On Wednesday, John Schappert stood in front of the Game Developers Conference and introduced a new initiative to put community-made games on Xbox Live, and of course helped unveil Gears of War 2. We caught up with John a day later to talk about 360 hardware sales, the Wii and PS3, how the XNA, Xbox Live and Zune relationships will work, and of course what happens now that HD-DVD has died on its arse.
Eurogamer: Let's start with your keynote speech yesterday. No mention of hardware stats - do you have any updated hardware sales figures?
John Schappert: I think that we've sold 18 million, the last time I've checked. 18 million hardware units worldwide.
Eurogamer: Do you have a projection for 2008?
John Schappert: No - we haven't talked about that yet.
Eurogamer: Do you have an Xbox Live subscription projection for 2008?
John Schappert: We don't have that yet either, but here's what I can tell you: we have 10 million Live members, which we hit six months ahead of schedule. We have 4 million added in the last six months.
Eurogamer: Is that all Gold subscriptions or a mixture of Gold and Silver?
John Schappert: We don't break that up, but I can tell you the majority are Gold.
Eurogamer: Are you satisfied with these figures? Particularly the installed base?
John Schappert: I think we're very happy in some regions and I think that we think there's room for improvement in other regions.
Eurogamer: Where would you say? The one that's often mentioned to me is places where PlayStation is strong, such as Southern Europe.
John Schappert: Yes, you hit the nail on the head. We look, and we are hitting the ball out of the park in North America, and I think that there's regions of Europe where we're not doing as well as we'd like to do, and we have room for improvement. Those are renewed areas and key areas of focus for us.
Chris Lewis is now the leader of the Interactive Entertainment Business of Microsoft for Europe - a new position - so we have a very keen interest in doing even better than we have, and doubling down there. We've appointed Chris and he's building up a new organisation just focused on doing even better there.
Eurogamer: The Wii has sold more than 20 million. It did that in one year. Does it worry you that it's got such acceleration compared to how you guys are doing?
John Schappert: I have nothing but respect for Nintendo - they've done great stuff, it's a nice little machine. However, I think it's a very different machine too. When you pick up an Xbox 360, it is to play games with a standard input device. You want to play Halo, you want to play your favourite sports game. I think that - bar none - we've got the best machine to play those games on. We've got higher-rated titles than the competition on that. I think it's a nice complementary machine. I think we've seen more dual-ownership this generation than before. But the machine that people are opting to play cross-platform games and third-party games is the Xbox 360.
Eurogamer: You say the Wii's a very different thing, but you were going after that mainstream demographic too. Is that still your goal? Or are you content now being a core gamer system?
John Schappert: I think we want both. So no, I think that what strategy the team worked on prior to my arrival is they wanted to capture the core gamer. The early adopter, the core gamer - I think they did a phenomenal job of capturing that core gamer. I think the next logical progression is extending out and going broader, and I think that Peter [Moore] certainly kicked it off and did a great job - Viva Pinata: Party Animals and Scene It, which did very well - and I think the other title, which isn't a first party title, is Rock Band in Northern America. It was a huge success for us. It outsold the [PS3 SKU] competition two to one. Guitar Hero - a huge success for us. And Rock Band continues to do well, where they announced at our keynote 3 million downloads of downloadable content.
Eurogamer: Do you know how many of those are on your platform?
John Schappert: I don't. I can say that if you look at the sales, we've outsold the competition two to one, so I would surmise that...you can ask them directly, but we're outselling the competition two to one.
Before the holidays, it was in sold-out status. This title was impossible to get before the holidays in North America. And I can tell you I personally walked into a Best Buy store before Christmas and there was a palette of Rock Bands, and I did a double-take and said, 'Wow', and guess what? They were all PlayStation 3 versions, which made me smile broadly as I walked on, because they didn't have any Xbox 360 versions.
Eurogamer: So, where's Don Mattrick? Peter Moore always used to be around, it's the same position - I guess we kind of expected we'd see him here now.
John Schappert: He's a dapper young man, Don is. He's back at home holding down the fort. I see a lot of Don, so maybe I should hook him up with you so he can talk to you! He's working hard, so Don is engaged in running the business and thought this was a great event for me to come out and meet some of the folks, and talk about community gaming on Xbox Live, talk about the great line-up of titles we have for 2008. It dovetailed quite nicely into what we're doing with our Xbox Live service. I'm sure you'll see more of Don later in the year.
Eurogamer: Is it a different management style he has compared to Peter?
John Schappert: Well I can't talk about Peter as I didn't work for him, although I think he's a wonderful man. I can speak to Don's management style because I've worked with him for quite a while. Don is a direct, straight shooter, no-nonsense guy who wants to do the best he can. He's a wonderful man, and I think that his arrival's been a good thing, because he knows the business, he's got more experience than most people in this industry, and he's a great leader.
I joined, he was a huge part of why I joined. I enjoy working with him. It's pretty darn cool to do things as a hardware platform. I come from the software world, and we can make and I've been privy to making some great games and working in teams that make great games, but what we just announced yesterday with community gaming on Xbox Live is industry-changing. That's something that only a hardware platform can do, and in fact something that only Microsoft can do. It's pretty cool to be in the saddle for six months and already kind of pioneer a watershed moment for the gaming industry where gamers can now become creators and distribute their games.
Eurogamer: The community gaming aspect - are people actually able to charge for their games once they've gone through the peer-review process?
John Schappert: We haven't talked about that yet. Our plan right now is that we have community gaming and a distribution mechanism, so people who want to create games can distribute them to our millions of members - 10 million today, but who knows how many millions by this fall - on Xbox Live. We're going to go beta with that in the spring, so if you're part of the [XNA] Creators Club you can help us work through all of the particulars - make sure it's all robust - for when it goes live this fall. During that beta period, we'll work out what that business model is.
Eurogamer: Getting games through XBLA certification seems like quite a slow process. If you allow people to charge for it, is it a mechanism you can seeing being used by smaller companies to effectively self-publish on Xbox Live?
John Schappert: We're not talking about the business model, but I will say that I think the same question could have been asked when our forefathers created Xbox Live Arcade, thinking, 'Gosh, they might play this and not play Halo'. I think you've seen that that's not the case, and that actually people enjoy the Arcade games because they're different than what the top-pillar games are. I think we're going to see the same thing.
Yes, there are small [development] shops making these Arcade games, but with some of these community games...Look at Dishwasher - made by one guy. He did the art, he did the coding, he did it all. So I think there are going to be different calibres of that. I also think - here's the great thing for the industry - it's a great 'farm league', if you use the baseball analogy. Start out here and make games. What better way to see what merits someone has than to see the game that they make? It could open the door to many, many, many more people to join our industry on a professional basis.
Eurogamer: What are royalties like with Xbox Live Arcade at the moment?
John Schappert: I'm not going to talk about rates because that is proprietary information and I can't discuss that. What I can say is that we are trying to do...what we haven't done in the past on Xbox Live Arcade is to fund development of games. Very few titles have come out from Microsoft. It's been a platform where independent developers have made their game, and we've put them on, and as you've mentioned there are limited slots. There are more titles than we have slots available - it's limited shelf-space, if you will - and marketing these titles and putting them in front of people, we want to make sure every one of these games gets a great shot.
What we are pushing and pursuing is first-party development. We want to fund the development of these titles, which is something new for us. We are thinking that instead of being a distribution channel, which we have been in the past, let's be a publishing channel.
Eurogamer: Changing subject, PS3 is catching up - it's done 10.5 million units or something. Are there any lessons you take from what they have done so far?
John Schappert: Here's a lesson we take, which I don't think we learnt from them, which is never run out of stock in January. I think the takeaway is we did better than expected over the holiday in America, we were in a sold-out situation, and now we don't have stock at the stores, which allowed them [Sony] to sell more units in January than we sold.
By the way, that's the first time since the launch of that platform that that's happened. We've always outsold them two to one at least every month since they launched. Our hindsight - and hindsight's always 20:20 - is we wish we knew how many units we were going to sell, so we didn't have the stock situation we have right now. It should be remedied by March.
Eurogamer: You mentioned the Zune stuff - that you can now do wireless multiplayer games on Zune. That's quite interesting obviously because Microsoft hasn't traditionally gone for handheld gaming in this way. How is that actually going to work? Are people going to be able to buy Xbox Live Arcade games through Zune Marketplace?
John Schappert: What we didn't announce is, we didn't say 'hey, here's the new game store'. That's not the announcement that we heard. What we did say is that XNA is a great cross-platform development environment. Before, you could download for free, develop on the PC, make your game on PC any way that you wanted, and you could then join our Creators Club, download that and now put that game on your Xbox 360. It's great cross-platform; very portable. What we then showed is that now we have a third platform that we're working on the API to roll out in a future Game Studio release. So we can't do that right now, but in future that will be a third platform you can develop games for. I would strongly urge you to call on the Zune people.
Eurogamer: I should love to call up the Zune people, but I don't think you have any in the UK. I don't think it's actually launched there yet...
John Schappert: I think you're right actually.
Eurogamer: How's the IPTV service with BT coming along?
John Schappert: I don't know the particulars of when British Telecom will be launching that. I can say that it is way cool. It is awesome. I wish, as a North American, that I could have access to that. We talk about things in North America that you don't have in Europe - that is something you're going to have that I wish I had! The Guide is cool, the ability to record shows is cool. It's just really great. The software's there, so it's a matter of working to the particulars, but it's really neat.
Eurogamer: This week we've learned that HD-DVD as a standard is going to be no more. I guess you must still have bundles of HD-DVD drives lying around in warehouses - are you going to sell those off for cheap?
John Schappert: I don't know what the plans are on that. It was a low attach rate. It wasn't one of the high-selling accessories if you will. The people who bought it knew what they were buying. What I will say is that I think it circles back - it's about a gaming machine we have that actually is the best gaming machine out there, which plays 7 of the 10 top-rated games, has the highest attach rate in history of 7 games purchased per console.
Eurogamer: You say it's a gaming platform primarily, but you did want to have the HD-DVD drive - it's not like it was forced on you or anything -
John Schappert: We wanted to offer people a choice -
Eurogamer: Sure, so now with that in mind, ignoring the fact it's the competition, would you do a Blu-ray drive and are you going to do one?
John Schappert: I don't think we have any comment on that right now or any plans, but my focus is I'd rather give you community gaming and contribute to more games you can play and focus on the fact that you're walking in, you're buying that box and it plays great games and has the best online service. I think the fact that it does movies and sometimes TV shows in other territories is great but not the primary reason.
Eurogamer: But in the interest of choice, in the pursuit of choice, which is something that you espouse, surely the next obvious thing to do now that this has been decided is to make a Blu-ray drive?
John Schappert: What I'll say is we have nothing to comment there. We have no plans to announce or anything like that right now. But I'd also urge you to look at the attach rate for the HD-DVD drive.
Eurogamer: So you're saying that given that it wasn't as popular as it could have been...
John Schappert: It was a 3 percent attach rate. So again, when you're saying 'the obvious thing', you also have to take into account how did the other accessory do when you look at the future. We have nothing to comment right now on that and my focus is how we make Live better, how we get more great games and how do we empower the community. That's what I wake up and think about, and it keeps me awful busy.
Eurogamer: [The PR gets ready to kick me out.] Last, last thing - have you played Gears of War 2?
John Schappert: I've not.
John Schappert is corporate vice president of Live, Software and Services for Microsoft's Interactive Entertainment Business. He let me play with his Zune and it was actually quite wicked.