Regardless of Microsoft’s many missteps when it comes to fully satisfying the hardcore gaming population, and despite the near-certainty of Nintendo usurping the current-generation console crown despite Redmond’s one-year head start, in many ways the Xbox 360 is a considerable success. Now, with the 360 business finally on the verge of posting profits, VentureBeat has scored a revealing interview with Entertainment and Devices Group president Robbie Bach, in which the Xbox boss speaks more candidly than you might expect about the console’s successes and failures.
Revelations include:
Releasing the Xbox 360 before the competition was a lovely accident they’d like to repeat with its successor:
Q: Did it turn out to be the right thing to do in terms of console war strategy to go ahead and beat the other guys to market?
A: If you take the question of whether it was the right thing to try to be first, the answer to that is definitely yes. It has given us a leg up in a number of places that are super important. It has given us a leg up with game developers. It has given us a leg up from an economics perspective. It helped us expand Xbox Live quickly. At a strategy level, if you asked if we wanted to be first again, I would say yes. The truth is when we set that date, we didn’t do it to be first. We thought Sony would ship at that point. But they slipped a year.
Though Bach points to profitability as a clear indicator of the 360’s short-term success, he doesn’t necessarily believe there will be a clear-cut winner in the modern console wars:
The video game business has now gotten big enough, so there will be multiple victors. It’s not as much a winner take all market as it was ten years ago. That speaks to the growth of the market, the diversity of what gamers want, and the ability to differentiate ourselves [...] All three of us can be successful. Having 40 percent market share to somebody else’s 30 percent market share is less important than it might have been five years ago.
Certainly seems like he’s backpedaling for his colleagues, but we suppose that doesn’t make it any less true — in the United States at least. But what about Japan?
Bach admits that the 360 isn’t doing well in Japan, but he suggests that (much like the Grand Theft Auto IV coup), breaking down competitors’ exclusives is the key to changing that:
Q: One metric was succeeding in Japan. What’s the situation there?
A: There are things we have to work on in Japan. Mathematically, our share is up a lot in Japan but it’s still small. We are still in single-digit share. Much better than it was. We made progress but there is more work to do. But we have made dramatic progress with Japanese game developers. The numbers of exclusives on PS 2 were plentiful, but you don’t see that anymore. The Japanese publishers discovered that their market was in decline and they had to look overseas for more business. That meant they had to make games for the 360. Good for them. Capcom, Namco, Sega, and Square Enix have done a lot on the 360. Sony owns 19 percent of Square Enix.
Potentially quashing the rumor that Xbox 360 might soon play host to Netflix is Bach’s view that video content is not a feature, but a capability:
Q: How big could this [HD video download] business be?
A: It’s a capability, not a business in itself. It’s a part of Xbox Live. I don’t think of it as a stand-alone business [...] the business is Xbox Live, not a video download service.
Of course, it wouldn’t be a Microsoft interview without a smidgen of spin somewhere. According to Bach, the reason consumers persist in demanding multiple replacement 360 units is because the console is so important to them… rather than, say, because the replacements keep breaking down:
Q: Doesn’t it surprise you that fans are saying I want my third or I want my fourth replacement console?
A: It speaks to the power of the product offering and service we provide. That’s my point. In the ordinary course of something like this, you would expect it to show up in the customer reaction data. We just haven’t seen that. It speaks to the fact that they love their games and Xbox Live. Does it frustrate them? Yes. On the other hand, they know we’re taking care of them.
There’s far more where this came from — be sure to check out VentureBeat for the rest.
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