ࡱ> 5@ Cbjbj22 dXXF;<@@@@@@@T(((8(D)<T`)`)v)v)v)v)v)v)SUUUUUU$Ry@+v)v)++y@@v)v)$/$/$/+|@v)@v)S$/+S$/$/<0@@v)T) b?D(<,?0+<-TT@@@@@v)v)T$/@*D*<v)v)v)yyTT/TT 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 werent 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 didnt do it alonethe inventors, the broadcasters, the electronics companies and even governments also played a rolea 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 didnt 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. Thats the power of competitive unity, and what made the magic of TV. Thats 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 theyre bankrupt. Those who have thrived online adapted it to existing, working businesses making the Internet one more venue for doing business. From Cisco to Victorias 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 theyre 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 its 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 Im 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 werent. We asked ourselves, what is this industrys next tipping point? We talked about the social dimension thats 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 gamesfrom Asherons 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 Koreas 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 wasnt 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 theyre Internet savvy and theyre 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 industrys 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 experienceits got to be easy. We committed to broadband because gamers wanted it. Because its always on just like TV and the Internet are always on. You can share broadband with your PC and other devices. And its 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 didnt want us to divide the platform into two speeds, two audiences, two levels of playability. So we didnt for two reasons. First, we didnt 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 easilyso we designed cross-game notification, to make it easy to find anyone, anywhere, anytime theyre 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 wont have to mess with it. Its 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, its 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 were going to have to be sure that content is always king. And that designers can realize their full potential without preposterous technical hurdles. Thats why did the service work for Xbox Live. Thats why provide an amazing toolkit for features like voice, download, authentication and matchmaking. Its 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 boxesContent 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 usthat 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 thats 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, lets remember what got us here. And lets 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. Lets not let up. Online Ecosystem Done Right Done right, online is about much more than simply bringing the next technical innovation to gamers. Its 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 its done right. By all of us, working together. Thank you. Online Gaming: Bigger than 3D? 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