Interview - Microsoft Europe's Chris Lewis

Chris Lewis, VP of interactive entertainment business at Microsoft was on hand at E3 this week for the big reveal of Kinetc and the newer, slimmer, Xbox 360.

VG247 had a chance to chat with Lewis about the new controller and its price; why Microsoft decided to introduce a revamped console half-way through the 360's life cycle; and just how important timed exclusivity is for the company.

[Interview by Patrick Garratt]

VG247:  So, Kinect. You must be pleased to finally be able to share the brand and Microsoft's vision with the world?

Chris Lewis: Very much so. It is exciting to see the reaction. It's fantastic to remove the barrier of the controller between the experience and the person. It's just fabulous. It's the machine understanding them, as opposed to them understanding the machine.

As you know, we remain very committed to our core audience of gamers that like the more intricate, complex, deeper, and more mature content - yet we love the fact that we're moving into this broader, more social casual space as well. Kinect for 360 really opens that up for us, and we're excited about what that means for innovation and leadership as well as just value and consumer experience.

VG247: At your conference, there was some amazing core content there, things like Reach and Gears. For the core, that's like the best thing ever. Then, you've got this very casual content which comes with Kinect. Do you think that your portfolio is full? I mean, do you think that you've provided something for the middle consumer? Maybe something for the person who isn't hardcore, isn't very causal. Is there a middle ground? What are you supplying for that?

Chris Lewis: Yes, I think there is a middle ground, and I think that many of the Kinetc experiences will serve that community very well. Suffice it to say,we're very targeted about who we want to get to. We do heaps of consumer research, where we wheel hundreds of people in and let them see the experience. So we know, in terms of age range, that we need to appeal to teenage girls. We know we need to appeal to a wider landscape of age groups.

So, I think certainly with what you saw yesterday - I really urge you to try it, and it sounds like you did - but what we're seeing is people really flocking to that experience and along with people in those age groups (the middle) that you just described.

And - there's a lot more coming.

I mean, I'm really glad that in many ways, some of the stand outs from the Kinect for 360 experience at the press conference were actually Ubisoft and Harmonix products. That's not because I want them to beat out our games, but I think that what that does is give people a taste of just how excited the developers are - the third-party partners are - for what this could mean for them. So I quite like the fact that, that sort of crescendo experience seems to be synonymous with those two guys as much as it is with us.

Now, yes, it was great to see people's reaction to Kinectimals and our own sports avatar title as well, but yes, we've got a lot coming from our studios and indeed our third-party publishers. But I also think there will some hybrid experiences where it's more natural to spend your time with a controller, but occasionally you may want a hybrid experience with voice gesture or hand movement to compliment that.

There was a bit of a deafening silence on the price. When do you think we'll find out how much it's going to cost?

Lewis: We will obviously announce it a little bit closer to the launch date - and I am pleased to say that in Europe it will also get a November launch right across the key markets, which is great. We're making sure of that as Don (Mattrick) is very fixated on synchronizing this and making sure that Europe is absolutely instep with the US and other parts of the globe. That's one thing.

To your question about the price, we're not saying exactly when, but be very comforted that it will be a great value. We know that's important. It has to be. So, we haven't said yet when we'll come out with a price point but it will be in a timely way, for retail to have a plan for the consumers to be able to plan the expenditure.

The new machine. Could you explain the thinking behind it? This this an excuse to revitalize it or an excuse to build in the wi-fi - I mean, what was the thinking behind it?

Lewis: Well, we're about five-years in and we think that two things needed - and that's only half-way into the life cycle - but I mean, one is that we are pleased to be able to come out with a sleeker design with touch-control buttons to clean up the face of it. It's whisper quite, as you pointed out, and with 25 million people online and one every five seconds growing, we know that top-quality wi-fi is integral to the machine. It's really important.

Swappable hard drives that are more flush - it just felt like a perfect time to bring that to market and at the existing price points. As I said earlier, I think great value is important and our consumers expect that from us, and this is the revitalization of the Xbox 360 for the coming years.

You do see that Kinect is in fact, a phenomenal risk. You are going into an interface that is virtually untested in the market. You know that motion works because of Nintendo, and then Sony's motion is timely, but again, it is hardware based. You're actually holding something. You're in uncharted waters with Kinect. The Cirque du Soleil reveal shows this kind of hype that we've virtually never seen from MS before - I mean, it's almost this artistic side where you're pushing - what you said in the reveal - the next stage in human evolution. Do you think you're in an area here where you are a bit outside of your comfort zone? I mean, you are taking a big risk with Kinetc.

Lewis: Well, you know, it's been a long time in the planning. We thought long and hard about whether we would use motion control devices ourselves, but we thought that was derivative and that consumers wanted that next step in innovation. We've tested it very vigorously, we're exited about the technology, and the fact that it exists, and that it works, and the excitement we've seem from people tells us that it's far from a risk - it's just a huge opportunity.

And the side that you described, we felt that Cirque just offered this unique way of articulating the reality of that into an artistic form. They were a very logical bedfellow for us, if I could use such a phrase, because of their ability to convert the ordinary into the extraordinary - it's what we see with 360. Converting the ordinary experiences into extraordinary ones. So, we're excited about it. I can see others are excited about it, I think that there's a lot more still to come.

2010 will undoubtedly be one of the most important years in our history because I do believe it really reset the tone for where we are going. We'll sell more consoles this year, we'll attach more games this year than we did last year - and last year was a big year. So all of that, I think, gives you a sense of our ambition for this.

This all just seems phenomenally well-planned. I mean, did you expect 360 growth to flatten the way it did in the US last year? It hasn't seen much year-on-year growth when you compare it to hardware sales last year. Robbie Bach said recently, around the time he announced he was leaving Microsoft, that Kinect would be a shot-in-the-arm of sorts for the console. Are you expecting the new box and Kinect to give you more return then -at least for a couple of years?

Lewis: For us it definitely will. We don't - well, we're pretty intolerant of anything that isn't growth.  Profitable growth I would say. I'm not being facetious at all when I say that. We have a similarly low tolerance for anything that isn't profitable, and we think it will be profitable and if you watch our earnings releases, you will see that we are now consistently profitable.

I think that that market was a little bit tough in the last 12-months, and those kind of factors always play a part in these things. There are certain parts of Europe that I think are a little more susceptible to that - it's where you've got strong housing based economies like Spain - I think UK to an extent too.

But with Robbie's description of a shot in the arm there, in many ways I think  it's a lot more significant even than that. I think it does take us onto a new trajectory, as we will be planning, clearly, for a much bigger year - our fiscal year starts July 1 by the way - so that's our FY11-  and we're calling for a bigger year. So I think that this extension of the platform and the life cycle - whether or not we get to use the "shot in the arm" analogy or not - gives us a big punch of adrenaline for our business.

And this whole community of folks, that we actually haven't been so honest with in the past, I mean, we are more defined by experiences that involve guns than we are by these new spaces that we'll be working in.

Is that sort of thing you want to change? Xbox 360 is really seen as the machine of the console gamer - you want that to change, really?

Lewis: Well, I mean, I think we used to design the console with that very much in mind and now we are designing a console for connected experiences for people to chat together - to have video chat, to share, to be connected as well as play good games whether they be controller-based games or physical games.

We certainly aspire to be more than we have been in the past. While at the same time, we want to remain true to the communities we just saw twenty minutes ago - I mean that is really important to us, and it will always be so. We make no apologies for that, and we kicked off our press briefing yesterday with content that we think both guys and girls will love.

Honestly, though, there was an announcement that felt almost just swept away by Kinect, and that was the Call of Duty deal and that is very significant.

Lewis: Yeah, but that's what we started with. That is a hugely significant deal. Somebody  asked me that yesterday, they were like ' So, wow, you started with that versus of your own IP' - but that is a massively significant deal for us. And, are we truly agnostic in terms of our own content versus others? Yeah! Of course we are! Because from our point of view it's just rich consumer buffering that I think is almost second to none.

So, yeah, it's a big deal. I don't think, I  hope people didn't think it was just swept off.

No, I mean, the story was Kinect and what was headlined. Hardware is always the focus it seems, and it is a shame because the Call of Duty announce - when it first came out - was like  lightening. That is pretty awesome stuff. But it is almost a old trick to lock up exclusive content like that, which you just saw the exact same thing in Sony's press conference earlier today. Do you think that pushing for that sort of deal is sort of the cut and thrust of the publisher relationship  - that you have to lock up content?

Lewis: Yes we still love exclusive windows, we still love all of those things as you can imagine. We love downloadable content because it plays uniquely to our strength of Xbox Live - certainly I think Call of Duty, Halo, games like that are synonymous with live gameplay. A lot of people we talk to don't play those kind of games unless they're connected to their friends and competing with their friends.

So, those kinds of relationships, exclusive windows, those unique windows we can offer will always be important to us, yes.

The big thing I wanted to talk about really was the price. Surely, there is a failure threshold where a product is too expensive. I don't know if you read this or not, but we were told just before the Kinetc event of a rumor that we were going to see two versions of it at the event. The more expensive one would be $189. Now, a lot of people seem to think that is too expensive, I mean, how do you feel about that?

Lewis: Well, I didn't hear the two version rumor, that one passed me by.

So they're not true?

Lewis: I mean, you saw what we're announcing. We were very clear on what it was, when it's coming out. I understand your appetite to understand the price, but all I will say to you again Pat is that we will offer great value. We need to do that in particular to this audience that we are aspiring to appeal to and we know that we have to resonate well there. And our track record over the past ten years - I hope has proven to people that we have an appetite to remain competitive. I mean, we have to.

The economics are good, of c0urse, but we think we are offering a great technology based experience that I think will carry a lot of enthusiasm - and people are prepared to pay for great experiences.

But it will be great value. I cannot comment on the numbers you just articulated, but I think you'll be very happy when you hear our plans.

One thing I do want to ask you about while I've got you is Rare. Now, Rare's obviously a very big Microsoft studio and you've re-branded it very significantly in the run-up to E3. Can you at least explain - I mean there's been a press release message on why it's been done and the sort of thinking behind it - but could you just explain to us what's going on with it. Rare was a core, studio, right?

Lewis: Yeah..

And now it just seems to working exclusively on Kinect. Is that correct?

Lewis: Well, no, it's not as simple as that perhaps. Those guys remain an incredible asset for us. They are a huge part of what we do. They are a massively talented group of people  that we know we have to continue to give great latitude to in terms of their creativity and their own culture. That has to be retained, and we're trying to work hard to make sure that's the case.

They're very focused on Kinetc experiences. They are truly focused on what we are doing with Avatar work and have been for some time. We're really excited about what that means.

So, a lot of what you are seeing is where their creative enthusiasm is. So it's not like we're trying to confine those guys to that space - it's just really where they are excited and where they are doing fabulous work right now.

Kinect launches in North America on November 4, and the slimline  ships this week.