Buoyed by news of Xbox 360 hitting 10 million in Europe, Microsoft earlier this week released its autumn update for Live users, introducing Twitter, Facebook, Last.fm and a Zune-branded video marketplace to the service. With Christmas approaching and Sony launching its own video service for PlayStation users this week, the battleground between the two fierce rivals has shifted decisively beyond just games.
GamesIndustry.biz caught up with Neil Thompson, Microsoft senior regional director for northern Europe, at an Xbox launch event in London earlier this week, where he discussed the significance of the update, Natal, the impact of Modern Warfare 2, and the chances of seeing the BBC's iPlayer on Xbox 360.
Q: You've just announced 10 million units sold in Europe, which you must be very pleased with?
Neil Thompson: We are very pleased, yes. We've seen really strong growth.
Q: The immediate cynical response to that from some in places - such as Twitter - was to ask how many of those suffered RROD... But just to widen the point to perception, can you clarify the situation now: are you confident that it's only older models which are still failing?
Neil Thompson: We're very confident with all of the Xboxes that are being sold today. There are still some people who've had their console three or four years, and are still running on those consoles, so we're very confident of the reliability of our products.
Q: The Modern Warfare 2 launch last week was tremendous for the industry. Did it benefit Xbox?
Neil Thompson: It did. It's a fantastic product. We saw fantastic results on our platform, both in terms of it selling into our installed base but also generating enormous growth in the console sales we saw last week. We think it was a well-needed shot in the arm for the UK industry.
Q: Also, notably, your servers held up while Sony seemed to have a few problems early on.
Neil Thompson: I'm glad our servers held up! I haven't heard what other people are doing, but we've seen amazing online stats for Modern Warfare 2 from literally the first hour that it was sold, and yes - it's an amazing game and an amazing experience.
Q: The other thing that came out of that launch was the controversial debate that ended up going as far as the House of Commons, with Keith Vaz and Tom Watson sparring. What's your view?
Neil Thompson: My view is it was an 18-rated game, it's a game designed for adults, it should be consumed by adults and as long as retailers are responsible when they're selling it to adults, and as long as parents are responsible in ensuring their kids who are under 18 don't get access to it and don't play it, then I think its a great product.
There are scenes in it that some people won't like, but you pay your money, you take your choice - as an adult - to make those decisions. And I think it was marketed in an appropriate way and it is appropriate content for an adult community.
Q: There was also debate about the price when Activision announced it was going to increase RRP, but as it turned out there was a supermarket price war around launch, so consumers got great deals, Activision are probably quite happy as well, so maybe retail were the only losers in terms of margin. Would you agree with that?
Neil Thompson: Retailers have to make their own decisions about how they price in the market. I suppose the challenge when retailers do go aggressive on pricing in the way that some people do: is that sustainable over the long-term both for the industry and for themselves? Retail just have to make their own decisions.
As an industry, I think we want to ensure consumers understand the value of the products they're buying, because these products cost tens of millions of dollars to create. So as long as people appreciate that and understand that, as I say retailers have to make their own decisions on pricing, but we do want to ensure the value is created in this industry and this industry has a long and fruitful future ahead of it.
Q: Last year NXE launched, which was a very big deal for you - the first complete makeover of the dashboard since launch. Now you've added in Facebook, Twitter, Last.fm and Zune - how significant is this update?
Neil Thompson: This is about us delivering on the promises we've been making. We promised that we'd bring a holistic entertainment experience and we're offering high-definition movie streaming now through the Zune service were launching tomorrow, and we're also offering a great music service through Last.fm. In terms of rounding out a lot of the entertainment experiences, we think this is just the next step in delivering on that promise.
And then obviously with Twitter and Facebook being integrated into the service, that's about delivering on our sharing and community promises. We have a great community on Xbox Live, they're very active, they love to share, and we think with Twitter and Facebook we're just giving them some more avenues to connect with friends and interact.
Q: Why do you think someone who's already using Twitter and Facebook on other devices should use them on Xbox?
Neil Thompson: I think it's about choice, I think it's additive. A lot of people when we launch these services say: "Well, hang on, I use it on my PC, I use it on my phone." Yes, you do, and you're still going to use it on your PC, and you're still going to use it on your phone, but now you can do it when you're sat in front of your TV as well in your living room.
So it's just about giving people choice and giving them a slightly different experience. The Facebook and Twitter applications are bespoke to the service, they do have Xbox Live unique features, such as being able to see which Xbox Live friends are online, et cetera. And over time I'm sure that will evolve as well.
Q: Are you looking specifically to evolve those services to be integrated into games themselves? Last.fm, for instance. And Facebook and Twitter, being able to update those from within games?
Neil Thompson: At the moment we're just looking at landing these services and ensuring they're great services. What the future holds, I honestly don't know. When we came into this business we said that software and services were going to be the defining elements of what a console or an entertainment hub in the home is going to be about.
To me, they are the magic pieces that bring this stuff to life, so in the future any of those connections could potentially happen, it's just a matter of evolving that software and evolving those services. We're an innovation company, we constantly want to innovate, so who knows what will come.
Q: On Twitter specifically, from people who've been previewing the service, one of the criticisms is just an issue with Xbox itself - you don't allow general Internet and web browsing, so when you're using Twitter you can't use Twitpic or follow links, which some would consider a core part of the Twitter experience. Do you feel the service is handicapped as a result?
Neil Thompson: No, I think if people want to do those sort of things - uplink photos and so on - they can do that on the PC. What the Xbox Live service is trying to do is give you another avenue to connect and chat with your friends. It doesn't mean it's going to do exactly the same that you're doing on your PC, because I'm not sure that's going to be the right environment to do a lot of those things to be honest with you. So, no, I just see it as an additive service.
Q: The BBC iPlayer is on Wii and PlayStation 3 - are we going to see it for the Xbox?
Neil Thompson: We have no plans for iPlayer on Xbox at this point.
Q: Would you like to see iPlayer on Xbox? Do you think it would complement the services you have on there?
Neil Thompson: I'm sure it would - I'm sure lots of services we could bring from a content point of view could complement all the services that we have. One of the things we focus on is which services are we bringing: How do we make them scalable; how do we make them deliver the quality experience that we have to deliver; and just through sheer bandwidth and capacity, we have to manage that very closely as to what we bring in.
But the other thing that we really want to do is ensure that when we do bring a service it has a unique element to it. One of the reasons we love the Sky service is that you can have unique Avatar party moments on sport and you can do that in the Zune Marketplace, where you can have an Avatar movie party.
That's what we would need to be doing in a lot of these other applications that we may bring onto the platform. With some it's easier to do that than others, and unless we can add that extra spice I'm not sure what we're bringing to the consumer that they probably aren't consuming in other places anyway.
Q: Is there an ongoing dialogue with the BBC?
Neil Thompson: I've got nothing more to say on what we might or might not be doing with the BBC.
Q: Are you pleased with how Sky's taken off? You had a slight blip at launch, but it's out there now. And as you said, there are unique features there that make it specific to Xbox.
Neil Thompson: Exactly. We were blown away - literally - by the response we had, and we took some flak, probably fairly. We didn't scale to quite the scale we should have, and I take that criticism on board and we've learned from it. But now it's up and running, people are loving it, the subscription rates, the download rates for the application and so on are just blowing my mind away, they're blowing the people at Sky's minds away.
It's proving incredible popular. I think you're right - part of that is it does have unique services that people can't access in their living room in quite the same way that they can on Xbox Live. It is a phenomenal success at this point.
Q: It's that time of year coming up to Christmas and people might be buying a second console or a console for the first time - what sets Xbox apart from the competition?
Neil Thompson: I think we offer a range of entertainment experiences, that no-one else offers, in a unique way. I think Xbox Live is obviously our most differentiated element, but also, arguably, we're the best value console on the market as well. We're cheaper than our competition and we're just offering more services and better services than I believe anyone else is offering and all the best games are on our platform, and if you look at the stats last week on things like Modern Warfare, more people are playing those sorts of titles on our platform than any other platform and I think that speaks for itself, really.
Q: The Natal alleged leaked details that emerged in the past week: were they accurate?
Neil Thompson: No.
Q: Way off the mark?
Neil Thompson: They weren't accurate, they were rumours. I've got nothing more to say about it.
Q: Internally, have you decided around a price point yet?
Neil Thompson: I've got nothing at all to talk about with regard to Natal. We're still very much in the baking on Natal and there're a lot of things to be decided on it.
Q: Your Elite console: It's branded 'Elite' - the Elite Xbox experience - but you've taken the HDMI cable out and it still doesn't feature Wi-Fi as standard. Do you think that matches the definition of an 'elite' home entertainment experience?
Neil Thompson: I think it does. A lot of what we've done with Xbox is compartmentalise a lot of the elements in order to enable price points. One of the reasons we're such great value in the market is because we don't stuff everything in a box that would make it more expensive, therefore we allow consumers to make the choices as they go.
So that's fundamentally why we do these things, to give consumers the choice and let them upgrade in whichever way they might want to, be it memory, cabling or whatever. It's about the trade-off between consumer choice and a brand proposition if you like with something around Elite, and we think we're getting the balance right...
Q: It can't be expensive to put an HDMI cable in the box?
Neil Thompson: Everything adds costs in the whole ecosystem. The more choice we give consumers the better off we think they will be and ultimately more successful we will be.
Q: As far as HD uptake goes, do you think there's just not enough people using HDMI as standard?
Neil Thompson: I think it's just a gradual thing. Over time, yes people will and that'll evolve, but it's their choice at any point in time. It's down to consumer choice, as simple as that.
Neil Thompson is Microsoft senior regional director, northern Europe. Interview by Johnny Minkley.