Dissecting Microsoft's CES

CES is normally a jolly for games journalists. Don't let them tell you any different, publisher types. The gigantic Las Vegas expo isn't a games show and never was, with vast halls of televisions, disc players and technical oddities pimped by America's Next Greatest Entrepreneur(TM) dwarfing what is inevitably a low-key showing from interactive entertainment.

CES pays homage to the triumph of North America's electronics industry, and it's usually humbling for the games sector to admit just how small a part it plays in the grand scheme of things.

There are exceptions. In 2001 Bill Gates unveiled the Xbox casing to a rapturous CES crowd, dragging then-megastar The Rock on stage for a bit of banter. And it was Gates, the great American hero, who again put gaming smack in the middle of CES this year. His keynote dwelled as much the success of Xbox 360 and the integration of PC titles into Live as it did on Gates's safety zone of talking fridges and machines that tuck you in at night.

Together with Microsoft's entertainment boss Robbie Bach, Gates announced the move of Xbox Live to Vista later this year and an IPTV service for US Xbox 360 owners. He also revealed that 10.4 million 360 units have now been sold worldwide. The following day, GamesIndustry.biz sat down with general manager of Microsoft's game development group, Brit-abroad Chris Satchell, to find out more about the company's ever-growing commitment to gaming.

Platform overlap

For Satchell, Live's move to Windows does not signal a blurring of platform development. It's simply a realisation of the promise made by the company at E3 last year that players of games on Microsoft's platforms would be able to access content from the home, the office and on the go.

"I think they're not completely separate," he says, speaking of Xbox 360 and Games for Windows, Microsoft's newly forged brand for PC gaming, "but that they have overlapped."

From a technology perspective, he explains, Microsoft's moving to a position where publishers and developers will be able to write a game once then publish is on both Windows and Xbox 360 - assuming the property is right for the format.

"For example, PC owners aren't traditionally interested in racing games," Satchell says. "Now, you could do it twice, but whether they want to or not is up to them."

The significance of this concept could be vast. If Games for Windows games are to work with a pad, it now must be the Xbox 360 pad - although Satchell's keen to point out that this isn't a prerequisite of publishing a Vista game. What Microsoft is working towards is a gaming world people like Trip Hawkins were envisioning a decade ago, a place gamers can visit in every facet of their lives.

"I think that when Live becomes ubiquitous - when it's fully featured on Windows, when it's full featured on mobile devices and it's fully featured on Xbox - someone will do the breakthrough game, which is playing in the same game-world but it's tailored to each of those platforms," says Satchell.

"It's just a question of who will do it, and I think someone will break through with something really big."

He says we're "some way away from it," but now Microsoft's in charge of getting us there it's fair to assume the whole 'roaming game-world' concept will become a reality. When Bach announced the migration of Live to Windows on the CES keynote stage, he signalled the realisation of gaming's ultimate dream.

I love my MTV

Of course, gaming only forms a part of Xbox 360's Trojan-like aspirations, as Gates' keynote stressed all too heavily, and Satchell - in true Microsoft style - is an enthusiastic proponent of the media convergence message.

IPTV is a relatively new concept in the UK, but the keynote showing of the upcoming Xbox 360 service wowed the crowd. Satchell flicks through hundreds of channels during our interview as the reality of a true, living-room based multimedia box sinks in.

"Live really is a vibrant community," he says. "That's really important, especially when we look at some of the IPTV stuff, because the interesting proposition when we get to IPTV is best in class console, best in class television service, best in class online community.

"And if you have that connected community that you can still be part of while you're watching digital television, I think that offers you something pretty unique."

There really isn't anyone else like Microsoft, says Satchell. "I don't think there's someone that has the gaming element now, and the online experience, and the ability to create that infrastructure and create an infrastructure that goes across multiple devices.

"I think we're pretty uniquely positioned. Look at the content we've got. We had 160 HD games by the end of last year. We're going to double that for this calendar year. So when you get to this Holiday we're going to have 320 games. That's a huge portfolio.

"Then look at what's in that portfolio. Obviously, you've got Halo 3 coming out this year, which is going to be the biggest entertainment "thing" that's going to happen this year. You've got GTA coming out, and there's only going to be one place you can play both.

"If you look at what those franchises did in the last generation, five out of six of the top games were between those two franchises, accounting for 27 million units. I think you've got to have both of those to really be a competitor."

Number crunching

It's in the area of competition that Microsoft showed its most significant change in stance at CES this year. The 10.4 million worldwide sales figure announcement gave the entire games arm a serious shot of neat confidence.

"What we're finding is that to have a strong PC gaming platform, you also need a strong console business," Satchell says.

"You need both. To take the console business - as we said in the keynote - we're super-happy with where we're at. We've sold 10.4 million, but the stat you may not have heard is that over half of those sales are from people that didn't own an Xbox 1.

"So there're lots of new people coming in, which kind of surprises you. What we're actually finding is that our customer set is broadening, which we think is important."

The expansion of Microsoft's games market is a factor the company is likely to push hard in the coming years, especially now Nintendo is making great headway into non-traditional gaming demographics with Wii. Peter Moore praised Nintendo on the CES show floor while making a withering remark regarding Sony's "talent" in the online console space. It seems clear who Microsoft's true competition is, and it's a sentiment mirrored by Satchell.

"If I was going to give them one piece of advice it would be to copy Xbox Live a little more closely," he says. "My honest opinion is that it's pretty much a disaster. They keep saying that they have a free [online] service. Well, if they don't have anything, of course it's free.

"And you know what: what's free about $600? You can buy our system for $400 and then have four years of Xbox Live. $4 a month for really good match-making, really good protection - you know the games haven't been hacked, you know it's a really secure online environment. People are quite happy to pay that."

End game

Microsoft's keynote and further comments throughout the show gave us valuable insight not only into the realisation of Microsoft's long-term gaming plan but to the state of the American industry in general.

Yes, Xbox Live has 5 million users and it's a growing figure. Yes, the convergence of video, TV, music and gaming is pulled together successfully in Xbox 360, and the full integration of gaming into Vista shows Microsoft was deadly serious about the console-PC-mobile message it put out at E3 last May.

But more than that, Moore and Satchell's comments regarding Sony and Nintendo show where the company's true intentions lie, and not even in the mid- and long-term. They show that Microsoft believes the console games space is split into core and non-core, and that before it turned up with Xbox, Sony had essentially no serious competition for the core 18-35 male demographic.

Those days are gone, and in two breaths, senior Microsoft staffers backed up Gates and Bach spouting the triumph of their strengthening gaming proposition on the CES keynote stage with praise for Nintendo and now open war on Sony.

If you compare Microsoft's performance at the show with Ken Kutaragi's woeful PS3 keynote at the Tokyo Game Show last September, it's clear that CES 2007 was the moment when Microsoft played the home advantage to devastating effect.

One thing's for sure: that post-New Year Las Vegas jaunt isn't such a jolly any more.