E3: Microsoft's John Schappert

Eurogamer: At the roundtable after your conference on Monday you revealed the games-on-demand service, which will include older games. Is there any plan to expand that to include new releases?

John Schappert: Not right now. Right now the plan is to have classic titles. We're talking about 30 titles at launch - I think we mentioned BioShock, Mass Effect, Sonic, Civilization Revolution. Some of these titles are great titles, but retail shelf space is at a premium, and not everything manages to stay at retail for as long as consumers would still like to buy it, and we generally think there's a lot of legs left on the 360 - we think we're only halfway through our cycle - so we want to pick up some of these older, great games you can't buy at retail.

Eurogamer: You can also make purchases with credit cards. Does that mean you're thinking of ditching Microsoft Points in the long term?

John Schappert: No, that's simply to facilitate purchasing of these games, which will be at higher price points obviously than standard Arcade games or microtransaction-based content that you have on Marketplace. You'll be able to use Microsoft Points as well, but rather than have to buy X-number of them, we thought this was an easier step.

Eurogamer: Can't you extend that to smaller purchases as well?

John Schappert: No plans right now.

Project Natal.

Eurogamer: The Natal project obviously radically changes the Xbox platform without you having to launch a new Xbox platform. Are we, do you think, post-hardware now, in a situation where platforms can evolve without necessarily needing to launch new pieces of equipment?

John Schappert: I think the power of Xbox certainly has brought that about. We're looking at the dashboard right now [in the interview room], and it's vastly different to when the Xbox launched years ago. We have avatars now - you still have your gamerscore, you still have friends list, but now we've got a Video Marketplace, in the US we have Netflix, we have Sky, we're adding Last.fm, we're adding Twitter, we're adding Facebook, so the power of a broadband-connected console with upgradeability has allowed us to truly change the functionality of that device.

When we talked about the New Xbox Experience last year, we talked about reinventing the console through the magic of software, and I think we've done that, and what we've shown with our new update that we're bringing out this year is we're continuing to add innovation and continuously improve the console experience - and I think there's a ton of power in that device right there, and we still have untapped potential and I think Project Natal will continue to extend our life for a long future with Xbox 360.

Eurogamer: Are you now targeting something like the 10-year cycle that Sony's been talking about with PS3?

John Schappert: I'm hesitant to date a year cycle. No one can predict the start and the end. What I can say is, we look ahead and we say, gosh, look, when we started life Facebook didn't exist, now we're partnering with Facebook. Last January, we had 10 million Xbox Live members. We have 20 million members today. Three years ago we had our video store in one country. We have it in eight today, and by this fall we'll be in 18.

So I think there's so much more that we can do in this console, and we're still tapping into the power of it, and Natal is going to usher in, certainly, a new wave of gaming experiences but there's also going to be a whole wave of non-gaming experiences that Natal will bring us as well. We saw some interaction with the dashboard there, we saw some glimpses of how you might be able to play a movie with Natal, I think we've got a lot of horsepower left and a lot of runway left with Xbox 360.

Eurogamer: Natal does seem like a response to Nintendo's Wii and how it's changed the market. Do you really think you can beat them this late in the game?

John Schappert: I'd say Natal is more of a response to breaking down barriers and introducing entertainment for everyone. What we realise is as much as we continue to make [Xbox] more accessible - and I think it's far more accessible, and an easier-to-use system than ever before, with more functionality than ever before - there still is going to be that challenge of having people to get over the 10-button controller, and feel uncomfortable to navigate the user interface when you play games.

What Natal is, is a way of breaking down those barriers, making Xbox 360 accessible to everyone, and introducing the world to controller-free gaming. What gets me excited about that is it delivers experiences that we haven't ever seen before and you couldn't ever do before. The demos that we showed you were our early thinking on games and entertainment that you couldn't do with that controller, and you couldn't do with a simple wand-type controller either. It could only be done through full-body gestural-tracking, facial-recognition, voice-recognition control that Natal brings us.

This may not be the competition in a technical sense, but it will be in the marketplace.

Eurogamer: But it's a branding challenge as well as a technical and design challenge in order to move into that space, because Nintendo is very dominant with those kind of consumers, whereas Xbox is perceived as more of a core product.

John Schappert: I think that it's fair to say that we certainly started our life as a core product. What I'm really proud of is the work that we did with the New Xbox Experience that we are recognised as an entertainment device now, it's not just a gaming device. There are people who have bought the console just to enjoy Netflix in the US. I think there will be people who buy it to enjoy Sky in the UK.

[These people] actually haven't played games on the Xbox. I think that when we can introduce those people to games - be it Xbox Live Arcade games, games that are innovative and different maybe like Joy Ride or 1 vs. 100, our interactive game-show - maybe we'll turn them into a gamer. If not, I'm happy with them just enjoying entertainment on the Xbox. I think it's an all-in-one entertainment device.

Eurogamer: Sony, you may have heard, announced its own motion control solution--

John Schappert: --Oh my goodness, no they didn't!

Eurogamer: Presumably this doesn't come as a massive surprise to you. Are you confident that your solution is the right one?

John Schappert: You know what, we're confident that we showed the world the future of interactive entertainment with Project Natal. We think, regardless of whether it's a controller you have to pick up or something you have to hold in your hand, it's another big barrier to being able to get people to enjoy interactive experiences, and what was important to us was controller-free gaming and using your full body.

Our goal is, you want to play great games, great controller-based games that started their life with that controller in mind like Halo, like Gears of War? Don't worry, we're going to continue to make great games like that - we even announced Halo: Reach. But, some other new games that we can't do with that device, Natal is going to usher in and bring us.

Eurogamer: 30 million consoles sold, 20 million Live members - how do you get the last 10 million online?

John Schappert: [Laughs] I think it's through continuous innovation. I think it's through continually delivering more entertainment and choices to our consumers on Xbox 360.

When you look at 20 million active members - these are not random people that have signed up one time eight years ago and never been back, these are people that have played on our system in the last eight months, so these are active users playing on Xbox Live - that number eclipses many - most, I should say - satellite and cable companies and their number of subscribers. We have reached critical mass there.

Now, that said, we have to do all that we can to introduce people to it and I hope with partnerships like Last.fm people are saying, 'you know what, I'd like to have music in my living room or my second room, I'll get an Xbox and do that because I can stream Last.fm'. Maybe music will do it, maybe movies and TV shows and the ability to not actually have to go out to instantly watch a movie with our 1080p streaming technology. Maybe it's Facebook and Twitter that does it. Maybe it's because they've been enjoying racing games on other platforms, on last-generation platforms, and they've been waiting for the definitive racing game to come out and it's Forza Motorsport 3.

I think NXE is a great indicator of success with us evolving the platform and bringing more people in, because our membership went from 10 million to 20 million. Movie watch, movie usage if you will, rental and television, is up 60 per cent since we launched the New Xbox Experience as well, and of course how could I not mention Sky? Our partnership with Sky TV is one of the ones I'm most excited about, because for the first time ever you'll be able to watch live television on the Xbox. Test cricket, Premier League football, right on your Xbox just like it's a set-top box.

Any excuse.

Eurogamer: Do you think you'll strike a similar deal to the Sky TV deal in the US?

John Schappert: You know, we're always looking at good partners.

Eurogamer: My colleague tells me you've been demonstrating Natal with Burnout Paradise, and so proving it's possible to retrofit Natal controls onto an older game. Is there any idea that you might patch older games to use Natal controls?

John Schappert: We haven't talked too much about that. Can that be done? Certainly it can be done.

What we did with [Burnout] is that was an early example that the team used to prove out their technology - the software layer and the magic that makes Natal special and unique to Xbox and to Microsoft, and so they wanted a finished game they could work on, so they actually created a pretty amazing little piece of hardware that kind of went from Natal and mimicked an Xbox controller, and so that's what they've got working right there.

It's certainly not the best implementation of how racing could be done on Natal, but it is amazingly accurate, robust and fun, and so that's something that... it's just a great example of seeing a finished piece of software, because everything else we have is still under development, it's still in the tech demo stage. But it's very enjoyable.

Eurogamer: How complex and expensive to manufacture is the device itself?

John Schappert: We aren't talking about pricing or figures, but I can tell you it's an amazingly complex piece of hardware - it has a depth camera in it, it has an RGB camera in it, it has a multi-array microphone in it, and custom silicon as well, and of course wrapped up with our software library that makes it all come to life.

So what you're seeing there is it's not just one random camera that is stuck there to bring us all this magic - it's all of that working in unison with the software layer that came out of our partnership with Microsoft Research to deliver full-body gestural control and tracking, which is why we say you're not going to be able to experience that anywhere else because no one else has that technology that we have.

So while it's got a lot of hardware and silicon inside of it there, the software layer is also just as magical, but our goal is to have it be as portable and as mass-marketable as we possibly can. So nothing definitive on pricing yet, but that's our goal.

Eurogamer: The reason I ask is that it will be perceived as a more advanced product than Wii MotionPlus, but Nintendo has the advantage that it's able to sell everything at a profit. Do you think you're going to have to sell Natal as a loss-leader?

John Schappert: You know, nothing specific to talk about right now. It's still in development as well, so this is something that's for the future. The hardware and software aren't finalised yet.

But, what we wanted to do is we wanted to unveil it because we want designers, creators to start thinking about what they can create with this new technology, and we wanted to get that in the hands of them. So the dev-kits are shipping right now, I think we're going to start seeing amazing things, and you'll hear more about the launch plans as we get closer to the launch window for Natal.

Eurogamer: And do you think that's going to be--

John Schappert: Which we're not also talking about.

Eurogamer: Holiday next year?

John Schappert: [Laughs]

The Fallout exclusivity deal ultimately only lasted six months or so.

Eurogamer: On the issue of exclusivity, there have been a few times recently where games or DLC have been announced as platform-exclusive and then they've turned up on the other platform after a few months. What do you think exclusive means these days? Does it have the same weight it used to?

John Schappert: [Laughs] Well, obviously there's various forms of exclusivity. There's exclusive for a window, there's exclusive forever. I think what's important is it's about choice, and it's about having the best games and the best entertainment and the best social experiences.

Eurogamer: I was interested by the avatar racing game, Joy Ride, being free to play but with paid DLC. Obviously that's a model that's increasingly popular in the PC space. Is that a model you're looking to explore further on 360?

John Schappert: I think that what's great about Joy Ride is it's an innovative new game and we're going to try a new business model for us, just like we're trying a new business model with 1 vs. 100. We have 20 million members - we have critical mass now, we can see how these things can work, and we've got enough folks that maybe some of these new business models will make sense for us, and bring us a new way of bringing people in.

You talk about capturing the last 10 million members - it's a great way of trying to bring them into the party. Hey, here's a great experience - while you can play it online, it's so much better online and it doesn't even cost you anything, so get your box connected to the internet and get your Xbox Live account signed up. That was a lot of our inspiration behind it and I think we'll get some great learning from it.

Eurogamer: How hard did you have to chase down Metal Gear Solid?

John Schappert: You know, I'd like to give that credit to George Peckham [GM of global third-party publishing] and [Xbox Japan boss Takashi] Sensui-san from our Japanese office - they deserve all of the credit in working with Konami and Kojima-san on that. I'm just honoured I was able to be on stage with Kojima-san and as a gamer couldn't be happier that Metal Gear Solid is coming to our platform.