Caging the Lion

Richard Teversham: We are proud to have Lionhead joining us, alongside such great developers as Rare and Bungie. We're honoured to have the vision, the gaming expertise, and the team that's at Lionhead joining us in Microsoft Game Studios. Not only will they be producing some great games for both Xbox 360 and Games For Windows, but I think the cross-fertilisation of their expertise into our other developers is going to go down really really well.

We're not actually announcing any franchises at the moment because we've got to leave something for E3 - but one of the reasons that we've brought them on board is because of their great work around games such as Black & White and Fable in the past - both of them have sold over two million units. They're a great developer to have under the Microsoft Game Studios umbrella, and we think they're going to do great stuff for us.

Well, if you think about it, Britain has some top talent - and our philosophy, our strategy, is to work with the best. We do work with people like Bioware, Tecmo and Epic from the US and Japan, but British developers do seem to be performing really really well, and they're very good to work with.

This also marks another major investment in first-party development for Xbox 360 - what importance does Microsoft place on first-party as opposed to third-party publishing on the platform?

First-party, to us, is critical in a number of ways. One, we do get exclusive content for the platform that actually drives the platform to our audience - so games like Project Gotham and Halo will do that. The second thing is that we make sure that our first-party games are showcases for utilising the technology in the Xbox 360, to push it to the ultimate that it can go. That demonstrates to our third-party publishers what they can use the box for and actually helps them to do that. We want to actually have games that are showcases for the platform; although some third-party publishers will do that as well, we've got to make sure that we show third-parties and lead them down the road on things like Live. We have to show how Live can work, how easy it is to implement, and actually be a leader in that field so that third-parties can see what we're doing and realise how easy it is to do that and follow the model.

Lionhead is a very high profile developer, so this acquisition is a great PR move - but realistically, every title they've done to date has been for Windows or for Xbox, so what's the advantage to Microsoft of having them do that in-house rather than doing it externally?

In reality, what it comes down to is that there are a number of business decisions that need to be made when thinking about acquiring a company. We know that a lot of people were interested in acquiring Lionhead, and we were the lucky ones to get them on board. We do have a strategic move of acquiring companies when we feel we need to, but also working with the best developers out there, such as Bizarre, Epic and people like that.

The benefits are that we can do cross-fertilisation of skills between the different developers, they can use the same engine within different games - so it really is the bringing together of different skillsets to make the best games under the Microsoft Game Studios umbrella.

Are you revealing any financial details of the deal at this point in time, or are we going to have to wait for your next quarterly financials to see that?

We're going to wait for the financials. At the moment, the deal is that we've acquired Lionhead, and now what's going to happen is that we'll sit down with them to work on the future together on developing games for Xbox 360 and for Games For Windows.

Did this deal grow organically out of the relationship between Microsoft and Lionhead, or was it simply the case that Lionhead was for sale?

My understanding is that there were other interested parties, but we were the one that had the same vision as Lionhead - and that's why we came to that agreement.

What is Peter Molyneux' role going to be now that you've acquired the studio? Is he going to continue to function as the head of that studio, or is he going to move into a new role within Microsoft?

The details are not defined as yet, but with Peter, we want to make sure he has a role in which he uses his vision and his massive experience in developing games.

He's been quite a key proponent for Xbox in the past - he's shared a stage with people like J Allard many times in the past to promote the Xbox vision. Is that something we can expect to see more of now that he's part of the family, as it were?

Yes, I'm sure he will. He will continue to run Lionhead day to day, and he will report in to Phil Spence who is the general manager of Microsoft Game Studios - but Peter is someone who is extremely eloquent, who's got a great vision, and we'll be utilising those skills and vision, I'm sure, in a lot of things that we do.

Lionhead laid off quite a number of people less than a month ago - how did that relate to the acquisition being announced now?

The layoffs were actually an independent decision made by them, and were not influenced by the acquisition. They decided to reduce the company from three to two teams before the actual agreement was made with them.

So that wasn't something that Microsoft requested as a prerequisite to the acquisition?

No, not at all.

Do you think that now that you've turned Lionhead into a Microsoft Game Studios division, you might actually ramp back up again - or is two teams the right size for Lionhead at the moment?

It's probably too early to say at the moment. The next steps will be sitting down together and actually seeing what the future of Lionhead within Microsoft Game Studios is going to be. We're making the announcement today; I'm sure that before E3, they'll get their thoughts together on that, and those questions will probably be easier to answer at that time.

Are we to assume that new titles from Lionhead will be a part of what you announce at E3, based on your earlier comment?

Again, I don't want to... Well, I think that you can put together your own speculations on this. I'm not going to confirm them. We want to make sure that at E3, we give people surprises and great content - and it wouldn't surprise me if we announced things at E3 around Lionhead.

You mentioned Games For Windows as well as Xbox 360 earlier - but when Lionhead dropped to two teams, they said that they were working specifically on two next-gen projects. Is it the case then that they're currently working on 360 titles, and that you'll be getting them to do PC titles further down the line?

Lionhead will be focusing on Games For Windows. Vista is coming out in the January timeframe, so it depends what your definition of next-gen is; next-gen on console is obviously Xbox 360, next-gen on PC and Games For Windows is going to be around Vista. I'm sure that they're going to bringing out the most advanced or the best games that they can on both platforms.

Do you have any idea what the timeline for the next Lionhead game is going to be?

Let's wait until E3 to talk about those sorts of things.

Are you looking at any other specific acquisitions at the moment? Is this the start of a buying spree to bulk up Microsoft Game Studios to create next-gen content?

Our strategy has always been, as I said before, to work with the best. If companies come up that we feel are good for the Microsoft Game Studios portfolio, we will continue to do that. We haven't changed the tempo or the way we're going about these things - we're continuing on in the same vein that we always have. If there are opportunities out there, we will certainly look at them - but in conjunction with that, we're very happy to work with independent developers as well.

What does the acquisition of Lionhead mean for your relationship with companies like Bizarre, or other studios with whom you work closely? Why buy Lionhead, rather than any of those other companies?

I think there are probably a number of factors within that. Our relationship with Bizarre will not change because we've acquired Lionhead; Bizarre is doing great work for us, the Project Gotham franchise is going through the roof, and that will continue to do so. It's almost like we've brought someone within the house, but we've still got great relationships with external people and this will not change that. In time, will there be other developers that will be ripe, or right, for us to acquire? I would say yes, but who they are and when that will be, is all just speculation.