Former Sega of America President Peter Moore is now Xbox top brass, and the big man had the big answers when we caught up with him recently - unmissable interview inside
20:19 You have to hand it to Microsoft. From nowhere and against a sea of disbelievers, the company has turned the tide in spectacular fashion over the last year or so, with Xbox cementing its position as number two in the West, striding boldly past GameCube, then establishing itself as the leading purveyor of online gaming.
And now the battle to establish itself as a serious contender has been won with relative ease, all eyes are on the future, as the gaming world gears up for what should be a cataclysmic battle between Microsoft and Sony as PS3 and Xbox 2 lock horns.
But what of the now? Out of the three major players, Microsoft arguably has the strongest line-up of titles for the next twelve months, but millions of consumers still need to be convinced the 'X' way is the right way.
Doing his level best to hammer the point home, corporate vice president for retail sales and marketing Peter Moore was in ebullient form when we recently had the privilege to speak with him.
From dismissing the competition and outlining his vision for the future of gaming, to explaining Microsoft's lack of interest in the handheld market and why Rare's games are just plain cool, Moore gave a lengthy but riveting and insightful interview, the full transcript of which is presented here:
What are the main differences between working at Microsoft and your time at Sega?
Moore: It's not a Japanese company! [laughs] The cultures are different, obviously. I ran North American operations for Sega but one of the challenges always when you're working for the subsidiary of a foreign company is that you spend a lot of time having to get decisions made. The Japanese will tell you they're not the most decisive people in the world, whereas what I do like about the position I'm in here with the rest of my executive colleagues is that we really are the decision makers.
There's five of us here who run the worldwide business: I'm responsible for Europe and Japan, I have a great team of people and there are resources here I quite frankly didn't have in my previous life to get the job done. I do enjoy being back in the hardware wars again, and so it really is a breath of fresh air for me.
I fully believe, as I did at Dreamcast... and I don't know if you know, at the first E3 for Xbox, I stood on the stage next to Robbie [Bach] and said I believe... do you remember the suit? It was Xbox green suit that I'll wear tomorrow! [laughs] But I said I believe in the social elements of gaming, which we tried to do very aggressively and probably didn't get to where we wanted to be with the Dreamcast. I still say it was a great little console and it paved the way for online gaming.
I truly believe, as I've told Robbie, that I passed the baton from Sega to Microsoft to do that and they have - we have taken everything they did with Dreamcast and multiplied it by a hundred. It's a phenomenal experience; the resource and the talent, the ability to grasp what videogames are about - because the important thing is the Xbox culture is a culture within itself at Microsoft - smart people, combined with great marketing, combined with the resources, combined with good games experience
A combination of Microsoft long-timers, if you will, and people from the outside giving a different flavour. Every day I go to work - be it London, Paris, Tokyo - there are very smart people, very dedicated and very clear in what they have to do. I'm excited about being one of the decision makers. I was not in that position at Sega, influencing the global strategy, but I have the ability to do that now.
At E3 Microsoft and Sony were both pushing their online services heavily...
Moore: Do they [Sony] have a service? Don't they just sell adaptors? [laughs] That's the difference: is it a service, or do you go online via a peripheral that costs you $40? There's no service there - it's an individual experience every time you play, whereas we have a service. You go in, you get your Gamertag, you have the same UI, and then you go from there - it's always the same starting point and you're within a service.
It's very much a clear difference in strategy, then?
Moore: I am not sure, right now, that Sony has a clear strategy - one of the most interesting things for me recently is that we have clearly rocked them back on their heels. The announcement here in the US of now making the Network Adaptor part of every PS2 going forward is to me, admission of the fact Xbox Live has woken them up to the fact we're in a leadership role and they cannot now be anything but 100 percent aware to the fact they need an online strategy.
But I don't believe they have this strategy yet: they don't have enough games - I can't even think what they have. EA is coming; SOCOM was a great game - did very well in the US, but there's no real service there. There strategy is clearly one of an open platform, bring your own backbone - BYOB as I like to write - so if you're Sega, Atari, EA, or Activision, you have to provide your own server infrastructure.
All Sony will do is authenticate the PS2 and from then on in you're on your own - I don't think that's a service. The experience you get with every game is different, dependent on the quality of the infrastructure each publisher has put into place. And what I think will eventually happen with an open platform is that some publishers will start to charge on game by game basis, some won't, and it will become fragmented.
We have a clear strategy, a clear customer service focus, a clear pricing strategy. We've announced the renewal package, $49.99 for the following year which I think is a great price point - a lot less than people thought it would be - and I think we have a portfolio of games.
By the end of the holiday season we'll have 100 Live games. And when you've got Halo 2 online, and Project Gotham 2 online, and Counter-Strike - and one of the great games right now is Castle Wolfenstein - when you add it all up, it's a phenomenal stable of games, and consumers love the fact you have a single gamer tag. It doesn't matter what game you're playing: you're the same guy and people recognise you.
Why didn't we make it dial-up as well as broadband? The experience - and I lived through this on Dreamcast - is too unpredictable, when latency kicks in. It's a long answer to a short question, but I think our strategies are very different. We've been very clear about what we're about and 500,000 gamers across the world would now agree with that.
What about the differences between the US and European markets?
Moore: The European market, as Europe is, is a little fragmented, but in some marketplaces, like the UK, Germany and Nordic countries, we've had phenomenal success. In some places we're challenged a little bit, like France, but our gains in the last couple of months, since the price adjustment, have been phenomenal.
In Germany we're now averaging 45 percent market share and recently actually outsold PS2 in weekly sales. The interesting by product of all this is that it's put huge pressure on Nintendo GameCube. What do they do? How do they stay alive? How do they differentiate?
Do they have an online strategy? No. Do they even have an entertainment strategy? Was not having DVD playback a mistake? They admitted at their E3 conference that it probably was. It's going to be a real challenge for them.
The US market is a single market, dominated by six or seven major retailers, with a similar culture across the board. Europe is more challenging as you're dealing with 10-12 different cultures, 10-12 different ways of marketing a product.
One thing we are going to change very soon is that we're rolling out a global campaign that will be consistent across Europe, the US and Asia, and the campaign will be focused on the social aspects of gaming.
I don't care whether that's Europe, North America or Japan, whether there's three guys side-by-side or when there's 3,000 guys all jacking into Halo 2 for a frag-fest with the aliens - it's the same thing.
You'll start to see us moving away from what we believe Sony propagates, which is the darker side of gaming - guys on their own, in the bedroom playing till all hours - to the more social aspects of gaming.
The hardcore gamer may argue it's still a solitary thing, but our research show there's nothing better than playing with your mate on the couch next to you and kicking his rear end, and playing your mate 10,000 miles away and still kicking his rear end.
That's the key: it's the competitive nature, and it's the ability to bring people together through gaming, rather than making them solitary, socially-challenged individuals who can't string a sentence together 'cos all they do is play Doom or Quake in their bedroom.
People love playing EA's sports titles, and EA isn't working with you on Xbox Live - isn't this going to hurt the service?
Moore: EA's a great partner. It's the number one third-party publisher on Xbox - we have great reliance on each other for our business models, they have a difference of opinion with us as to the way the model should be separated. I think they'll probably do very well with their online games for PS2, and I think we'll do great on Xbox Live.
I don't think a consumer who wants to play Xbox Live, when faced with the prospect of Halo 2, Project Gotham 2, NFL Fever, Counter-Strike, NBA Inside Drive and 85 other games, is going to say that's not enough.
You could argue that one area we need to do better in Europe in is with a football game, and with FIFA Online coming, that's an area we have to look at very hard. But we've got the depth, the breadth, the quality and the experience and I believe the day will come when EA and Microsoft will be able to figure out how to make it work for both of us. We talk to them every day, as you can imagine.
What does Microsoft need to focus on, in terms of software and hardware, for the future therefore?
Moore: We're very happy with the game line-up for this Autumn. We had a tough last six months where you could argue that we needed more triple-A games to get us through the holiday. We took the approach of doing aggressive bundling work, particularly in Europe with the Sega bundle, which had phenomenal dividends for us.
Going forward, I'm extremely happy in Europe; with Japan we need to do a little bit more work, but True Fantasy Live Online is going to be a huge weapon for us there. An MMORPG for a console, which the Japanese market is dying for, and we'll be the first to do it.
Then titles like Sudeki, and games Konami and Namco are working on which we're about to announce - we will continue investing in Japan. I think our content portfolio is as good as we've had, and we have a breadth of titles from Counter-Strike to Spongebob Squarepants and all the bits in the middle.
As we see a broadening of the market, a title I think will be massively successful is Disney Skateboarding, which uses the Tony Hawk's engine. And with third-party publishers and their licences like Potter and Lord of the Rings, there's something for everybody.
I don't think there are any holes in the portfolio; I think we have all the genres covered.
Then we're looking forward to the next generation. As you can imagine we're working on the next generation of Xbox hardware and the only thing we're going to say right now is that we will not allow Sony a time advantage again with the launch of the next platform.
What are your thoughts on the life-cycle of this generation fo hardware and beyond?
Moore: When I look at what we used to call the 128-bit cycle, which we're in now although everyone's forgotten that phrase, there's no doubt that it's going to be at least five years, which has been the average life cycle.
Look at this generation already: PS2 launched in early 2000 in Japan and you're already approaching the fourth year. And I don't see anyone diving out of the business in the next 12-18 months. Here's the important thing: we believe the extension of the platform, not the console but the platform is going to be driven by software and services.
You saw what we do in Music Mixer; those are just little baby steps along the way to being able to expand upon what we believe is continuous innovation. We did it for the PC very well, obviously, but the business model so far has been this closed box which is closed hardware, not expandable, and the way you can expand the usage of a console is through great software.
I will argue that Music Mixer just expanded the Xbox exponentially for the usage of that platform. Does it mean it's more powerful? No. But are you getting things out of it that you didn't when you bought it? Absolutely. Karaoke, digital photo download as well as playing Halo? When people bought Xbox at first, they never dreamt they'd be mixing music, downloading tracks, bringing digital photos to bear, singing karaoke via a microphone, with the vocal stripped out - that is extending the life cycle. By extending the usage it remains relevant to your day-to-day lifestyle.
Therefore, can we expect further extensions like a keyboard or MSN messaging functions?
Moore: If it's core to games, we're constantly looking for ways to innovate.
Is karaoke core to games?
Moore: Yes, because it's core to the social aspect of what you do.
So is MSN, in that respect.
Moore: Yeah; one thing you'll see with the next generation is, the thing we talk a lot about at Microsoft is something called 'Better Together', and the next iteration of what MSN can do, what Windows' launch will be, bringing all of that expertise - MSN is a fabulous service, although I'm a tad biased.
And then you bring what we've learned through Windows and what the next iteration of Windows is gonna look like -which I've already seen a glimpse of - what we're learning through smart phones, what we're learning through MSN... The backbone of Xbox Live billing is the MSN billing structure.
So here's how the greater Microsoft comes to bear, so when the next iteration comes into play - which is Sony versus Microsoft, not PS2 versus Xbox - then it's really who has all the tools in their toolset to be able to compete.
How much more money can you afford to lose?
Moore: I'm obviously not going to put a figure on that, but last time I looked we had a few dollars lying around [laughs]. We're committed. This company never backs off from investments for the future. I've had the privilege of being in a number of meetings with Bill Gates, talking specifically about this and there is a long-term commitment to this program, to making a difference in videogaming and to expanding the definition of what vidogaming is all about.
PC will still be the hub of the home - we haven't changed our view on that. But right now, you'll do things on your PC that you won't do on your console and vice versa. So from our point of view, it's actually better to keep all of your leagues and ladders as a web-based tool. So if you're competing on NFL Fever, do you want to do that on Xbox Live with a controller, or do you want to somehow interact your PC and Xbox together? We believe it's the latter, so things change.
There's no dollar figure that anyone's willing to put on investment in the future of entertainment in the home. There's clearly a long-term strategy to become a profitable business, but there's no timeline placed on it. One thing Microsoft does very well is invest.
And we're a great learning company, which will bring in the right people into the right positions. People who have come from Sega, Konami and Disney all bring a different consumer feel to what has typically been more of a developer driven company.
What did you make of Sony's announcement of PSP?
Moore: I have bigger fish to fry. Did Ken Kutaragi have anything in his hand?
The UMD disc format...
Moore: Maybe that's a better question to ask Nintendo. We're not in that business and there are no plans to be in that business right now. If I believe, which I do, in the social aspects of gaming, at the furthest end of the gaming spectrum against that is handheld gaming, because that's a very solitary, time-killing activity.
It's not something you share - we believe that the future is the social element of gaming, and that's going to be done through a console, not through a handheld gaming device.
But aren't the connectivity possibilities offered by PSP advantageous?
Moore: You can link the GBA up to GameCube. When I was at Sega we did that with Sonic - the consumer went [shrugs shoulders] big deal! Someone's yet to explain to me the value of hooking up your handheld device to your console. If somebody can tell me what the value of that is, I'm al for it.
I believed it, did it with Sonic Advance and Sonic Adventure and the consumer gave it a big fat shrug.
Sony is a very innovative company and will find a way. If it adds to the gaming experience, fine. I just don't quite understand how utilisation of a handheld device, working with a console... I need to know in gaming terms what it does for me. I think it has limited usage, plus you have to by a link cable, and attachment rates for peripherals are single digits.
Onto Rare: Kameo looks great, and Rare has a fantastic reputation as a developer but a terrible reputation for getting stuff out on time. Furthermore, there was a rather muted reaction to Grabbed By The Ghoulies at E3 - were they worth $365 million?
Moore: If I thought by acquiring Rare we'd make all the money back in 12 months, that wouldn't be right. Rare is one of the most innovative developers the industry has ever seen. GoldenEye, Banjo Kazooie, Perfect Dark - it all speaks for itself.
I don't think they've suddenly lost the plot and can no longer make a great game - Kameo is going to be fabulous; it will be very interesting to see how Conker goes to an Xbox consumer; and Grabbed by the Ghoulies is a classic Rare game, which will be unique and probably an acquired taste. As all of those games were originally.
I'll actually be having the privilege of going to see Rare in a couple of weeks and see a little bit more. But from our point of view, we couldn't be happier with the stuff they're working on and I think if you look at the long-term, at the next-generation of hardware, having Rare at your side and the type of content they're able to bring to the platform at this part of the cycle...
We've got Bungie sitting right with us in Redmond - you know what they can do. You need a counter-balance to that. With Ghoulies, I think you look at it and think it's interesting, but when you actually get to play it it's incredibly fun. Everything's interactive - it's hard to see that from the video.
You'll be laughing from the word go, and that's what Rare does. It's all about fun with those guys. I'm very excited to be going up there to pay homage - if they'll let me in. [laughs] They don't like the suits...
That's exactly what I was going to say.
A solitary, time-killing activity? Was he drunk? That's the whole point! To fuck around with some shit until something happens instead of playing with your prick! What does he think gaming is? Communal and meaningful?
Sorry, I forgot Sensei Yok-Soo-Kim was meeting with the Counsil of Elders to play some eight on eight Return to Castle Wolfenstien and ponder the greater importance of the recent seismic activity we have been experiencing.
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