To Infinium and Beyond: Kevin Bachus talks Phantom
Following his surprise appointment as the president of Infinium Labs, Kevin Bachus spoke candidly with <b>gi.biz</b> in this exclusive interview about the controversial company and its plans for the Phantom game service.
Launching a videogame console into the market for the first time is a fraught process for any company, no matter how large or how small. From the tough job of convincing investors or senior management to give the green light, through to the even tougher job of persuading publishers that you're for real, and finally to the toughest job of all - persuading consumers to part with hundreds of pounds of their hard earned cash for your system - it's not a task for the faint hearted.
Kevin Bachus is a man who's been through this process once already. He was a key figure right from the genesis of Xbox project and helped to turn the fantasy of a few "renegades" within Microsoft into the reality which has become a serious challenger in the console market. The experience can't have been that bad, though - because now he's preparing to do it all over again.
Earlier this week it was announced that Bachus has joined Infinium Labs, a Florida-based start-up company which announced its intentions in the game console market, in the form of a broadband-reliant system called the Phantom, last year. Bachus is the first major figure from the games industry to be appointed by Infinium - and indeed, for many people, his appointment at the company is the first sign that the Phantom might actually be a serious prospect.
Phantom in the Night
Infinium, after all, has a somewhat tarnished record within the industry as a whole, and with the media in particular. From "unveilings" which actually unveiled little or nothing, to unanswered allegations about irregularities regarding the company's premises, the company has had what might be described kindly as a tempestuous relationship with the media - and until Bachus' appointment was announced, prevailing opinion suggested that Phantom was vapourware at best, a hoax or a scam at worst. Even now, with Bachus at the helm, there's much doubt over the company's ability to deliver on its promises.
"There has been a tremendous amount of miscommunication," acknowledges Bachus, "and the company isn't entirely blameless in that." Up until now, he explains, Infinium has been focused on convincing investors to back the Phantom and it's that that process which he believes has led to the difficulties in the company's relationship with the media.
"Infinium is a company at a crossroads," according to Bachus. "It has been enormously successful in creating a vision for a product and generating some real excitement around that idea, and most importantly in getting the resources into the company to start working on that vision... I've been through startups before, and I can tell you that in order to secure investment you have to position yourself as a going concern, and make statements with the best information you have at the time. Nobody was being deceptive, but things change."
He compares the situation at Infinium with the challenges faced by Microsoft when it brought the Xbox to publishers and the media for the first time. "Some of the conversations we had when we were thinking about launching Xbox showed tremendous scepticism about our ability to deliver a console, and this was coming from the strongest company in the world."
"The only way to overcome that was by being delivered and consistent and backing up everything we said we were going to do; Infinium has not been able to do that up until now," he acknowledges. However, Bachus doesn't believe that this is an "unrecoverable position" by any means. "These guys have come in and have articulated a vision, and convinced the investment community to back their plan. We now have an opportunity to go and deal with these misperceptions."
Company at a Crossroads
Bachus believes that January has marked a turning point for Infinium, with a number of developments including the listing of the company on the stock exchange (through the acquisition of a publicly quoted shell company) and the securing of fresh investment, culminating in his own appointment as president this week.
The Infinium we're going to see from now on, he contends, is a rather different beast to the one that we've seen up until now. "It's the difference between a start-up positioning itself for success, and an operating company that has a team, a vision and capital and is now executing to deliver a product for launch."
In terms of the management team, Bachus claims to be only the first major announcement of several which will be forthcoming over the coming weeks and months. "A lot of great people are coming in behind me in different roles, doing all the things that are required to build [Phantom]... We're building an all-star team of people to get this delivered, because time is short and the challenge is great."
Changing the way that Infinium operates and managing the about face from a start-up company whose main objective is to obtain funding to a funded company with the path to a product launch ahead of it is not necessarily going to be an easy process, and the need to repair the public image of the Phantom won't make it any easier. However, there's a real sense of energy and determination about Bachus' vision of the task ahead of the company, with less than five months to go before a potential make-or-break milestone - the E3 trade show in Los Angeles this May, which Bachus confirms will be a public outing for the Phantom.
Before Infinium can go to E3, however, there are several fundamental questions that need to be answered about Phantom, and it's here that we hit a stumbling block - right now, Bachus doesn't have the answers to many key questions. "I was very reluctant to talk to the press at this point in my association with the company," he admits. "I'm not the kind of guy who likes to come to the table without answers to every question, and we're not there yet."
What we do know about Phantom is that it's not so much a game console as an end to end game service, with the console providing the viewer and a broadband digital distribution network providing the delivery system. Infinium's vision is that Phantom subscribers (note the distinction between "owner" and "subscriber") will have "access any time, any place to what is arguably an unlimited library of gaming software."
Bachus describes Phantom as "more like a DirecTV system than a PlayStation", with the purpose of the console being to provide a consistent, fixed device for the delivery of network content. "Rightly or wrongly, it's easy to fix in and focus on the console, because that's what people are used to," he comments, but he believes that "if this is done properly, it could change the business model of the industry."
The devil, however, is in the details - and details are thin on the ground right now. Bachus doesn't have answers for the obvious questions, such as the specification of the Phantom box, the price of the console or of subscriptions to the Phantom network, or the launch date of the system. All of those things, he explains, are largely dependant on another unknown which the team is currently working hard to establish - namely the target audience.
"I don't know who my customer is, I honestly don't," Bachus tells us - a startling admission from a company pitching a device as ambitious as Phantom "I know that there are people who want to buy it, but as far as where I want to aim my service, I need to find out from the customers themselves. That's a pretty scary thing to say, but the fact is that we're working on this right now, and I will know the answers within a few weeks, and what I'm going to hear back isn't that there is no customer - it's who our customer really is."
"I am satisfied that there is demand for this product," he affirms. "As to who my customer is, my intuition tells me that it's probably people who are enthusiastic about gaming, particularly PC gaming, but aren't willing to put in the investment in terms of time and effort that it takes to be a real PC gamer... However, we're approaching it really methodically, trying to work out who that customer is, what they want and what they're willing to pay."
Countdown to E3
Once the answer to that question is found, the rest of the answers should fall into place, Bachus believes - and it should all happen in time for E3. "By E3, we'll have announced availability, pricing, specification, content support... I already have the process in place that's going to yield those answers," he confidently tells us. This is the next big milestone for the Phantom - "a proper launch of the console - where we can tell people, 'this is what it looks like, this is what's inside, this is what it'll cost, this is where you can buy it, this is when it'll ship'."
Cynical minds might point out that Infinium has already spoken about the Phantom's specification, at least in broad terms, and has shown off a box design described as final, but Bachus again reiterates that there has never been any attempt to mislead people. "What was shown last year or at CES is demonstrable of what the company's vision is going forward," he explains, comparing the showings to the CES unveiling of the Xbox -which featured pre-rendered demos, a case design completely unlike the final console, and a specification radically different from the final hardware. "The team was over over-zealous in announcing some of the specifics," he admits, but maintains that the final product will be true to the vision revealed so far - "we're not going to come back and say that we're making a sewing machine instead of a game system."
Although the Phantom did make an appearance at CES, on the Windows Embedded Devices stand, E3 will be the first chance that the games industry and media have had to really get acquainted with the console and the concept and company behind it. As for so many products in this industry, the Los Angeles Convention Centre may be the first true test of Infinium's vision - and of its resolve.
"We will have a presence at E3, and we will show the product," Bachus promises, but "how we show it, I leave that to smarter marketing minds than mine. It's not going to be pomp and circumstance - the people expecting us to stand toe to toe with MS and Sony are not paying attention, because we're not competing with them, we're just not on that scale."
Of the details which will be announced ahead of E3, one could speculate endlessly about the possible innards of the console, or its external design - with Bachus promising that the Phantom will be "smaller and sexier", but giving no indication beyond that of what it'll look like. More important, and arguably more interesting, are the questions of the launch date of the console, and the price point.
"That's the big question isn't it," says Bachus in response to our questioning about the launch date. "My instinct is that this product has to be in the market for this holiday season. Xbox 2 will be announced at GDC, PS3 around the same time, so there's going to be a lot of focus on the next generation consoles this year but they won't be delivering for some time. That means that we have a chance to build a loyal following during a relatively quiet time, and it would be very disappointing to squander that opportunity."
This gives Infinium around ten months to bring the console from its current state, with the final specification undecided and most details still up in the air, to a point where it can be launched to retail and find its way into American homes. "It's a tight time-line, but it's not impossible," according to Bachus, "because this isn't a ground-up engineering effort - we're taking PC technology and repackaging it appropriately."
Initially at least, the console will be launched in North America only - an approach which Bachus regrets, but sees no alternative to. "It's incredibly complex to do a global launch, but this is obviously a product with global appeal, and we want to get it into the hands of as many people around the world, as soon as possible," he says. "I can't tell you how we'll do that right now - there'll probably be overseas partners involved, and a delay before we make a full launch. This is a question I'm going to revisit really quickly... And although we can't put a full launch mechanism in place overseas to begin with, that doesn't mean we can't put stock into Europe for people who really want it from the outset."
The other "big question" is price, a consideration which has a lot to do with the business model that Infinium pursues with the Phantom - be it a traditional "razors and razorblades" model which sees the company making a loss on the hardware and then recouping it on software sales, profitable or break-even console sales, or even a more radical model such as renting the hardware on a monthly basis to consumers.
Bachus won't be drawn on specifics of the company's plans in this regard, and indeed it's possible that they are not yet finalised, but he's adamant on one point - "I'm going to build as big an installed base of this as I can, as fast as I can. I will not allow price to be an impediment to sales."
"At the same time, we have to build a sustainable business, and we're not a cash cow like Sony or Microsoft," he concedes. "But this is about the service, not the hardware - the console is not usable without the broadband service, so I have access to a subscription fee, to online purchases, to a rental system, to additional content downloadsâ¦ I'm also creating a distribution channel here, so I can sell games and participate in the sale of games, reorganise my store front and so on - there are many things that can be done that provide the consumer with a more compelling experience."
Ghost in the Machine
A major problem for most new hardware platforms is that they cannot compete with existing platforms in terms of software support, but this is an issue which Infinium hopes to bypass with the Phantom service, since the system is designed to deliver and play existing PC software without any alterations.
"My message to the publishers is that they're already building Phantom content and they just don't know it yet," states Bachus. "The difference between a PC game and the games that are delivered on the Phantom service is nothing; no additional engineering effort on the part of the publisher is required to make this new revenue stream work, they just have to sit back and watch additional revenues come in."
"Then the only question is, 'what effect will this have on my front line business - will this cannibalise my retail sales', but the fact is that the retailers are very enthusiastic about this," he claims, stating that he conducted a number of meetings with major retailers at CES who expressed a keen interest in the Phantom concept.
This seems counter-intuitive, since if something like the Phantom is successful it will surely take sales away from traditional retailers - but Bachus believes that there's potential for retailers to actually augment their business by working with Infinium. "Retail is not going anywhere for the bulk of sales of software that will happen over the next five years, at least. What I'm proposing is something that augments the traditional retail business; allowing retailers the opportunity to associate themselves with a recurring revenue stream, which is great for their business."
He draws on the example of the mobile phone retail business, where retailers sell a heavily subsidised device, and the network operator makes a significant amount of money off the recurring subscription charge - but the retailer gets an ongoing cut of that charge, and also gets to sell items like accessories and top up cards to customers, both of which he believes are "fairly intuitive" parts of the Phantom business model.
The Phantom Menace?
Bachus may not have the answers to all of the questions right now, but his honesty about the position that the company is in and its future plans is refreshing, as is his realism. "We're not going head to head with Sony or Microsoft - to be honest, we're not even going to see their tail lights," he tells us. "But we will build a loyal and enthusiastic user base - we'll have our place in this industry alongside the consoles and the PC."
Whatever other questions remain unanswered, the biggest question of all - whether the Phantom is actually for real, and whether Infinium is serious about it - has certainly been answered. "I spent more time probing these guys and asking tough questions than any journalist has," says Bachus, "and I would not be talking to you today if I was not confident in the company."
"It's natural to be surprised if you decided, as I had to be honest, that there is no way this thing would be built, and then you gradually hear that it's not a scam, that they have real investment, and now they have a real management team, and next you'll be hearing about manufacturing deals and relationships with chip makers."
Or, to put it more succinctly - "I plan to be working in this industry, hopefully at Infinium but if not then somewhere else, for a long time, and ultimately all I have is my credibility." For now, Phantom still exists on paper only, and the vapourware tag is bound to linger - but by E3 in May, the time may have come to start believing in ghosts.