats in the business, though I think it would be complacent of us to say that we buttoned that up. Because it's all very well having them, but they've got to play better, the experience has got to be richer.

Take GTA for example - yes, we're genuinely pleased and excited about what we managed to achieve there on what history would frankly say is a very traditional title for Sony as opposed to us. And what we did there in terms of retail, what we're doing in terms of premium downloadable content through the Live service, we're really excited about the fact that we've been so agile in that space.

And as you say, I think you've got to have at least an equal if not a stronger position on those types of franchises. If you are slightly shorter in terms of time in the industry as we are versus Sony - because I think we forget sometimes we've only been in this business for about seven years - and certainly in terms of Europe we have a very high ambition to win in this generation. What we did with the price drop, and GTA, and other spikes in the business - you're going to see us invest in the right and appropriate way to achieve our ambition.

We'll hire the right people, we'll bring the right content, and we'll continue to invigorate the service through Live in a way that nobody else can get close to. And you've got to be at the right price - you've got to do a lot of things well, and that's good for the consumer. You've got to rely on your price, your content, your services and everything else, and I think it's a really important inflection point in the industry at the moment. This Holiday period will be key to that, but we have a low tolerance for doing anything other than winning - it's a fun thing to be involved in, I assure you.

Q: How happy are you with the position of Microsoft with regards to wider audiences?

David Gosen: You'd be very surprised if I said I wasn't happy…I'm very happy, because what we've built is the new Xbox experience, and for me its foundation is in this concept of convergence. And everybody talks about convergence, but they don't really understand it. What we're doing is converging games and entertainment, and probably the first platform to do it with such scale, to create almost 360 degrees of entertainment.

Because that's what we're doing - we're saying that's the future. Xbox is more than just games - we've got great games for the established gamer, we've got Gears of War, Resident Evil, and Final Fantasy is clearly a fantastic announcement as well.

But what we have to do is we have to broaden, and the social and family games are so important. And you've got to remember the social and family games that come from Xbox come from the business that has over 12 million online subscribers, online members through Live.

So we've got a social network that works today, and what we're doing is extending that sociability into the games. You've got Lips - and Lips for me is quite interesting, because it shows how second-mover advantage can be a really big advantage.

We know the two main things that consumers dislike about karaoke games today are the wired microphones and the limited choice of songs. Lips turns that on its head immediately by allowing you to play your own songs from your own music library, and the wireless microphones that really allow you the freedom to dance around your living room as you see fit.

I think that's an example of how we can take social games and make them work. You're in the Movies - same sort of thing, and you can actually download your movies on Live.

Live is at the centre of everything we do in terms of building out these social games, so do we have to be a little bit schizophrenic in terms of targeting the harder core gamer and talking to the broader consumer? Yes we do, but it's under the banner really of entertainment for everyone.

Q: Are the avatars a direct response to the success of Miis on the Wii platform?

David Gosen: Well avatars go back to this concept of a social experience on a social network - as I said, 12 million members globally, and we have a very actively engaged member-base. I'll give you an example - every day three and a half million instant message texts or Live Vision events happen on Live every day. Three and a half million, every day.

So we've got a really active community already, and what we need to do is create an identity for those people. Personalisation isn't really new - we know people want to personalise their experience. Now, the avatars we've got are Xbox avatars, and they have arms, necks and legs, which other people's avatars maybe don't.

But that's just the start point. They're appearing in the game, and what you'll see us do more and more is make sure that avatars are truly integral to everything we do. It just goes back to true personalisation and creating a social network that really works and is really relevant to all people.

I was talking to some hard core gamers after the event, and they were saying that they'd use an avatar. And I'm sure that when I talk to my daughter she'll use an avatar. It's about personalising it and making it relevant.

Q: And with one eye on what Sony is doing with Home - is it important to get your avatars out there and have customisation of characters before people really start using Home?

David Gosen: Well I think what Sony does with Home is up to them, and my advice is that we shouldn't hold our breath, because that could be quite a dangerous thing to do.

We've got 12 million members. We're actively doing it today, we're demonstrating convergence of games and entertainment today - we're demonstrating in Europe more and more local content for video-on-demand coming to the platform. Globally we are the largest provider of high definition on-demand videos and TV, so we're doing it today and proving it and setting the bar very high. We'll continue to do that and make sure we create that broad appeal for the broad market.

Q: The Netflix announcement will be key for the US market - what's the response been to Video Marketplace in Europe since launch, and do you have plans to ramp up on the same scale in Europe as you have in the US?

David Gosen: Live has almost been our best kept secret in many ways, and what we're committed to is really investing in Live to take it to where it needs to get to. And that means more content overall, and more local relevant content.

Now, unfortunately there isn't a Netflix that covers the whole of Europe. It doesn't exist. In many countries there isn't even a Netflix equivalent. But what we're committed to is investing in Live to bring more content, whether it's movies, TV or music, and we'll be working on those sorts of deals and negotiations over the next 12-18 months and ongoing, to bring the best range of entertainment to our members.

Chris Lewis is the VP of Interactive Entertainment and David Gosen is VP of strategic marketing in Europe for Microsoft. Interview by Phil Elliott.

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