Q: Talk us through the development of the first Xbox.
Alan Bowman: In the beginning of the original version of Xbox, it was a bit of a hare-brained idea in many ways. It was led by a guy called J. Allard who actually was one of [Bill] Gates's key developers on Internet Explorer.
He was a pretty funky guy and a gamer, and kinda convinced the company we should be in the games business. It was an interesting thing to do because we didn’t really have a game culture, although if you looked at the engineering community in Seattle, they would be our target audience – the 30-40,000 working on different products there now.
Being there at the beginning, it felt like a counterculture. I’d been a marketing guy, I’d been used to working in the subsidiaries selling Windows and Office, and the whole Xbox thing fell in my lap in the very beginning.
Someone said “Hey, we’re gonna launch in five or six markets and we think Australia should be one of those,” because relative to the population, PlayStation had a strong track record and brand. So we did a market evaluation and worked out how much share we thought we could take, but there was so much we didn’t know.
It was really interesting then going back to Seattle and spending time with those guys, soaking up the vision, and figuring out what we were trying to do with that product. And they were kind of living the dream – everyone wanted to go and work in the Xbox business. That team formed up two-and-a-half years before we launched the first version of Xbox in the US in 2001.
Q: What lessons were learned with the release of that first console?
Alan Bowman: There was a lot of optimism that was a bit blinkered actually. I think we were over-zealous in terms of what we put in the box – we were having a bit of a joke before about the fact that we had an Ethernet cord in the first box. You couldn’t connect anything to it and we didn’t have Live at that stage. But there was this vision there that hey we were gonna take this box that had this massive disc drive in it, we had an Ethernet port, and more graphical grunt than you needed. This huge thing. And it had a filthy hot heat sink and a very noisy drive and a great big power pack out the back of it, but apart from that it was beautiful!
One of the things we soon learned was that to get broad appeal you needed broad content, and I think in that first year… when we launched the Live service, EA weren’t on Live, and I think it took us two or three years [to get them on board]. They were going down their own live pathway that didn’t work, and eventually they came onto the Live service and that was a good moment for the business. We’ve seen the ups and downs, and I think coming from behind and being a challenger brand is difficult but fun, and a great test for the teams in the field. During the Xbox 360 generation, in most markets around the world as you aggregate it out we went to the number one brand in the category, and that was a huge achievement. We made incredible progress against an incumbent brand.
We’re optimistic about this generation as well. We’ve got a unique value proposition, and from just a pure specs perspective it’s always gonna be fairly marginal difference. The purists are gonna argue the toss, but I think it comes down to the games. You’re gonna see great exclusive games on Xbox One, and when you look at the cross-platform games, and there’s gonna be exclusive content on Xbox One. We’d like to be in more markets – this is a global business – but it’s also a long-term business, and we’ll progressively launch in more markets over the coming year.
Q: Speaking of markets yet to see the Xbox One, why doesn’t Xbox do well in Japan?
Alan Bowman: That has been an ongoing challenge. Being a local brand makes such a huge difference in Japan. Sony are so strong in Japan as its their home base, and they certainly get a lot of support from the customer as well as the ecosystem – the local third-party developers, who primarily publish for Sony. We had moments midway through the life of the 360 where we’d see a sales spike if we had Japanese developer content released. Japan is very [local] content-driven. Same applies for Korea, same applies to Taiwan. Most of north Asia is very content-driven.
Q: The first Xbox was dropped pretty much as soon as the Xbox 360 hit. Now the Xbox one is out…
Alan Bowman: There will be parallel development. We see that continuing to live on because 70 million consoles worldwide is a big base for developers to continue to produce for, and the box itself has plenty of headroom technically for creative development. So you’re going to continue to see good games coming for the 360. The Live platform will be consistent, but the game content will be different on Xbox 360 and Xbox One, and if you want Forza 5 or Ryse, you’ll have to go to Xbox One.
Q: Are there likely be to any Xbox 360 exclusives now the Xbox One is out?
Alan Bowman: Titanfall and games like FIFA will be cross-platform. If you look at the big publishers that have got scale – Activision, Ubisoft, EA, some of the Japanese publishers – they will develop on 360 and Xbox One. Would they just do a 360 title? Look, some may because they’ve already got expertise and so it’s a lot less expensive to do.
Xbox Lead New Zealand Steven Blackburn: You’ve got publishers and developers right now looking at tricky balance between volumes on last-gen, and then the ability to tap into a fast-growing next-gen and get the benefits there, whether its establishing a new franchise or getting on that publicity ride. Xbox 360 has some legs in terms of volume.
Q: What’s going on with Xbox One TV apps locally?
Alan Bowman: We haven’t got anything to announce today. If you put your media/entertainment lens on and think about who they might be, it’s those sort of companies that [we are] engaged with. One thing about this market is that there is a really high penetration of gaming in homes – more than a third of all households have some form of gaming device, largely split on the console side. So for content creators and aggregators (like cable providers), the platform does provide an additional distribution opportunity beyond direct subscription. You can control the TV experience through your Xbox, and have the additional functionality of Kinect there so it’s interactive from a gesture perspective. And you can split the screen up.
Q: Who is the Xbox One consumer?
Steven Blackburn: At launch it’s the early adopter, the core of the core, guys that are passionate about core gaming experiences. There’s a buy-in either because of the brand association, or it’s looking forward to the future, or people responding to specific pieces of content, like Killer Instinct, Dead Rising, Forza. It’s absolutely as male and core-skewed as you can imagine, but that will change. We need to have the ability to be that broad church. It also needs to be easier. Gamers are willing to spend time configuring things, but someone who just wants to watch TV is not.
Alan Bowman: We can’t let the tech be a barrier.