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Game Developers Conference

J Allard, Corporate Vice President and Chief XNATM Architect

The Future of Games: Unlocking the Opportunity

San Francisco, California

March 9, 2005

ANNOUNCER: Ladies and gentlemen, please welcome the Director of the Game Developer Conference Jamil Moledina. (Applause.)

JAMIL MOLEDINA: Good morning. This year at GDC we are debuting our Vision Track, designed to provoke free-thinking creativity beyond the constraints of modern production barriers.

The next speaker is a perfect ambassador of this philosophy. As the leader of the Xbox team and pioneer in forging the XNA infrastructure, he has provided groundbreaking capabilities and opportunities to the development community.

Please join me in welcoming to the stage Chief XNA Architect and Microsoft Corporate Vice President J Allard. (Applause.)

J ALLARD: Boy, it's great to be back at GDC again and I'm really excited to be in San Francisco this year.

Just to start things off, I hope that everybody here will join me in congratulating both Nolan Bushnell and Shigeru Miyamoto to be the first two inductees into the Walk of Games. (Applause.) It was truly a privilege to be there last night to honor them both for the great things that they've done, everything that they've done for our industry.

Now, meeting Nolan for me was a special thrill because when I was growing up my heroes didn't come from movies, they didn't come from sports or music; my heroes, Evel Knievel and Nolan Bushnell.

Now, it might seem like a strange pair but if you think about it, they both took incredibly big risks and really changed a generation. Now, the nature of the risks might be a little bit different, right; I mean, Nolan didn't break quite as many bones as Evel did but he did launch Chuck E. Cheese. But despite that and despite the success of the XGames, in my view, Nolan made the more lasting impression for our industry, the bigger contribution to our society.

Like many of you in the audience, I was fortunate enough to be growing up with a game controller in hand when the videogame revolution started back in the late '70s and more than anyone, Nolan really brought this industry to life by founding Atari.

There is one TV commercial from that era that I'll never forget. It starts out with the two kids on the couch and they're playing a game and they're having a great time. It cuts away to the requisite screen graphics and there's Breakout. It cuts back on the couch and now dad is playing with the kids, switches back to Space Invaders and goes on and on. And eventually the grandparents are playing on the couch, playing some game on the couch, holding the joysticks and it was a crowd of like 20 people around the couch all screaming and cheering at the TV and having a great time. And it ends with one of the most profound statements that I can recall from that era of gaming: It asks, "Have you played Atari today?" And the thing about the statement for me, the thing was it was an open invitation to the world to come and enjoy this exciting new medium.

I could have been one of the kids on that couch just like any one of you could because in my life Atari changed my world. Twenty-five years ago I was ten, the family game night centered around games like Monopoly and Chutes and Ladders and Battleship. But after Atari it was all about Combat and Space Invaders and the board games really started collecting dust. So then all of our allowance money went into buying game cartridges and Atari replaced after school specials on the TV.

And that's the reason -- that's the reason I'm doing the job that I'm doing, the reason I'm so passionate about our industry and what this industry is capable of. It's all about what happened to me when I was 10. The change from board games to videogame was powerful, it was fundamental; it did more than just change my expectation of what it meant to have fun, it changed our society, it changed our culture and it birthed this very industry.

Well, today I want to talk about three new forces, three new forces that are going to change our industry just as fundamentally as its initial birth.

Just over a year ago I went to a sports bar with my wife and some friends and we watched the Super Bowl. The bar had an HDTV and the show just blew us away. Well, it wasn't long before we had an HDTV at home and that's really the essence of the first consumer force that we're facing, the high def living room. Now, once you've seen the Super Bowl in 16 by 9 with high definition, digital surround sound and the whole thing, going back to anything else on a 4 by 3 screen is bit of a disappointment. And as more and more people get exposed to the high def medium through television, the visual expectations that they have for all mediums are going to ratchet way up.

In 16 by 9 it's great to see more of the field, more of the game play but it doesn't change the way the players play football. In our medium it is going to change the way that people play our games.

And the trend, the trend is more than just resolution; it's not just about the digital TV screen, look at what else is happening in the living room with time shifting and TiVo. Look at digital broadcasts. Look at what's happening as consumers are accessing their digital lifestyle through their digital living room. They're watching their own digital videos, they're watching their own digital photos in the living room, they're even listening to digital music that's stored somewhere else on a PC in the house. In the high def living room our consumers have greater control over their entertainment experiences and a

wider range of possibilities to enjoy them.

So high def, it's not just about graphics. The thing about high def is really the impact that it's going to have on the digital living room.

Something else I remember back from my Atari days, you know, when we got our first very Atari console it was about the same time I got my first phone. Now, it was a shared landline but it was in my room and that was a big deal to me. It's not a big deal to kids today. Kids today, they've got cell phones, they're connected all the time. They pick their coffee shop based on hotspot availability, they're connected to people all the time.

And we're all like that; these days I take my phone wherever I go and I expect to be able to reach out and touch you no matter where I am, digitally. If it's by phone it's voice or maybe by text, on the computer it's an e-mail; if I'm on the computer and you're on too it's instant message. Or if it's like this keynote and a message that we want to get out to millions and millions of people, it's a podcast or a blog posting.

And this is this big second consumer trend that we're facing. Think of this as high def connectivity. High def connectivity isn't just changing the way we communicate but it actually is going to change the expectations of our entertainment experiences going forward. We've all seen it in music today and we're going to see it more in television and movies and in games. Our customers are going to expect to be able to connect to their content wherever they are whenever they want to.

Now, here's something else that didn't change in the Allard household. When we were first playing videogames I didn't race out and get my first tattoo and that's what people are doing today. Kids today are personalizing everything and they're starting with their body. Now, if you think about it, tattoos, piercings, plastic surgery, think about their cars; when I was growing up, a 16-year old's dream birthday present was a new car. The dream today is mom's hand-me-down Honda and 2,000 bucks to go trick it out with ground effects, a killer AV system and a new paint job. Kids today want jeans made to their personal specs.

And that's really the essence of trend number three, which is self expression. Forget Gen Y, this is not about Gen Y, this is about the remix generation. What we have now is a consumer generation that wants to leave their fingerprints on everything they touch and their mark on everything they do and digital technology gives people that ability to remix content and remix themselves in entirely new ways.

As game-makers we need to learn how to honor and really build on that impulse. And it's valuable, how valuable is this impulse? I mean, things really haven't changed that much since we were kids. Oh yeah? Why is the ring tone business in just three or four years worth 3 or $4 billion?

As game creators we should be asking ourselves questions about that industry. I mean, how is it that they've ramped up so quickly to come close to how much money we bring in and it's taken us 30 years.

But the next question: How are we going to take advantage of that consumer behavior and that urge to personalize and take that into our games? Well, the answer is simple; I mean, we just go out and build products that reflect the amazing shift that we're experiencing.

Today we stand on the leading edge of a new era, the HD era, and if we work together in this industry we can turn these forces into a massive wave that's transforming all the assumptions about our industry, the assumptions about the types of games that we can create, the types of stories we can tell, the assumptions about our target market and the size of our audience, assumptions about the value of our intellectual property. If we're smart, if we build the next generation of games to amplify these forces, we have an opportunity, an opportunity to create the kind of transformation that you get only every couple of decades.

Today we have the opportunity to make videogames the center of the HD era. We have the opportunity to establish ourselves as the cultural force that other media looks to when they're looking for cues to the future. We have the opportunity to dramatically expand our audience. If we're smart and we really capitalize on the HD era, I'm confident that we can double the size of our audience this decade.

Why games, why are we going to be the ones to lead? Why now? Why the HD era? Well, it's simple, the HD era, the HD consumer needs more than a high def Super Bowl. You are the people that are going to ignite the HD content revolution. It's not CBS this time or ESPN or Sony Pictures, it's you, because in the age of high def productivity, connectivity, games and self expression, people want to connect to their friends and experiences in fundamentally new ways.

In an era where the people out there all value self expression above just about everything else, you have created the one form of entertainment that yields the role of the protagonist to the consumer. It's a perfect marriage, it's perfect. I believe that the games industry is right at that precise point in time in that before and after transformation, before it was all about 3D, 3D graphics on the 4 by 3 screen, in HD it's going to be all about 16x9, those clear high definition visuals and movie theater quality surround.

In the 3D era it was about online gaming, online gaming as a novelty or as a differentiator. In the HD era connected communities become the very essence of the experiences that we're creating and delivering.

In the 3D era it's one size fits all, our games had a beginning, a middle and an end but in the high def era it's going to be about self expression and consumers are going to get the chance to tell their own stories and their job is going to be to expand our world, the worlds that we give them and take them in places that we weren't even able to imagine. In the 3D era everything was wired; we had wired PCs and wired consoles and wired controllers. In the HD world we're going to get rid of wires, we're going to untether users from the console and we're not going to have to worry about home networking


In the 3D era we had a lot of challenges in the development community, in the HD era it's going to be the same. In the 3D we were all about dedicated silicon, high performance silicon optimized for the very specific needs of 3D. In HD we're going to move towards more general purpose silicon. We're going to move from multiplayer games and we're going to move to multi-platform games where in the windows the gamers are giving the orders and on the console the gamers are carrying them out and taking them out to the


In the 3D era we had siloed game development, we had teams and 20, 30 people; multipurpose staffs that brought these experiences to life. In the HD era we're going to have really integrated -- integrated multi-site development, armies of hundred plus participants in the game creation process.

Before we had poly-based rendering, floating point performance was an issue and tomorrow we're going to be looking at real time ray tracing, we're going to be looking at physics acceleration and other breakthroughs.

And it doesn't just change for us, it changes for the publishers. We're going to move from a model of licensed IP to what I call polymorphic IP and right from the outset our new ideas are going to be envisioned with a way to express them in TV, film, movies and games.

The 3D era was pretty much a retail only proposition for publishers as well and we need to augment that. It's time to augment our content with micro objects, with episodic content, with on-demand gaming that gives you the opportunity to leverage your IP and deliver it to a broader audience in easier ways.

As exciting as I am about the whole transition from 2D to 3D, it was a great, great shift for our industry, I'm more optimistic about the shift of the HD era. And one of the reasons is because we have a lot of new friends. In the 3D era we kind of did it by ourselves but this time we've got new friends. They're anxious to join us at this party, they're anxious to open their minds and open their wallets and help make the HD era come to life.

There's really a massive wave building here and if we can ride that wave we're going to put games right at the center.

Let's hear what some of these partners, both new and old alike, think about when we talk about the HD era.

(Video segment.)

J ALLARD: Well, the opportunity is now and it's enormous. But make no mistake, we have the power to blow it. It's going to happen with or without us. In the next few years people will upgrade their sets, TV programs will be broadcast in high definition, movies and music, it's all going to become mixable and shiftable.

So the question comes back to us: What's it going to take to put games at the top of the list? And the answer is content. For games it always comes ultimately back to your content. And I'm focused on what it's going to take to enable you to create the experiences that will capture the imagination not just of today's core audience but for the mass audience that the HD era is going to unlock.

And to that tend, I'm focused on three specific things: software, hardware and services. The software provides the operating system, the runtimes, the user interface and the tools to create your content, hit the hardware and make it run. The hardware is about the displays, the devices and the silicon that light up your imagination and gives your audience the ability to live in that universe. And finally, services is what connects the players; it delivers that channel to you that allows you to connect to those players yourselves. It's going to provide a storefront that allows you to go direct to the consumers from within your game experiences.

To realize the opportunity of the HD era it's going to take an integrated platform, the integrated platform that's going to unlock the power of your content, a platform that combines those three things -- software, hardware and services -- in an elegant and well balanced fashion.

Ten years ago at GDC we announced DirectX. Now, just look at where the Windows gaming platform has gone and all of the innovation that's come from the balance of software with DirectX, the hardware innovations from our partners and the birth of the Internet.

The Windows platform is alive and well today. It continues to be that innovation engine that really drives new concepts into our industry.

We're not the only ones building software on this platform either. Windows gaming has strong communities, think beyond middleware even. We have end users creating mods, fan sites, birthing new genres and new ideas, we've got MMOs and FPSs as a result of the 3D era, all birthed on the Windows platform. We're starting to see people start writing their own applications to the content exposed on Xbox Live and. And, of course, the Windows platform, it's the killer platform for creating killer content.

What we've done with Windows games is build a platform where even the consumers are bringing these new services and experiences. It's a great cycle. I talked to one publisher the other way; they're seeing that their online communities are growing at a 15 percent rate per month. And I saw another analyst report the other day; $6 billion in 2008 for Windows online. Yeah, that innovation engine is strong and it's working for us. Six billion dollars in '08, 15 percent growth, those are ring tone like numbers, ring tone like margins, that's good, that's good for the industry.

When we look back to the HD era, the Windows platform is going to be the basis where we snapshotted what's going on in hardware, software and services and tying it up for the living room experience as well.

And that's what we did five years ago if you think about what we did five years ago with Xbox. The Windows platform gave us a great running start to enter the category during the 3D era. We're a platform company, it's our DNA, it's what we do. And our success as a platform company is directly related to enabling you to create the opportunities and the experiences that you envision, particularly during inflection points like the one we're facing right now with the HD era.

In this era of games we're going to take all of our lessons, all the lessons of Microsoft, 30 years as a software company, ten years of Windows gaming and DirectX, the three years we've been in the Xbox market and what we've learned with Xbox Live, we're going to take all of those and we're going to drive the development of a new console platform that provides the perfect balance between hardware, software and services that guarantees that

your content can really shine in the HD living room.

Let's talk a little bit more about the platform in detail. We're going to start with software.

Software is always the place to start because it's the interface between you the creator and the hardware that actually brings it to life.

Now, I was talking to a developer the other day and this story might sound familiar. They had big ambitions. They had shipped a couple of PS2 titles, they had shipped a couple of PC titles and they wanted to go and they set out to build a killer Xbox title. So they had a great concept, they had great art, they had a great team of artists working together, they had a great game hook that every publisher would love and they got the big publishing deal, started ramping up but they missed the first milestone. The team was struggling a little bit with coordination.

And then the published asked for a minor change and, well, that broke everything and pushed out the next milestone even further because of dependency tracking and coordination problems again.

Well, you know what happens next in the story, right? A new game comes out, same category and it ratchets up the visual fidelity. So the developer and publisher sit down and they say, "What are we going to do about it, we've got to go catch up," so the budgets increase, the staff grew, more specialists got added like a lighting engineer, like a shader composer so that they could ratchet up and catch up.

By the time they were done, the producer was pulling his hair out, couldn't herd the cats at all and they missed the holiday window. And the team continued to work because they had the vision, they had the dream but they got caught up in this negative cycle and it meant that their vision, the hook for the game, the essence of the game never made it into the code. So finally the publisher had to pull the plug.

Now, I know everybody in this room has heard some variant of that story and probably it's all too familiar for some of your experiences in the industry. It's impossible -- it's impossible for me to talk to a developer and not hear fragments of this story lingering about. Teams are frustrated with the workflow challenges inherent in doing what we do today.

The fact is it's going to get harder because when you're making a game for somebody that's got high def Super Bowl expectations you're going to need that army of artists.

When you're making a game for a consumer that wants to play with their 20 friends online and create new game modes that you haven't even envisioned, that's a much taller challenge as well, so how the hell are we going to do that? How are we going to make our successes repeatable and make the process rational?

Well, last year we talked a little bit about XNA, we talked about the increasing complexity of game development and we assured you that we were here to help. We talked about our plans for building and integrating XNA components to enable better efficiencies and some cross-platform development and since then we've done a lot. We made pics available both on Xbox and Windows, we have Xact, the DirectX 9 API, HLSL, developers have a common controller, the live services are now available from the PC and games that are on shelves today are already exploiting that capability.

So we're bringing it all together but last year since the last GDC we shipped over 3,000 development kits, Xenon development kits to get people ready for the high def living room.

With the high def era, as excited as I am about the platform and I think my job is relatively secure, there is a lot of work to do, the platform is not the constraint, the constraint flips to you, it flips to your time and the time that it takes to create these games.

Just to make one point, look at the proliferation of roles. A while ago one person creates a mesh, texture it and animate it. Today, one guy builds it, another has to do the materials, somebody else rigs it, somebody else is doing the animation and somebody still has to fit it in to the transform and the build process to make sure that you have a daily build with that object. That's just the start.

In the HD era the volume if content is going to go way up and when that volume goes up that means teams are going to go way up, it means the interactions between these teams are going to go way up, the relationship is going to shift between you and your QA department and your publisher and we're even going to see the introduction of offshore development.

These are the realities in the next generation, we all see it coming.

At the beginning of this week we announced part of the solution, we announced XNA Studio. XNA Studio is a new game development platform that really takes a holistic look at the challenges teams are facing in our medium today.

At the very heart of XNA Studio is the workflow system. It allows you to create all your content in native format, map out all of your dependencies, provide specific transforms, manage your workflow, customize it and shove it all through a unified build environment.

XNA Studio is going to let you track your content, it's going to allow you to track your process, it's a bug tracking system, it has managed work lists.

We're building XNA Studio so you're not wasting time with broken builds or broken assets.

Integration to this is really the key. By pulling all of this together in XNA Studio we're going to deliver serious productivity benefits for every single person in this room, every single person on the team, the artist who needs to check in an asset and not bug a developer to create a build to see what it looks like.

Just a simple example: Tomorrow you're going to need the workflow that allows you to scale your team, scale your processes and work in a distributed environment. You're going to have distributed assets all over the Internet that you're going to have to collaborate with. And finally when you're ready for certification and test, XNA Studio is going to let you push a button and submit that final build.

That's really our goal, our goal is to provide a platform and a toolset that untethers you from the limits of the technology and makes time a non-issue, it makes your imagination the only real constraint.

To do this we're building on Visual Studio, we're building on the team concepts that are going to be introduced this year in a product called Visual Studio Team System. It's a mouthful but it's going to be great for the game development community.

And next year we're going to introduce XNA Studio and we're going to go beyond programmers; we're going to make the studio relevant for the content creators in the audience as well. Think of XNA Studio as basically our Visual Studio for games developers. For the coders in the crowd you can get VSTS this April by just going up to the XNA Web site and registering. You'll get on a beta, we'll let you participate and you can start giving us feedback on the Team System. And for the content creators of the crowd, I'm looking forward to coming back next year because I'm going to put a copy of XNA Studio beta in everybody's hands at the keynote next year. It's going to be critical to streamline the development process and I want your feedback.

All right, so that's software; let's talk about hardware. There's been a lot of speculation about the next generation hardware that we might be putting together with Xbox and I'm not going to tell you about it, I can't disclose the details here, we're going to save it all for E3. But we do know that great gaming requires great hardware and to get the most out of it you have to design the hardware with software in mind, you have to design software with the game creators in mind.

Now, ultimately there are two approaches when you're designing game hardware, so let's talk a little bit about how we thought about it.

Now, on one approach you can say, hey, it's all about the hardware, take a super customized approach with a lot of PhDs and you could design your hardware to win at science fairs, lots of blue ribbons, you can woo over the electrical engineers of the world.

You might go so far you might put a fancy label on it, forget the fact that it's hard to program to, this is cool. That doesn't mask the fact that you didn't design it for the developer. It becomes apparent because after you launch a system like that it takes a year before anything worth playing comes out. That's a crime, that's a crime; there are too many good ideas in this room to go that approach. The science fair approach turns game programmers into hardware schedulers and the only emotion that approach can elicit from you is frustration.

Those days, they're over. Here's my point, here's our approach. The platform is bigger than the processor. If your starting point is hardware and all about focusing on maximum theoretical performance, it doesn't matter, all the software and services in the world aren't going to help you people make better games. It's the wrong design point. Hardware is no good if you can't light it up.

So we took the other approach. We designed the hardware with the software in mind, software that maps back to your needs, the needs of content creators. The better the marriage between hardware and software the closer you're going to get to achieving that theoretical performance of the hardware.

When we set out to design that hardware we said from the start we wanted to create that elegant balance between software, hardware and services. Of course, we picked cutting edge partners. Three years ago, it was over three years ago that we sat down with IBM and ATI and build a custom designed system. This system is a monster; it's going to deliver over a teraflop of targeted computing performance. And for the last three years we've had a thousand engineers working on it, working across nine different locations to bring the system to life.

It's going to be an amazing system. We're going to deliver custom hand-coded silicon, just like the other guys, but we're going to design that for the HD era in mind, the HD consumer in mind and most importantly the HD game creators in mind.

We believe that innovation is critical and to unlock that innovation we need to deliver on familiarity so we designed the system to bridge a gap, bridge from the successful last generation and make sure you can use the same tools, the same processes, the same middleware that you're all familiar with so you're not re-imagining your process, your re-imagining the game.

Now, for the next console we've made a very conscious choice, we made the conscious choice to go to multi-core general purpose silicon, high performance cycles that provide unlimited flexibility, limitless. It's provides you the headroom that you'll need and it gives us the opportunity to deliver value to the customer after we've locked on the hardware specs.

And we're also ensuring that you can take advantage of it by taking a symmetrical multi-core architecture that's happening in the PC world as well, you get to take advantage of all the new techniques and processes that are coming to life both on the Windows platform and on the Xbox platform.

So we designed this hardware with software in mind, with you in mind. Our approach here, it was Bruce Lee, it wasn't brute force. And the result is a platform that has games at its core. You're going to be free to develop and innovate with no restrictions and no struggle with the hardware. That's going to allow you to make great games.

But still we have to make games the most compelling form of high def entertainment. How can we be at the top of that list? And the final answer, the final component here is services. Services like Xbox Live have been really successful, Live has been great.

We've created the gamer-to-gamer connection but now we have to create the developer-to-gamer connection. We need to capitalize on high def connectivity and high def self expression in a big way. Already we've delivered a strong foundation in Xbox Live but we've got to focus on that developer-to-gamer connection; we haven't done enough there.

I mean, initially you need some basic stuff, you need authentication, you need security, we've got that stuff. But we have to build on it, we have to build a channel that allows you to publish incremental content in a way that users can navigate.

In the next generation of Live we're going to have a micro transaction system, a system that's going to allow you to take the credit card transaction fees out of the equation and enable you to sell a five cent tattoo, a dollar car or a $5 tournament entry fee and you don't have to worry about the transaction cost.

Now, today we're approaching 2 million subscribers on Live, which is great, but what gets me up in the morning is to think about how do we get to 20 million. That's where might sights are set. The challenge around breaking from 2 million to 10 to 20, the problem is the next wave of consumers, they're a little intimidated by this whole online thing. So what we have to do for the consumers is we have to simplify it. We've got to create a consistent experience so that consumers can enter our worlds much more easily and enjoy them.

If you think about it, you think about renting a car, you come down to San Francisco and you rent a car, you can't figure out how to turn on the lights; it starts to rain, you can't find the windshield wipers. I mean, imagine if the car manufacturers went and flipped around the gas and brake on a whim; that would be no fun. But yet that's what we do.

We have all these great tools and great ideas but we reinvent the interface every single time. You change games, you change metaphors; the way you find your friends is different, the way you set up a match, the language that we use. We change the rules on the gamer every time.

No more, we've got to create some consistency. If we want to get to 10 or 20 million subscribers we've got to create some consistency and minimize the complexity as we surface these great new concepts.

So as part of the next generation of Xbox, we're going to deliver a new user interface, a user interface that's going to be consistent across the HD era of games.

Now, from the user's point of view it's going to provide the gateway to those rich services that we've talked about in a simple and easy to understand way with easy to understand terms.

Back in Redmond we've been working on this for a long time, we've been jamming on next generation software for a very long time and I'm happy to show a little bit of it to you now.

So we've done some really cool stuff, it exemplifies a lot of the things that I've been talking about right now. So we've stitched it together in a walkthrough so we could show you what the next generation might look like and what we're envisioning. It's taking a little bit of creative license here and what we're going to show you, we're going to fast forward through a couple of the steps but you'll get it and know that this is all based on real, running code that gamers are going to see next generation.

What we've got here is we've got Forza Motorsport. It's a game that's coming soon to Xbox, it's done some great innovative stuff with personalization, a lot of anticipation in the community right now for this game.

Now, let's see what Forza might look like if it was integrated in this next generation user interface that I've been talking about. While you look at this, keep in mind that this next generation user interface is going to be available in all games, so while we've got one example here this is going to work across all games.

Here the gamers finished their race, they're off to the garage and maybe they're prepping for their next race. What happens is a system alert comes up. In this example, system alert says low on batteries. This could have been any number of different things, could have been your Internet connection was dropped, that download you've been waiting for has been completed or a wired controller got ripped out. And in all these cases you're probably thinking, oh, it's not that much work, right, I mean, we can pull all the controller ports, figure out which one it is, synthesize a texture, put it up on the screen, QA it, localize in 16 languages, but that's not your dream; I mean, it's not hard but it's not delivering on your vision and this is just one example, there's a ton of these things that you have to do.

From a user's point of view we're going to provide this in a simple and consistent fashion, from your point of view you don't have to worry about it anymore, so that's the first concept, the first concept is these user's alerts.

But the next thing, the next big concept where it really starts to pay off is here the user initiates the UI and this is where the user takes some action and says I want to go personalize my experience and I want to take advantage of some of these enhanced features that you've been talking about.

This here is the user interface that will give players access to the world of self expression through things like music, the online marketplace and their friends and online community.

At the top we have the concept of a gamer card. A gamer card is a new concept in Xbox that's going to be very important in all next generation games. You can see we've got Hero Protagonist here from Seattle, Washington, looks like he's played quite a bit and his gamer ranker is okay with a rating of four stars. The gamer card also shows they like to play in the pro zone. And for some reason he looks vaguely familiar because he's personalized it a little bit.

Now, beneath this is my friends access so the gamer can see what friends are online at the click of a button. Eight friends are online and we can go and set up a voice chat, talk about the next race we want to set up or maybe jump to another game.

There's also a simple way to access the Forza Motorsport soundtrack or to personalize it.

And then finally you can see the Forza mod shop. And when we talk about online marketplace, this is where you have the opportunity to get right to the customer.

Let's go back to music for a second. Music and custom soundtrack is one of the most popular features -- done a lot of research on this -- one of the top features that users cite as a reason they love their Xbox but there's a disappointment factor as well and that is it's not in every game.

So in the next generation user interface on the next generation Xbox in all games. It's not about the amount of work required, just like the batteries, you guys can do it. We even made it easy. But it's one of the first things that gets cut when you have to make schedule and it's a disappointment for us all.

So here is a way that we've put the gamer in the center of the action, allowed them to customize their experience and we're bringing in a new partner. Now musicians get to brand their part of the experience in this new connected world and ultimately the user gets the payoff because they get to play the music that they want to play.

All right, I love this song but let's move forward and pretend like we're really online.

Back to the garage. Here we get another alert. This time the alert looks exactly the same, I'm going to deal with it exactly the same but it's a different alert. This one is an alert from the system or that I initiated, now somebody else has initiated. And Doomster says she wants to race.

You saw a quick tile of my gamer card up there; this is a blown out version of the gamer card and there's actually even more behind the scenes than this. This is where the player gets to put their imprints and you could see some of the same information that was available on my gamer card. It's where they get to express themselves to the larger community.

So before we take on this challenge let's look at a couple of other new concepts.

In this expanded version we see some other interesting ranking information on top of the hometown and that kind of thing. I look at this and I think of this as sort of the gamer's baseball card. It's a new concept but it's a little bit about who they are combined with what they've accomplished.

And this is where you as creators get to start putting your stamp on it. We're creating a new concept called Achievements and integrating this in the next generation UI.

Achievements, think of these, they're like merit badges, they're merit badges that I earn as I play through your game experiences.

What's great about it is it allows me to go size up the competition, creates a vocabulary for us to talk about the accomplishments that we've made in one another's games, maybe I'll get a new racing line from Doomster, for example, provides a basis for that kind of collaboration and also an opportunity to start having the community help you market your experiences, because I can see some of the other games that Doomster plays.

So that's a great effect. We're going to create a real great network effect with the gamer cards and the notion of accomplishments and what kind of badges that we've earned in the experience.

Now, the last thing I want to do is let's go to the mod shop and this is that online marketplace we've been talking about. It's where you have an opportunity to brand the UI and have a direct interaction with the gamer, where the gamer could go personalize their experience through your personal user interface. You can add your own concepts in here the way that you want to extend your game and, of course, you can collect real money using real micro transactions in the back-end.

So here is the Forza mod shop where the creators have decided rims and wings and turbos are the kinds of accessories that I can bolt on to my car and that the gamer can buy. It's where we're creating a whole new online economy where you can sell this incremental content, you can sell it for a dime or a dollar and not worry about the transaction fees.

We've talked a lot about the remix generation. The remix guys, they want to personalize.

So let's let Hero here finish off his experience, we've got some new stuff and we'll go out and accept the Doomster challenge. Again, this is all part of a user interface that we're going to take care of for you, be consistent across games, it will be branded by you and it will be simple for the gamer.

Let's cut back to the race now and we'll see Hero has got a new paint job, a new wing, a new soundtrack and some new rims.

And that was enough to intimidate Doomster and give Hero that little extra edge he needed to beat her out. And when he finished that race you can see that an achievement has been awarded by the game. If we went back to the gamer card you'd see that that badge is lit up now that Hero has landed that best time.

That guide, that user interface is really the gateway, a consistent gateway for our consumers, our broad consumers to access these new next generation services that we've been talking about. And it doesn't just stop at the things that we've shown but by creating that standard interface and a standard way to interact, we really have the opportunity to take the HD era to all new places. Just as important as the user interface was the manifestation of new underlying services that are going to allow you to implement things

that we can't do today, can't do easily.

While Forza is a great game and I can't wait to play it, remember this could be any game, any game could be behind that UI.

In the next generation Xbox we're going to make sure all these components -- the notifications, the music, the online marketplace, the gamer community, the music library, the gamer card, they're there for every game.

Now, you're probably thinking all these new features, getting a little nervous. Well, what happens, you know, when we launch a new platform? We've been through this before, J, you launch a new platform, TCRs go way up, the checklist of things that I have to worry about go way up. Well, we hate that, too. You're already dealing with hundreds of TCRs and we hate it but it's the only way that we can really control the quality and the consistency of the user experience to get to mass market scale.

This time we're going to do it different. So I'm happy to announce a major tax break this year. This year we're going to introduce all these new features in Xenon but we're going to reduce the TCR list by over a hundred items so it's going to be easier for the people in this room to really focus on the vision, on the games that you want to create and the experiences you want to deliver, because we have the remix generation in mind and so do you.

That's a few of the hints about how we're thinking about the next generation of gaming.

And we've talked to a lot of other people and people in the audience here about what they're thinking. Let's turn it over to the creators now and hear what they have to say about what happens when we deliver this kind of platform and where their focus will be.

(Video segment.)

J ALLARD: Constantly raising the bar on each other, self expression, personalization, virtual economies, community impact, interactivity and personalization: They're not concepts I came up with for a keynote speech, these are ideas that you've cooked up, these are the defining and driving attributes of the HD era and if executed on well it's going to put is right at the top of the list.

I want to focus on interactivity just for a second. It's the defining characteristic of our medium. No other medium can do what we do. We yield control of the protagonist to the gamer. In an age of high def self expression driven by the remix generation what single thing could be more powerful than the essence of what we do?

So we stand on the threshold of the HD era, it's going to happen. The consumers are ready, they've signaled their readiness, their expectations have risen; what's it going to take to fulfill our vision for the medium? And the answer lies before us: We're the right medium for this age. We have the right platform to provide users with a consistent and breakthrough set of experiences and at the same time make your job easier.

Our platform is going to unleash your creativity and allow you to redefine the traditional notions of what games should look like, feel like, sound like and play like.

Working together, working with partners, working with partners from other industries who are betting on this HD future, we'll put games at the very center of the entertainment experiences and in this decade I believe we're going to go out and double our audience.

In 2004 the best selling game was 5 million units, give or take. In the HD era we're designing the platform to sell the first title that does 20 million units.

In the HD era we're going to be able to return once again to that Atari commercial, that Atari commercial that I mentioned at the beginning of this speech. In the HD era millions and millions of consumers around the world are going to gather together to play games. They're going to be in a new living room, the high def living room and for millions and millions of them the answer to the very simple question, have you played a videogame today, the answer is going to be yes.

Thank you. (Applause.)

Oh, wait, wait, wait. Thank you for coming to this speech but thank you, I want to thank you a little bit more broadly than that because you guys have been great partners for a long time. Ten years ago we came up here and we said we're going to go do the 3D era right, we're going to go to DirectX, we went on a quest and you followed. Thanks. I mean, that made a big deal, big impact for the 3D era.

And four years ago we were up here and we were saying we're going to go throw our hat in the ring and we're going to enter the console business. A couple of you, a few of you might have been skeptical, but most of you got behind us, so I want to thank you for that.

And two years ago we came up and we said we're talking about Xbox Live and we're betting on broadband and betting on voice and we're betting that consumers are going to pay us for it. And you know what, today we almost have 2 million subscribers and we're really changing consumer expectations. And again I want to thank you.

And once again history repeats, I'm up here talking about the HD era and I'm asking more of you. The expectations are huge, the tasks are tall. Well, this time I want to thank you in advance.

So I talked at the beginning a little bit about partners and I was talking to Peter Weedfald. Peter works at Samsung, he's a senior VP of Samsung America. We were kicking around ideas and say, you know, we believe so much in this HD era. What can we do, what can we do for the game development community to really spark this up and ignite it?

So to express some of our gratitude in advance, Peter and I came up with an idea, an idea that I think you'll all like. Today we have a thousand Samsung HDTVs to give away.

You like that idea? (Cheers, applause.)

All right, so in the spirit of the conference, we're going to play a little game today. So tell you about it, Dick Butterfield. (Applause.)

(Game segment.)

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