Turning 10: Chris Lewis on Xbox's past, present, future

European Xbox boss Chris Lewis aims for continent-wide domination as the green machine celebrates its tenth birthday, speaking at gamescom in Cologne this week.

Xbox's European buck stops with Microsoft's vice president of interactive entertainment, Chris Lewis. He's the boss. Lewis has been with the Xbox project from the start, and no one on the European side of Microsoft's gaming effort is better placed to update on its past, current and future.

With pressure coming down from global Xbox head Don Mattrick for Xbox 360 to achieve a European win over its competition, Lewis and his team face a pitched battle in PlayStation's traditional stronghold for domination this cycle: the rocksteady exec constantly moves forward, having gained 20 percent growth in Europe last year and pushing up to 8 percent total marketshare.

I spoke to Lewis at gamescom in Cologne this week, where Microsoft pushed heavily on Kinect, announced 14 new mobile games and reiterated its core message with Halo CE AE, Gears of War 3 and Forza 4.

VG247: Generally, then, how's Xbox?

Chris Lewis: We're having a really good time at the moment. We love gamescom. As I've some a few times in the past to you, you look at August and you say, "August? Is this going to make sense for us?" And yet we come here and the vibrancy's amazing. It's really nicely timed after E3. A real, key footprint for Europe.

Number one status is the ambition globally, and to achieve that we need to be number one in Europe. We enjoy that status in parts of Europe, but not everywhere, so to be able to come here and major on existing and new experiences - some of which we described at E3 – and to give people a chance to play those games in more detail, to get behind the wheel of the latest version of Forza and to announce relationships with Disney and Star Wars, to talk about voice and Youtube? Fabulous at a time where we're continuing to grow: 20 percent growth last year in Europe, 8 percent of market share. We've made progress, which is amazing at this point in the lifecycle. We're happy at gamescom and we're having a good time.

How is the integration of Kinect into your business working out?

It's given us the growth I've just described. You'd think that six years in you'd probably be in a plateau phase, probably not growing in the way we are growing, but 10 million people love it, and that's growing fast. It has pumped adrenaline in the arm of the business at a time where, particularly in continental Europe, more casual audiences are now addressable through Kinect in a way that wasn't possible before. But at the same time we're very committed to that core audience. We deliberately started at E3 with core experiences, and we're unapologetic about how important Gears, Fable and Halo are: we remain very committed there.

And all the things that are multi-platform we pride ourselves are better on Xbox. Xbox Live is unique. It's the oxygen of what we do. People that play CoD and FIFA love playing those games via Xbox Live, and we're really pleased about that.

Are you still pushing for exclusivity with third-party products? I'm thinking specifically about Call of Duty. Are those deals still important to you?

Very much so. We love the exclusive windows on DLC that give us the upper hand in terms of the competition. We're very mindful of the competition, and, as you know from over the years, very respectful of what they do. But we wouldn't trade places right now, particularly given the success we're enjoying through Xbox Live and the growth we've seen with Kinect. But yes, those types of unique windows on DLC and the universe that is Xbox Live, I think, gives us an advantage that's actually growing rather than diminishing.

"[Kinect] is central to our strategy for growth, but that doesn’t mean we aren’t committed to bringing great core experiences shown at E3 and gamescom and will continue to show at TGS and other forums."

How is Kinect changing your business? It seems very much that from developer up there's almost a Kinect mantra in the entire Xbox business now. We talk to developers all the time, obviously, and they're constantly telling us that Microsolft is extremely keen on incorporating Kinect into their games. Do you see Kinect as an absolutely instrinsic part of your business going forward?

It's intrinsic to our growth. There's no doubt. In a way, I'm glad to hear you say that, because what we don't want in any way is to have the real success of launch that we did have and then step back and think, "Well, we've done that now." We were very deliberate in taking the innovative step to avoid a physical pointing device. We knew that we wanted to leapfrog that and get into physical movement, and we know that to keep that, to make sure it isn't a holiday spike and then another holiday spike a year later, we have to keep bringing great experiences to it. That has to include both Kinect functionality in games like Forza, that enhances the experience of what is otherwise a controller-based game, but also to bring in other franchises Like Disney and Star Wars to it, that resonate with families and broad audiences.

So. It's central to our strategy for growth, yes, but that doesn't mean to say we aren't committed to bringing great core experiences in the way we've shown at E3 and gamescom and will continue to show at TGS and other forums. The key, Pat, is to market accordingly sok we don't alienate one audience versus another. That's tricky. It's not necessarily what we're used to doing over the years, and you have to avoid the alienation of overlap in marketing messages. We're learning how to do that very fast.

How do you see the console business going forwards in general? It seems to be being squeezed on all fronts. We have cloud functionality in things like OnLive and the mobile business is obviously exploding. Boxes like Xbox, the next PlayStation: do you think they'll still have the same impact on entertainment going forwards?

Well, yes: clearly things are changing, as you quite rightly describe. Ten years ago, we were very clear that Xbox was pure gaming. In fact, I remember saying at some stage or another that it wasn't some Trojan Horse to entertainment. But I'm very pleased that we listened to what consumers want, and that we've built online functionality into the architecture of Xbox and that we fiuture-proofed in that way.

That vision has really helped right through 360, and now we're unapologetic: we aspire to be an entertainment hub, whether that's movies or music, whether it's the Xbox Live community and communication, whether it's core games or whether it's Kinect. We think we're best placed to serve those audiences.

"Right now I see coexistence of physical media as well as digital download in terms of what consumers do and the way they behave, but the options of the future are infinite, really."

The future, therefore, as digital becomes all pervasive, and cloud-based storage becomes a reality – and by the way, that's true for all parts of our company, not just Xbox – I think we're better placed than anybody to be where our consumers want us to be. I think flexibility's key. Scalability's key. And right now I see coexistence of physical media as well as digital download in terms of what consumers do and the way they behave, but the options of the future are infinite, really. I think that's really exciting. We're good at services, and I think our Xbox Live service is testament to that, so I think the future's very bright for everybody, but particularly bright for us.

You're in a bit of a dogfight at the moment in Europe. One of your key missions is to become number one. I remember talking to you at E3 a few years ago, and we discussed the difficulties of marketing to different territories within Europe and how you were maybe not so successful in some areas and more successful in others.

Agreed.

Is that still the case? Have you made headway?

I think we've learned quickly how to be more textured in the way we approach markets. Any manufacturer that sees Europe as one market where the North American model will work does so at its peril. We did a little bit of that back in the day; I think now, more than ever, we're more textured in our approach. In Continental Europe there's a more casual gaming taste, where outdoor campaigns, viral campaigns and poster campaigns are more effective relatively than would be the case in the UK, and we're learning fast how to utilize that.

Our success is more even now, but we're still a little bit polarized towards success in the UK, and that has to change. To be number one overall in Europe means we have to be number one in quite a number of geographies to achieve an aggregate. This year in Germany we're going to spend way more money in media than we did last year. A disproportionate investment. Partly that's to get on the back on our success with Kinect, but it's also recognition of the fact that we have to be successful everywhere, and we don't want to be polarized.

We're broadly way more successful. This 20 percent growth that I alluded to earlier wasn't just a UK phenomenon: it's the case everywhere. Very good year last year last year in France and Germany. Italy does well for us and Benelux does well for us. Nordic always has, but, yeah, we're trying to be a lot less polarized in the way we approach things, and we're having success there.

There big story of the show was the PS3 price cut. Are you feeling any pressure to move down a little?

No. As you can imagine, we plan for these scenarios all the time. For me to sit here and say that was a big surprise would be a lie. Respect for what they do, of course. I love the competition, actually: it keeps us on our toes, and consumers benefit ultimately. We think we offer great value now. We have better service provision than anybody. We attach more effectively than anybody. I think Xbox Live's enviable. What we've achieved with Kinect has given us growth that I think others would aspire to at this point in the lifecycle. We're happy with our position. While we're not complacent about the competition, I wouldn't trade places.

What are your thought on the mobile space at the moment? Your window onto mobile is Windows Phone 7. Sony's making a gigantic launch with Vita: it's their next gen handheld and they're still very active in that space. Nintendo's still very active with 3DS, whatever the success of that may be.

Yep.

Do you have any plans for anything other than Windows Mobile for the mobile space in the future, or are you happy to let Sony duke it out with Vita, Apple and Google?

There are a few threads to this answer. Certainly happy to watch them duke it out, as you describe. I think the integration that we have with Xbox Live into Windows Phone 7 is serving us very well. I think it's a statement of our intent here that 14 games are being announced for Windows Phone 7. We've majored on a couple: Kinectimals is a good, detailed companion experience to the console play and there are more of those things coming.

Our commitment to mobile is second to none. It's a critical play for the company as a whole, not just what it means for Xbox. We think we're in a good place, and we don't have anything to announce beyond what we're doing with phone, console and PC. My answer to you earlier about not wishing to trade places would be true for that question as well. That's probably all I'll say.

It's the tenth anniversary of Xbox this year. I just did some features on it and I dragged up some pictures of you in the Virgin MegaStore.

Stop that. I looked at those the other day and I was thinking how long I looked.

Are you going to be doing anything as a company to commemorate the birthday?

I thought you were going to say, 'Are you going to be doing anything to change your physical appearance back to 2001?" I was genuinely looking at those pictures the other day.

It really took me back.

Yeah. I was slightly nervous that I had this black shirt on, trying to be trendy. Anyway: very important, and it is amazing how fast those ten years have gone by. Do we want to celebrate? I think, to be honest, that our celebration is about the fact that we're so successful now. I think that we've established ourselves in a way that, back then, I'm not sure we dreamt we could. There are 55 million people with Xbox 360? That's not even counting V1.

We've learnt a lot through the years, and we've had some bumpy phases. It was great to launch at the Virgin MegaStore. We had early and continued success in the UK; we didn't have success everywhere. We've learnt a lot. I think our celebration is that we're not very well established against our competition. We're a household name. Kinect's given us another growth spurt at a relatively late stage of this lifecycle with 360. For us that probably celebration enough.

I'm not sure I want to look at pictures of myself ten years ago.

"We’re still a little bit polarized towards success in the UK, and that has to change. To be number one overall in Europe means we have to be number one in quite a number of geographies to achieve an aggregate."

PR: I'd quite like to see them.

I'll send you the link.

Makes me feel nostalgic. It was great.

It was.

We continue to stride out. I think innovation now is better than it has even been before, and I think the key is to continue to build on that success without being too complacent about anything. We're a naturally paranoid company. We always aspire for more and more and more. And I think that's what keeps moving. When Don sets us challenges for number one status in Europe, that's not trivial; it requires investment, focus, partnerships with retail and partnerships with developers and publishers, and I think ten years from now we'll be looking back on this gamescom and thinking, 'Wow, look how far we've come.'

You and I'll be retired by then.

I'll be nearly 50.

Stop that. Never. You're 25, right?

Right, last one. And I have to ask this. There's an awful lot of talk about you announcing your next console at E3 next year. Have you got anything to say about that?

Look at where we are now. We're still growing. You knew I'd say this.

I said it to Dom outside.

No plans to announce anything. We think we're in great shape. Consumers think we're in great shape. We offer good value. We're fixated on this generation, and our publishing and development partners love the consistency that that brings. Huge growth ahead of us, and nothing to announce.