Online Gaming Bigger then 3D?

Online Gaming:
Bigger than 3D?

J Allard
General Manager Xbox
Microsoft Corporation
The Triumph of TV

When TV was invented, do you know what some people said? They said it was simply
“a movie theatre in a box.”
Some feared that TV would actually put
an end to the film industry and movie theatres.

But others – including leading creative and business people – saw something
more in television. They saw a broad
landscape of opportunities.

These creatives were the ones who invented a whole spectrum of new forms of
entertainment for TV. They
invented the variety show and game show and talk show … sitcoms and soap
operas … the cop series and the
lawyer series, the crime of the week and
the disease of the week … educational TV, music TV, and reality TV …

sports channels and cooking channels, sci-fi channels and shopping channels.

Those things weren’t being done in film. But TV became a mass medium
because of them – and not because
it was simply “a movie
theatre in a box.”

The explosion of innovative, creative programming that was unique to television
is what drove the
development – and the triumph – of TV. The content
fueled the revolution.

Of course, the creatives didn’t do it alone-the inventors, the broadcasters,
the electronics companies and even
governments also played a role-a vital
role in making TV succeed.

Like many forceful new technologies in history, from shoes to railroads, the
TV industry started in a state of
competitive chaos. So before it would work
for everybody, all the players who wanted in on the action had
to come to some
basic agreements.

They had to stop fighting about electronic vs. mechanical dissection and transmission
strategies… the
frequency spectrum needed to be divided in a well-defined
way… The industry had to come to an agreement
over such simple things
as UHF and VHF numbering of channels and even set some basic rules like the
30
minute block and the :20 spot.

They had to agree on a set of standards and conventions that worked for everyone
– and especially for
consumers. Because TV had to be easy and consistent for
viewers before it could be big and profitable
for producers and broadcasters.

The pioneers of TV succeeded by creating a peaceable ecosystem of competitive
unity. Where multiple
broadcasters could thrive – and content creators could
focus on creation. So when creatives and producers
wanted to do a new show,
they didn’t have to buy a studio lot or build a soundstage, invent cameras
or sell
television sets, start a network or launch a satellite, sell commercial
time or pop the popcorn. All they had to
do was invent their shows, tell their
stories, and develop the hits.

And when consumers wanted to enjoy the programming, all they had to do was
buy a TV and plug it in
and turn the dial. They got a world of content on one
box from one service in an intuitive fashion.

That’s the power of competitive unity, and what made the magic
of TV. That’s what made TV the most
massive entertainment medium
in history.

The Internet Is Magic

The Internet got its magic in much the same way as TV. Standards and conventions,
in the form of HTML,
pages and links, allowed people to access content from
a single network. Browsers provided a simple, consistent
navigation experience.

Content creators benefited from the same standards and conventions – and a
simple, inexpensive set of tools
for bringing their ideas to life. This allowed
them to focus on creating content, instead of reconciling network
protocols,
managing packets and constructing rendering engines.

And so, like TV, the Internet exploded with content. But even more than with
TV, countless communities
of interest proliferated on the Internet as
masses of users congregated around the content of their choice,
and maybe more
importantly users created even more content.

As for business on the Internet, many who used the Internet to invent imaginary
business paradigms online
were wrong – and now they’re bankrupt. Those
who have thrived online adapted it to existing, working
businesses – making
the Internet one more venue for doing business. From Cisco to Victoria’s
Secret,
smart businesses have used the Internet as a new way of touching, serving
and selling to their customers and partners.

During the gold rush, there were some exceptions to this rule – super portals
like Yahoo and AOL, and
a few unique businesses like eBay and Amazon.com. But
ask yourself: Why have they become the top
online brands? Because they embody
the cardinal values of the Internet. By aggregating tons of content, they
bring
together millions of users and give them the content they’re looking for.
They promote commerce through
content and the communities that form around
content.

Like TV, the Internet is a peaceable ecosystem. It presents a simple, unified
experience for consumers.
It allows creators to create. It allows businesses
to compete on an equal footing. And it’s become a massive
medium, on a
footing with TV, but in a matter of a few short years rather than several decades.

Is Online the Next Video Game Revolution?

You can probably can see where I’m going with this. So I want to interrupt
the narrative – or change the
timeline for a second – and take inventory.

When Xbox was still on the drawing board three years ago, we asked ourselves
where the next revolution
in video games would come from – what would wow and
grow the gaming audience and build the industry
the way 3D did in the 90s, but
even more. While there were over 100MM households in the gaming market,

there were a whole lot more that weren’t. We asked ourselves, “what
is this industry’s next tipping point?”

We talked about the social dimension that’s always been part of gaming
on the couch or in the
arcade – the head-to-head play, the talking trash and
the laughter when you play with friends.

Could online be the next revolution? We looked around and we saw some interesting
signs, in our own
backyard and beyond.

Our Zone.com service was bringing more than 30 million gamers together in one
place to play games-from
Asheron’s Call to Quake to Chess and Checkers.
It was a pretty diverse demographic, with over 50% of the
audience represented
were female.

The business side of Zone.com was also fascinating. With sponsors like Toyota,
Radio Shack and First USA
all lining up to reach the online game-playing audience
– not companies one usually associates with gaming. Here
were some major companies
helping promote our medium.

We saw the success of titles like Everquest, with its sustained growth and
revenue, in online PC gaming. And
the way games like Half-Life forged closer
relationships between developers and their customers through online
play and
episodic content. The result? Half-Life maintained great volume and pricing
over a 2+ year history and
has grown a tremendously loyal following.

Looking abroad, we saw phenomena like the PC Baangs so popular in Korea. With
nearly 1 million connected
PCs in Korea’s 40,000 online game rooms, it
seemed to us that the social aspect of gaming could be key…

Xbox Live: Listening to video game players

But analyzing PC gaming dynamics wasn’t good enough for us. Closer to
home, we listened to thousands
of video game players about what they
wanted next. As always, they want new game experiences. And they
want to come
together and play with their friends anywhere, anytime. They want it because
they’re Internet
savvy and they’re very connected to their friends.

Video game players made online video game believers out of us – they convinced
us that online will be
that next revolution. The tipping point that will change
the video game industry’s place in the entertainment world.
And catapult
gaming beyond the scale of comic books – way beyond – to the scale of TV.

Video game players told us to bet on the future. So we did. We made some serious
bets, starting with the
Xbox hardware, where we built in Ethernet and a hard
disk, and added an extra slot to the controller for voice.

Gamers told us that the online experience needed to compete with the cable
experience-it’s got to be easy.
We committed to broadband because gamers
wanted it. Because it’s always on – just like TV and the Internet
are
always on. You can share broadband with your PC and other devices. And it’s
got the bandwidth to do
voice and episodic content – experiences that
gamers crave and new abilities for creators to explore.

We debated putting a dial-up modem into Xbox as well. But gamers didn’t
want us to divide the platform
into two speeds, two audiences, two levels of
playability. So we didn’t – for two reasons.

First, we didn’t want to confuse consumers. And second, if we forced
developers to deliver on the
lowest-common denominator, we were afraid that
nobody would fully develop the potential of online
gaming – and gamers
would never get to enjoy that potential.

Gamers want to find their friends easily-so we designed cross-game notification,
to make it easy to find
anyone, anywhere, anytime they’re online, across
any title from any publisher.

We put in voice, of course, because gamers want to talk – talk trash – collaborate
– with each other as they
play. And we made voice part of the Xbox Live service
and toolset so that developers won’t have to mess
with it. It’s
built into every Xbox Live multiplayer title – you can count on it.

We implemented a download infrastructure for episodic content and enhancements,
so creators can keep
their games fresh and gamers get an experience beyond the
retail purchase. If you think of episodic gaming
as “broadcast gaming”,
and reflect back on the content innovation around broadcast TV, it’s going
to be huge.
Episodic unlocks the potential for publishers to extend the life
of hit titles and franchises, longer than ever and
experiment with higher-risk
ideas through “pilots” rather than being trapped by the epic budgets
of today.

Bottom line, we made Xbox Live a single, unified service because gamers told
us they want it. Simple to access
and consistent across all the online games
they might want to play, from any publisher.

We developed an orderly online gaming arena based on standards and conventions,
where content is king.
Where creators create and gamers enjoy the fruits of
their creativity – and all the magic that online gaming is
capable of delivering.

Xbox Live: Checking the boxes

If we want to take gaming online and create magic – not to mention the next
revolution for our industry – we’re
going to have to be sure that content
is always king. And that designers can realize their full potential without

preposterous technical hurdles.

That’s why did the service work for Xbox Live.

That’s why provide an amazing toolkit for features like voice, download,
authentication and matchmaking. It’s
why we manage the hosting, the networking,
the bandwidth, the security, the billing, and all the rest.
So that great
game creators can focus on creating great games.

What are the alternatives? We could have asked every designer who wants to
create games for online
to do a ton of server work. We could have told them
to learn all about networking and voice, and worry
about logons and security
and authentication.

But that would be like asking the guy with an idea for a TV show to start a
network or launch a satellite
before he creates it. Or asking every proud parent
to install Linux and start up a server farm to put their baby
pictures online
for the extended family to enjoy.

Just as with TV and the Internet, the magic of online gaming depends on letting
creators create. Letting
designers design … focus on unleashing
their visions … and create the radically new gaming experiences that
players
are always hungry for.

With Xbox Live, we checked the first two boxes-Content is King and established
some Standards and
Conventions. But what about competitive unity?

No one here can do it alone – move the whole industry forward, create the next
revolution, make the magic.
No single company, no single segment of the industry.

We are the living proof – all of us-that some competitive unity is needed to
take online to the masses. Our industry
has always had some defecto standards
and conventions, in the form of controllers, D-pads and predictable,
intuitive
interfaces and packaging.

Competitive Chaos or Competitive Unity

Last week, a business journalist asked me what keeps me up at night. The journalist
was surprised when I
said that “competitive chaos” was the biggest
factor holding back the next revolution for our industry – that’s

what keeps me up at night.

Imagine a world where publishers fight over the gamers, where we look at online
as a way to cut out the retailer, where
we split the platforms even further
with different standards and conventions for different online destinations with

multiple passwords, billing, and customer support.

That would be like forcing consumers to buy a Panasonic set to watch sports,
to buy a satellite dish for soap
operas, or pay a service fee to ABC for one
show, another fee to NBC to watch friends. Imagine the Internet
if you had to
have a different browsers to access different sites … load a different
protocol to join every
chatroom … or use a separate password to log on
to every site.

As we enter the online era of gaming, let’s remember what got us here.
And let’s not screw up the next big
thing for gamers.

The clear alternative is competitive unity. The same dynamic that made the
magic possible for TV and the
Internet. Competitive unity among platforms has
been healthy for all of us – common royalty plans, rating
systems, E3, and even
get-togethers like this one. Competitive unity is what has made this the amazing
industry
what it is. Let’s not let up.

Online Ecosystem Done Right

Done right, online is about much more than simply bringing the next technical
innovation to gamers. It’s about
advancing the industry to the next level
of maturity, in a way that benefits everyone.

Done right, online will deliver unique, breakthrough experiences for gamers
– and draw new people to
console gaming. Lots of them.

Done right, online will give game creators new tools to express themselves
in new ways and even bring
new creators into the fold.

Done right, online will let publishers keep their content “fresh”
through updates, extending product
lifecycles and freshening revenue streams.

Done right, online will create opportunities for retailers to sell new products,
from peripherals to
subscriptions to services, and sell more of them
to a growing market.

Done right, online will create new opportunities for promotional partners and
service partners, like network
operators, who will help promote gaming and drive
demand for all of us.

Done right, online gaming can become the killer app for broadband.

Done right, online enables gamers to be producers and to share their ideas
and creations with other gamers.

Done right, online will be the next revolution not only in console gaming,
but in entertainment and commerce.

Done right, we can make gaming the next TV, the next Internet, the next magic.

But only if it’s done right. By all of us, working together.

Thank you.