Sony and Microsoft-an odd couple if there ever was one. On one hand, you have a Japanese electronics giant with dozens of years of experience and a track record of success in the videogame market. On the other, you have a U.S.-based company whose fortune was made off operating systems for the PC and whose number of years in the videogame industry can be counted on a single hand. But if you think the next-generation console wars are going to be one-sided, think again. We spoke with J Allard, corporate vice president of Microsoft, and Kaz Hirai, president of Sony Computer Entertainment America, to get the details on the next generation and how consumers will ultimately be the winners.
OPM: What do you think of the whole idea of granting an interview to a PlayStation magazine?
J ALLARD: I think it's great. Congratulations on the 100th issue. I'm still a reader and have been for a long time, so I'm glad [to do it]. From the broadest point of view, one thing that bums me out about the videogame industry is that we've developed these camps or factions when we're all gamers. Whether you're making games, talking about games, or anything else, the factions we create can be a little unhealthy. We're not as grown-up [in this regard] as music, movies, or television [are], so that holds us back a bit.
OPM: Right, we see the division between Microsoft and Sony, but beyond that, we see divisions in things like online strategies, specifically with regards to Xbox Live, and we have to wonder why Sony isn't following suit to make its own online service better.
JA: We started Xbox as an intrinsic part of the dream. We believed that [console] gaming was going to shift to online much like PCs shifted to online, and we wanted to be the catalyst for it, so we designed the hardware and programs, staffed the team, and baked We believed that [console] gaming was going to shift to online much like PCs shifted to online.
things into the budget. Our blood flowed online before we even had a team or product. That's probably the biggest thing that has helped make Xbox Live so successful, [the fact] that we didn't separate it from the hardware. We didn't separate it from the development tools or first-party development. Instead, we said online is going to be a part of everything we do. If we make a first-party racing game, it's going to be online, and when you see the sales brochure, it's going to talk about online. When you go to a developers' conference, we're going to talk about online.
The second biggest thing is that we're an online company. We don't outsource our Web stuff. We build our own website, and we have a lot of talent on the team and, more broadly, around the company. We have a lot of assets like the Passport security service and microtransactions that we'll be using in Xbox 360. That's a material advantage for us. Sony's advantage is that, in their company culture, hardware is their strongest, most developed muscle, so they do things like the shrunken-down PS2. That's something that comes very naturally to them, and I think online is something that comes very naturally to us.
OPM: The funny thing is, though, that people generally don't like paying extra for things. Sony's model, in which users don't have to pay an extra fee, on paper seems like it would have an advantage over Xbox Live, a service where users do have to pay an extra fee. Why are people so willing to embrace Xbox Live?
JA: It's a quality thing. Back in the day, there was a thing called cable TV. It basically offered better reception with the same channels. It had HBO, ESPN, and MTV, which really helped it catch on and bring it to the mainstream, but before those channels were available, people bought it for the reception. [Consumers wanted] a higher-quality [picture], and that was a big part of the value, so people were willing to pay for it. Who on earth would pay for a better NBC, ABC, or CBS? Turns out millions of people would. Similarly, with Live, we offer a higher-quality experience, and people are willing to pay for it. From the outset, we said every game was going to have [voice chat]. We said you're going to have one identity, and that identity is going to be the same for every game, so anything you attach to that identity- whether it's the reputation you have online, the friends you have online, or your online preferences-we're going to tie all of that up.
We can also put an enormous emphasis-and we can because it's a managed network-around cheating. We didn't want [Xbox Live] to be an environment where people could spoil it for each other. Whether it's hackers or gamers driving around the track backward, we're going to put some walls up to make it safe [for gamers who play fair]. Something you see in PC gaming is a lot of cheating, and it takes a very small number of spoilsports to ruin it for everyone else. So we tried to learn from that and apply it vigorously to [Xbox Live].
We've made good on our promises, and people are happy. We also have a strong commitment from our first-party team-Halo 2 being the biggest showcase, for sure-but a lot of people found an enormous amount of replay value and enjoyment from [our first-party] games, whether it's Project Gotham Racing 2, Halo 2, Forza Motorsport, or any of the XSN Sports games.
I got online the other night to play PGR2 with a guy who just flat-out demolished me. I haven't taken that disc out of the drive since the day we shipped it. I probably have around 800 hours on this thing. A situation like that-well, gee, if a kid spends 40 or 50 bucks on a title and then 50 bucks on a subscription, he or she's in for 100 bucks, but they've also played it for over a year. That's enormous value. Typically, a gamer like that would go out and buy five racing games to get a fix.
OPM: So, obviously, someone who walks into the store or someone who's familiar with Xbox Live realizes it's a pretty good value, but what's the attraction for developers? Companies like Electronic Arts took some time before jumping onto Xbox Live, because EA wants to control the online experience.
JA: You have to separate the developers to begin with. Smaller developers just can't think about managing servers, credit cards, and worldwide tax issues. There are a number of things you need to deal with to build an online service where you're connecting client software to servers around the world-it's very complex. Even the [midsized] developers that could do it think Xbox Live is a godsend. Very big companies are a little more thoughtful in their decision process. It generally takes them longer to commit to new ideas. EA also has a big team of server people, and the majority of their software is multiplatform. So when they're making a game like Madden or FIFA with online capabilities, and one company can solve most of their problems-let's just say 90 percent-but we only solved it on one platform, they had to think very hard [about] how they could deliver the very best experience for [both] a PlayStation customer and an Xbox customer.
OPM: When Microsoft launched Xbox Live, it was pushed hard as an online gaming service, but we've seen a few innovations since then that have garnered it even more attention. Are you surprised at all at how much a part of gaming culture Xbox Live has become?
JA: Not at all; that's why we believed in it. It used to be that you went to a store, you bought a console and a videogame cartridge, and then your experience was It's not just about manufacturers or game creators, it's about players, too.
limited to whomever you could fit on your couch in that room. If you got a high score, it might've been remembered on the game cartridge, but most likely you wrote it down on a pad of paper because you passed the cartridge around to your friends. Now we're inviting you into the world. It's not just about the manufacturers or the game creators. It's about the players, too. If your aspiration is to be the No. 1 racer in the world, you get to see where you rank and work on that. If your aspiration is to go meet new people that share common interests, you can do that.
So, we want to invite the community and say, "Look, when you go to the store and buy an Xbox, an Xbox game, and an Xbox Live subscription, it's not just about what we can give you, but it's what you can give back to the community."
OPM: Is there any concern that there's too much being integrated into the next generation of Xbox Live, since simplicity seems to be a big factor in its success?
JA: It's hard to say since we haven't shipped yet. I've been playing with it for three months, as have most of the people on the team who are trying to work the kinks out. I've earned 450 points online-the total score I've earned online across all games. I've earned a bunch of these points and achievements. It's going to be an emotional moment when we erase all of that when the service goes live and everyone starts from zero. I'm going to lose all that progress, so I have to jump back into the games and earn all of that back. On one hand, you can worry about us doing too much. On the other hand, I've played it for three months as a gamer and it's awesome. It remembers everything that I've done. It's basically my save-game history. It's preserved forever, [even if you just rent a game].
I still have PS1 memory units with my GT scores and cars in the garage [on them]. I never bring them back out, but with Live, we're going to remember all of that-if you conquered that racing game, it's going to remember that forever. Is there a concern we've done too much? Maybe. We've done an awful lot. The good news about doing too much is that in a community setting like this, it's the community that will decide what is important. Maybe I'm the only human being excited about keeping my score and the badge concept, and we'll find that out and change our focus [appropriately]. We have too many paid subscribers, and the paid part is important. They're paying us money, and the feedback they give us is very good. I talk to our customers every day. I just put on a headset and go play games, and they tell me what they like and what they don't like. It's [not like] the surveys these people do online where people could lie. I'm talking to guys that really pay for Live and say things like, "I really wish..." or "How do we get that guy off the system?" So I've been collecting feedback just from playing the last few years.
Flipping it back to PlayStation, I hope there are a lot of people at Sony that have Xboxes and Live accounts and are listening to what gamers want. It's much better than doing Web surveys. If they don't have Live accounts and they need one or some games, just have them call me and I'll send them over, because it's a great way to find out what the customer and the community wants.
[Online Religion: While its single-player experience may leave something to be desired, Halo 2's multiplayer mode is nearly flawless since all of its features work almost seamlessly within the Xbox Live environment. Will Sony have an answer for this kind of experience on PlayStation 3?]
OPM: It's clear Microsoft doesn't just think of Xbox Live as simply a business, but rather as a part of gaming. That seems to show not only how Microsoft markets Xbox Live, but also how yourself and other members of the Xbox team present it. Sony doesn't necessarily present online the same way.
JA: You think that's going to change with the PS3? It feels like they're forced to talk about it more reactively. Phil Harrison seems to have stated on a few occasions in interviews that Sony is going to be more committed to it next round. You feel like they're coming around to it?
OPM: Seems that way, but sometimes it doesn't seem like Sony knows how to approach it, because, as you say, it's not an online company.
JA: I'll give them a road map. [Laughs] One piece of feedback we've gotten from large and small publishers alike is, "Boy, we'd love to have Xbox Live on PlayStation." My response has always been, "[SCE President Ken Kutaragi] has my number and I'd be happy to talk [with him] about it." It's damaging for the industry to have three different companies pursue three different theories of online [gaming]. If one company thought voice wasn't important, or another company thought that voice was paramount, while a third company thought it was all about text-that's tough for gamers. I have to decide: Am I a voice guy? Then I'll go over here, but then I can't get GTA. Am I a keyboard guy? If I am then I'll go over here, but I can't get Halo. If I'm an apathetic guy who doesn't really care about online, I'll go with that one. It's tough, and for a developer trying to make a racing game on all three platforms-it's, "OK, guess I have to make a game where you can type and talk, and I have to set up servers."
OPM: Speaking of online console gaming, the 360 has been referred to as the Dreamcast 2. What are your thoughts on that? Also, will Microsoft be able to adjust quickly to complaints about its online service?
JA: That's the great thing about online: You can be much more agile and responsive to gamers. If you're a designer for Nokia, how do you listen to your customer? They all have phones, but it isn't like you can just listen in on their conversations. We go online and play with our customers. We go one-on-one with our audience and find out what they want to see more of, and we have to keep listening. We can't be complacent, and you need to have the right mentality to say it's never going to be good enough.
On the Dreamcast point, there are a couple of ways to skin that cat. I remember 9/9/99. I waited in line, probably dropped $999-there were a lot of nines going around that day [Laughs]-and I had the best first-day console experience of my life. It had the best graphics I'd seen. It let me go online. It had the best launch lineup. The sports games took it to the next level, and I loved it. So, if you want to put us in the category of Dreamcast and say we're going to have the best first-day launch of any console in the history of mankind, I'll take that.
The second part about Dreamcast is that it didn't have content. It was a day one launch, and after that, they didn't have a steady flow of content and didn't have companies like Electronic Arts and Square Enix committed. Anyone who thinks that's a problem with the 360 just needs to go to the website and look at the release list or talk to anyone in the industry. The entire industry is behind this platform, and we've got tremendous first-party [support]. People are saying, "Gears of War and Halo aren't shipping on day one." Well, exactly, because we have an amazing firstday lineup, so Gears of War and the yet-to-be-named Bungie title coming out on the 360 [can] come out later. We're going to have a steady flow of amazing content, and we've got the world behind our back. Dreamcast didn't have that.
Third thing is: Why did Sega exit? They couldn't afford to stay in. Times got tough, and Sega didn't have the financial fortitude to hang in there and scrape their way back. They could've weathered the storm if they could've afforded to. We have a little more money in the bank than Sega did. We can afford a bum quarter or dry spell. We can work through it, so that comparison is tough. I think people are oversimplifying it a little bit. There's nobody who knows it better than my partner in crime, Peter Moore [former president of Sega of America], who lived through it. He's not going to make the same mistakes again, and he's ready to have the most successful launch he's ever done. I'm not worried about the Dreamcast, but I think we're going to have the same impact that the Dreamcast did on day one.
to be continued....