The Xbox Strategy

The console's director of platform strategy talks about the road ahead

by Colin Campbell

Now that it has some real competition, Microsoft must face tough questions about its granular strategy for Xbox 360. How does it compete with the newer Wii and PS3? What does it do about pricing both of its hardware and of services like Xbox Live? How does it keep innovating?

Scott Henson is director of platform strategy and has been involved in the Xbox project for six years. His job gives him access to all areas of Xbox’s strategy, but most particularly with Microsoft’s relationship with third parties, and with Xbox Live.  These are the questions that he has to work with every day.

For now, Xbox 360 is enjoying the benefit of having been onto the market first, with a year’s worth of growth from which to draw upon. Part of the benefit is reaping hardware sales that might have gone to competitors were they not hampered by shortages

The competition

Speaking of the competition, he says, “Now we’re dealing with reality and not with spec sheets. People are putting the options side by side and they are realizing what we’re delivering, what Sony’s delivering and what Nintendo’s delivering. Shortages of PS3 and Wii can’t help but benefit us but I fundamentally believe that we have a better product at a better price and that’s the real advantage for us.”

But consumers, especially videogame consumers, are attracted to the new. How will Microsoft counter the feeling that its product is, well, older? “The best way to fight against that perception is by looking at the reality. Consumers are smart. They know what they get for their money. They’ll realize where the better value proposition is. Our portfolio in 2007 is incredibly strong. We have more great games. Our online certainly is extremely strong and our price is extremely competitive.”

Xbox Live

Xbox Live is clearly Henson’s pride and joy, so we talk about that service’s achievements, and its future. “The decision to focus on online looks really obvious now, but six years ago people were really questioning the bets we were making on broadband, on voice, on giving every game an online component. We really believed that that would transform the expectations people had of consoles and it’s awesome to see, six years on, how we’ve changed the entire industry.”

For Henson and Microsoft, it is an article of faith that the company’s online work has driven the industry forward, and changed everyone’s attitude towards online play. “All three next-gen consoles have some kind of online offering and it’s clear that [online] has become a defining characteristic of the next-generation. That’s extremely satisfying for us.”

I ask about the future of the service, and, although there is an inevitable reluctance to talk details, he offers some hints about the company’s directorial thinking. “We used to dream about scenarios where we could blend offline and online together,” he says. “Over the last few weeks that’s exactly what Gears of War has been doing with great success.  I can go play a single player campaign and my friends can drop right in with me and participate in that single player campaign just as if they were sitting next to me on the couch.  It’s exciting to see those scenarios come alive.”

The Mainstream

The big challenge for Microsoft is making sure its impressive rate of Xbox Live players is sustained as its user-base becomes more mainstream. "We’re redefining what online means," he says. "It's not just for the hardcore, competitive, multi-player crowd but for everyone and is accessible to everyone. Our goal is to get this word out to everyone so that they realize there's something in it for them no matter who they are."

Xbox Live Arcade

He says the firm will focus on social communities and offering consumers the chance to express creativity via Xbox Live.