I suppose it's more difficult for Microsoft Game Studios because Xbox's success is tied to what you're doing.

Yeah.

Do you feel like you need to set a very illustrative example of what is going to work on Natal for other developers?

[Laughs.] It sounds like you work at MGS. You hear our internal messaging. That is what I think our role is in this ecosystem, right? We're, obviously, focused on fewer platforms than our third-party partners. We don't ship the number of games as some of the other publishers ship. But when we ship a game, we want it to really matter. Our games matter. There's a reason our games are in the portfolio and that our customers should look at them and think about how they continue to move this state of the art forward. We take that responsibility seriously -- kind of sounds corny, but it's true.

And Natal is no different, right? We want to think about the breadth of experiences. You can go back to the launch of Live and the games that we had: obviously, Halo 2 and Project Gotham Racing and MechAssault and a bunch of different -- Counterstrike -- a bunch of different things that we were working on. And we've continued to evolve Live with XBLA and 1 vs 100, [Primetime] coming, and we'll do the same thing with Natal. It is our role within the organization.

So, this is going to be almost equivalent to the launch of Live?

Yeah, absolutely. Yeah. And mainly as the content creators, we think about it from the opportunity perspective. You know, before Live, games were solitary experiences. I mean, maybe, somebody came to your house and you played next to them. But, now when you play a first-person shooter, you play a racing game, now, maybe, when you play a trivia game because of 1 versus 100, you think about playing with a community. And it's really changed the way people perceive gaming the way it's supposed to be. And Natal being the same way, we're working on a breadth of experiences. And when we say Natal, you remember there's full-body mapping, there's facial recognition, voice recognition. There are a lot of technologies at play that allow us to craft a multitude of experiences.

When you think of the features of Natal, you've got the camera, you've got the voice recognition, but then you also have an outside element of Live. Have you been giving much thought to how best to incorporate Live into Natal?

Yeah, I mean Live's become core to almost everything that we do mainly because customers enjoy the opportunity to socialize ... portray themselves through this system with things like Avatars. And we think it's a natural map to what people will do with Natal.

It doesn't mean every Natal experience will necessary be a Live experience. But, at this point and where gaming is, I think you almost have to convince yourself why wouldn't an experience be Live? Because, it almost ... the way it's introduced now where consumers can opt in to go play online, it makes most experiences that people have on the console better. It's an area that we think where we have strength coming out of Summer of Arcade where we had 'Splosion Man and Trials HD and Shadow Complex that did really well. So, I think, not only in Live as a way people play together, but also as a way for us delivering content will be part of Natal.

You announced all the new publishers that are joining in with Project Natal ... but how many actual games have you seen?

I have seen none of the third-party games and nor will I until they launch. You know, my role as head of Worldwide Studios, we keep a line between what third party is doing and what first party is doing for obvious reasons. But they will see the stuff that we're working on. We go on road shows and we demo our first-party work to the third parties. We've done that since the launch of Xbox 360. I think it's another important role for us to play.

How many projects is Microsoft working on that qualify as full Natal games?

To talk about a number right now, not only to just dodge the question, but it's also difficult because you start with concepts on things that might work. And you can think up hundreds of those. The typical process is you continue to whittle down concepts and the prototypes -- actually try to make things work -- to really come up with the core experiences that we think define what the technology is about.

But I want to say it's not really about the number of games. I'm comfortable with the number of games that we're working on and the support the third party is showing. It's really going to be about those hallmark experiences that surprise people -- delight people because it's not something that they saw coming.

One of the things that Hideo Kojima mentioned that he likes about Natal is that it doesn't abandon traditional controllers. You're not leaving the core group behind.

I liked it when he said that as well.


If I'm a core player looking to buy a game, how are you going to convey to the player that this game will also support Natal?

Well, you can look at when we launched Live. I think we had a way of both messaging on the box through different kinds of functionality terms that we put in place to not confuse the customer, and I'm sure you'll see something similar when Natal launches: a clear way for us to communicate to the customer what this game is and what they should expect out of it. I thought Kojima-san's message was very true, at least for how we follow, that this is not about a specific kind of game. This is about entertainment for everybody. And Kojima-san talked about the fans that he has and not wanting to abandon those people. I would say something very similar for us in our franchises.

If you go back to the Live comparison -- as you said before it seems almost strange not have that Live element -- do you feel that even hardcore games will eventually reach the point where it would be strange not to have a Natal element?

What we're seeing as we investigate the technology is this is not something that will be a niche part of our business. That the ability to interact may be in addition to a controller in certain cases, or instead of a controller in other cases, I think will become common an expectation that everybody has about gaming. At least that's why we're doing this. And after three months -- three months after introducing the technology -- you have a lineup of third-party real estate. The strongest lineup you can imagine of third-party publishers talking about their support. So, obviously, they are seeing this as well.

Are there any in-development games that you've got for next year that you have looked at again and said, "Maybe we should put Natal here, we didn't think of it before?" Anything that you're going back to and reconsidering?

What we did, when we got to a point where we felt comfortable with both the hardware and software technology, is we distributed development kits to all our internal studios and we weren't prescriptive about what people had to go think about. Let's just take our best creative minds and let them think and let them come up with plans. It's sometimes hard to delineate what was a previous idea versus an idea that ends up pre-Natal, post-Natal.

I can say there have been experiences that we were working on where the introduction of Natal added something and completed the experience. Peter Molyneux has talked to this a little bit about Milo; where Milo is something that's been incubating for quite a while. But when Natal came in you clearly saw this match. It made something that we thought probably wasn't possible -- even though we had tried -- very possible. And you saw some of the demo work on that at E3.

I believe you mentioned in a previous interview that Milo was actually the result of -- it used to be Dimitri.

Well, inside of Lionhead, Peter and the team are always coming up with new ideas under different code names. There are definitely parts of Milo that come directly from Dimitri, absolutely. Dimitri was something that we worked on to build a game -- somebody reliving their childhood experiences -- and to build AI technology and some animation technology that would allow that to work. And then you bring in something that actually allows you to interact with your TV set, with characters on the TV set with no barriers. You can just talk. Milo sees you.

These are things that obviously never came into the Dmitri vocabulary because it just wasn't possible. But all of a sudden, you add this ingredient and you come up with something that's really revolutionary.

Do you think any of those elements will find their way into, say, Fable 3?

Lionhead's been a real innovation studio for us. We have the release of "Fable Episodic" this week, where they're taking Fable 2 and breaking it up into chunks and allowing people to buy the content at their pace. Fable 2, I thought, was a great release with the orbs that they added through Live, adding new functionality to the franchise. It wouldn't surprise me in the least if Natal found its way into future iterations of Fable.


Because I was thinking about going back, once again, to the Live comparison. You had a bunch of games that really pushed that functionality out, almost like launch titles. I would imagine that you're having the same idea for Natal, especially for games that are more aimed at hardcore players.

I think it's both. It's for everybody. I think the opportunity for us as an industry for both first and first party, is how do we make the overall audience bigger? How do we make it larger? Today, the controllers are barriers to some people. We know that.

People who didn't grow up gaming, they look at this thing with all these buttons, and sticks, and controls, triggers and it's not a natural device for them. We know that when we create, we remove that barrier, open up the audience space that, yeah, you see some existing franchises come along. But it's also a really important time for us to create new IP. Natural inflection points in technology are -- create those opportunities. Halo was created then; Pokemon was created. You can look at, historically, this is when franchises get creative. We want to do that as well.

Do you think that some of the older franchises that are quite popular now among core gamers will fall behind in any way? Is there a danger of that happening?

Not ours. [Laughs.] If I look at Live again, we've used that as an example. Maybe I'll use Fable. I hadn't really thought about this. But, I loved Fable 1. I was definitely involved in the development of that for quite a while, and we thought about Fable 2 in a more traditional action RPG. What would you do with Live? Well, you could download content. You could play co-op. These are things that other games have done. But the orb idea came up of, how about if we show everybody else that's playing the game, almost a pseudo-MMO.

It's not an MMO, I realize that. But, allowing you to see the global community that's playing the game at any one time. It would've been easy for Fable to fall behind; kind of remain last generation's action RPG. What you saw in Fable 2 is that they're keeping up. Again, first party. We're not going to turn, we're not going to crank the next version of the game just because. We're going to make sure the next version of the game really matters when it comes out.

Which brings me to Halo. You've got the Halo anime that's coming out, Halo Legends. You have Halo Wars, you have Halo ODST, which just came out a few days ago.

Yeah, doing very well.

How well is it doing? [Editors' note: A more recent answer is, "Pretty well."]

You know, the numbers I get right now probably aren't worth quoting, and I'm not saying that again to dodge the question -- I mean, they're very spotty. I feel really good about the review scores that have come in. There are a couple of bottom liers, but overall I think people are showing Firefight is a great new online mode. People enjoy playing that.

Our goal in ODST was to tell the story at a different pace than this huge monolithic Halo 1, 2 and 3 were and to break it up into shorter minuets that people could digest in smaller segments. I think that's worked pretty well. I saw the excitement around the pre-orders and some of the midnight launches, and it's just great to see consumer reaction.

It felt almost experimental to me.

It was.

I think, despite what you feel about Halo, it's the first game in the series for a while that's felt like that: "We are trying something different."

I think that's smart. Look at Waypoint. Waypoint isn't something that -- I don't know if you've seen Waypoint.

Yes.

Okay. We're trying to take an experience that's more a cross-game and bring that to the Live customers right in the Dash. You mentioned Legends which is -- Halo is so big as an IP and there's so many stories that can be told, and to take a very different creative community ... it both introduces Halo to new customers; anime customers who maybe haven't played the game. But also shows our existing customers a new take on the Halo story; different parts of the storyline. Again, it's really interesting.

What precautions are you taking to prevent Halo from becoming Tomb Raider circa the 1990s? Too many games and people are growing tired of it.

Well, one thing is quality. You have to make sure that when you're going to do something, with any of our first-party franchises or new IP -- our quality rating over the last three or four years is as high as any publisher in the industry. I've always been very proud of that because I know, well, reviews aren't always what the customer voice is. It is a metric and it's nice to see and, specifically with something like Halo, you have to make sure that when you're shipping something, when you're coming up with a new idea, there's a reason it exists. You understand the first-party goals that we have especially with Halo, which does things like define Live for many of us and matchmaking, how that worked.

And that's how we'll continue to work with the franchise going forward. We have 343 Industries now internally, which is really focused on the complete Halo experience. We still continue to work with Bungie to create great games. Halo's in a very good spot right now.

Okay, and you've got Reach coming out next year. Any idea when the Halo Reach beta will show up?

No, not yet. The game is actually coming along really well. I would say as well as any game that Bungie's worked on. And our kind of internal playing that we're doing right now is showing that this could be a really special release for us, together, something where the quality might set a new bar.


Did the split between Bungie and Microsoft earlier have any effect on that game?

If it did, we're seeing a pretty positive game, so ...

Maybe you should break up with all the other guys, too.

[Laughs.] No, no. Bungie remains very committed to building great games. Halo is near and dear to that studio's heart, as it is for us as a publisher. The relationship between us and Bungie remains strong. And I think ODST and Reach are just the next examples of us doing great things together.

What about the Peter Jackson project? Why did the bottom fall out there?

For us, when we step back and we start looking at the Halo franchise, we want to make sure that we're ... You brought up the term earlier, we're not kind of over-saturating the market with Halo content. We're not just doing things because there's, say, some kind of revenue opportunity there. But we want to do things that time, that really sync with the overall franchise plan and help tell parts of the story that are important to our customers. And, I think, Peter's a great director, a great story teller and seems to be doing great things. And we continue to stay focus on making Halo what it is.

Do you think there's a possibility of the movie coming back into play?

The Halo movie, you know, it could. I think about Halo as something that's very important to us and something that we wouldn't want to jeopardize the quality of the IP by getting into a space where we didn't have shared goals with the partner and that the timing worked. There's so many variables when you take two different creative industries and try to come up with the right property, the right shipping product at the right time, and make sure both people have enough time to focus on the quality. It's just a delicate balance. And I don't want to get into a situation where we're not completely comfortable with what we're going to ship.

Over the last few years there's been a shift for MGS. Microsoft used to own a lot of studios.

Uh-huh.

Project Gotham, Halo, all that stuff. You've sort of gradually moved them out and become a conduit between the third-party developers and Microsoft. How would you describe Microsoft Game Studios' role aside from just developing games?

Well, to be honest with you, the number of developers we have in the studios now is as high as really it's ever been. And, we just went through an acquisition of Big Park in the spring, the developer behind Joy Ride. For me, as the head of the studios, I want to make sure we have the right talent applied in the right places. And, regretfully, sometimes that means you're going to shuffle the playing field a little bit.

But it's not about divesting from first-party internal development in any way: Kudo Tsunoda running the Natal Team; the Spawn Point team is really doing a lot of the Natal work. We continue to have strength at Lionhead and at Rare and 343, as we've talked about, a studio that we've kicked off and with the acquisition of Big Park. I think what you see inside the studios is a real breadth in dexterity of creative ability that we probably haven't had in the past. And that scenario we're going to continue to invest. We realize internal development is really important to our future.

Speaking of Rare, what are they up to these days?

Well, obviously, Rare was instrumental to shipping Avatars in a NXE. They really did a lot of the background work and the work that people are using inside the Dash, which I thought was great. And Rare has shipped great games in their history, but actually [having] built part of the operating system on their own and [to] ship it inside the Dash, I thought was a great accomplishment.

You know, now they have 20, 30 million people and are building Avatars using their tech. I thought that was great. I think George Andreas, who is one of the creative directors there, was in the press not too long [ago] talking about looking at Natal and what some of the ideas are. I think we're coming into a world now that really maps to what Rare's strength is. And we're going to see some really great things from that studio in the next year or so.

Some good stuff for Natal?

Yeah, absolutely.

If you look at the Natal launch, and it's been said to be on par with a console launch, do you think it's safe to draw conclusions about the Xbox 360's overall lifespan?

We started Xbox 360 with an investment in technology that we thought could grow with us. We realized Microsoft is a platform company. We're a software company. We can build hardware, but at the core we build operating systems and experiences, and we wanted to make sure that 360 was a hardware platform that was capable for us, that we could evolve on top with the cores inside -- this GPU and CPU and memory technology that we had. And that's been proven to be true.

NXE last fall: we rewrote the complete operating system of the machine and really added, I think, some great new functionality for our customers. Natal is something that we'll ship and when it ships it will work with every 360 in the market. I think that's a great statement on the technology that's inside the 360. Customers have invested in that and letting them get the most out of their investment is going to be important. And I think the future for us on top of 360 remains strong and will for years to come.

Yeah, but should there be another platform in the future, do you think it will be easy to just shift all the stuff that you've done for Natal over to that system, much like you shifted Live from Xbox 1 to Xbox 360?

Yeah. Well, that is the different world we're in today, which I think is an advantage for us gamers; that as different technologies come online, you can actually find a way of moving -- there's not necessarily a fork in the road where I have to re-sign up to a Live service and get a new Gamertag and friends network. As the platforms evolve, our systems evolve along with you. As we continue to move forward as a platform gaming company, that'll be something that will continue to be important to us. I think that is the promise of Live. The promise of Live is this constant platform for customers regardless of where they come from.

And one of the big sequels that you're working on for 2010 is Crackdown 2.

Nice, good question. Here we go.

Uh-oh.

No, I love Crackdown! It's my favorite game this generation.

"How awesome is Crackdown 2?"

[Laughs.] Honestly?

There's been like a little bit of a kerfuffle about the switch in developers.

Ah ...

With that in mind, how are you ensuring that the next game changes things up without departing too much from what people liked about the first game?

Well, Crackdown 1 is a game I played quite a bit of. And the reason it took us a little while to get going on the sequel is really to make sure that we had the right team and the right goals. You know, the number of people that have played Crackdown 1; the success it had in the market -- I'm not sure everybody expected that. And I want to make sure that franchises continue to grow.

And when I saw "grow" I don't just mean in terms of sales, I mean in terms of innovation and creativity. And, for those of us that played Crackdown 1, there were a ton of opportunities, let's say, for us to make the game better. But, we also wanted to make sure we stay focused on the things that we can actually achieve and it doesn't become five or six half-baked ideas, but it really excels at a few things. The team at Ruffian that's working on the game, Billy, the lead creative design behind Crackdown 1, is in place for Crackdown 2. Really happy with the team and the progress we're making right now. It's great to see.


Did Microsoft approach those guys or was it the other way around?

The other way around.

And you weren't actively looking for a developer for Crackdown 2?

It was an IP that we owned and it's something that when the right opportunity came around, we would follow. But, again, I don't want to just go out and try to find somebody that's capable of building something called Crackdown 2. I wanted to make sure we found a team that in their heart, knew what the soul of that game was about and what the next version should look like.

Realtime Worlds could have done that, absolutely. I have a ton of respect for Dave Jones and his team and APB looks like it's coming along very well. I'm real excited to go play that game. And Billy and the team at Ruffian, I think, are set up to succeed with Crackdown 2, as well. It's really a hotbed up there in Dundee, Scotland right now. [Laughs.]

[Editors' note: At this point, we're asked to finish up the dialogue.]

One more question. Alright. We'll make it a good one.

Okay.

If you were a vegetable ...

[Laughs.] Eggplant. I like the color! It's good.

Alan Wake. That's been in development for ages. How are you going to reconcile the huge wait with the end product? People will be wondering if it was worth the 4–5 years.

I think we're the one that paid for the four or five years. We're the ones that see if it's worth waiting for. I'm kidding.

Remedy has a long track record of really building great games and their telling stories in really innovative ways. For us, with Alan Wake, similar to what I said with Crackdown, you want to make sure that the right game is going to come out. We knew we had enough a buzz early on with Alan Wake that we could have probably shipped something early and had a decent amount of success with the game. But we're not going to ship 20 games a year in MGS.

If I'm going to ship six or seven full retail games -- eight -- whatever the number is, each one's really got to matter. And for a game like Alan Wake and the kind of storytelling that we're trying to do in that game, you wanted to make sure that the developer had time and that we followed the creative process to actually end up at the right result. I think we're on that path now. Game's looking great.

Thank you.

Thank you!