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As it readies to release its new Xbox 360 gaming console, Microsoft is doing something decidedly out of character: Instead of dealing just with the industry's heavyweights, it's courting independent game developers.
In early October, 2004, the software giant sponsored the IndieGamesCon 2005 expo, which attracted some 300 people to Eugene, Ore. There, Greg Canessa, manager for Xbox Live Arcade, the group which focuses on smaller, downloadable games for the mainstream player, told the crowd that Microsoft believes much of its long-term success in the gaming market will come from small studio efforts (see accompanying slide show "Big Fun with Small Developers").
Why is Microsoft (MSFT) hobnobbing with the indies? In its effort to grab the console-gaming crown away from rival Sony (SNE), Redmond has redoubled its efforts to lure casual gamers -- schoolchildren, grandmothers, and the like playing poker and puzzle games through MSN Games and MSN Messenger a few hours a day.
Wrangling those players is key to the company's goal of taking the Xbox 360 to breakeven within two years of its launch on Nov. 22. And indie developers can help the company attract them.
INNOVATION STATIONS. The new Xbox 360 Live service, which allows console owners to play against each other and download additional game levels, will feature a special Xbox Live Arcade section filled with casual games. One of the dozen-or-so titles to debut will be from indie studio GarageGames. That's a first for Microsoft, which previously has launched exclusively with bigger, mainstream titles (see BW Online, 14/10/05, "Indie Gamers Hit the Right Buttons").
But Microsoft hopes to work more closely with independent game developers in the coming years, both because the indies are known for producing innovative titles and because many of these smaller developers are already well-established in the casual gaming market.
Canessa talked about Microsoft's plans for indie developers and casual games with BusinessWeek Online reporter Olga Kharif on Oct. 7. Edited excerpts of their conversation follow:
You're sponsoring IndieGamesCon. Why is Microsoft interested in indie developers? We love and respect Electronic Arts (ERTS) -- we think they're great. But we think they aren't going to put out the entirety of what people are going to be playing.
People like different games. And some of the most innovative gameplay, some of the stuff that defines genres, comes from the independent game developer community.
Just like in the movies, if Hollywood was only about Jurassic Park and Independence Day and Star Wars, the industry would be dead or dying.
How do you ensure that people try games from unknown, indie developers? Gamers might know they want Madden Football, but they'll have no idea about [an indie title such as] Wildlife Tycoon. Having a recognizable brand can work for you or against you. Madden Football, Grand Theft Auto -- those are powerful franchises. But many franchises have jumped from Hollywood to the game universe less successfully.
When converted into interactive media, those brands just didn't meet the customers' expectations. So now, people see movie- or TV-related games and they shy away from them. They expect those to suck.
The quality of indie games varies widely. How do you pick and choose the next-big-thing for the Xbox Live Arcade? We have experts in all types of games. They look at games on a submission basis, and pick and choose to make sure that our portfolio of games is representative of what our customers wants.
For now, we're going to pick what we view as, say, the best Hearts game. As the market expands, it will support three or four or five Hearts games. Longer-term, we're interested in establishing an ecosystem for third-party developers.
How will the growth of the casual-gaming market, through services like the Xbox Live Arcade, reshape the industry? Ultimately, what Microsoft offers will be a phenomenal opportunity for developers, both indie PC-game developers and those developing for consoles. Hopefully, it will be a very profitable financial opportunity and we'll all win. We'll have more games, we'll have more innovation in this space, we'll have people buying more Xboxes, and the consumer will have a broader game selection.
Financially, will it be more beneficial for indie developers to work with Microsoft than with other companies? We aren't interested in squeezing an extra $2 of margin out of the little guys. It's more interesting for us to have a viable ecosystem of developers and products in order to sell more Xbox consoles. So it's in our interests to make sure it's an attractive situation for indie developers.
You've talked about how this ecosystem will encompass not just the Xbox but MSN Messenger and mobile-phone games. Why is Microsoft looking at all these markets? The future lies in the convergence of gaming on different platforms. We want to create a unified gaming community [where the points you've earned playing MSN Messenger games show up in your total score in your Xbox Live account, for example. Or where you can play poker via your mobile phone with your grandmother, who's playing on her PC.]
What will have to happen before that scenario is a reality? We're already moving toward convergence. We've created a common set of tools across the PC-game and the Xbox development community so that game developers can spend more time making games fun and less time worrying about porting them [to different platforms].
Another example is the MSN Messenger and MSN Games badges. We are trying to create a common badge system, so that you can earn a badge for achieving 1,000,000 points in the Hexic puzzle game, and that badge appears in your Messenger profile and your MSN games, no matter where you are. So these are a few examples of our baby steps toward conversion.
How do you expect Messenger games to evolve going forward? There's an evolution and expansion that needs to happen. We have a lot of first-party-developed games now, but we're interested in making it more of a marketplace that we can open up to third-party developers.
We will be creating a set of developer tools that would facilitate easy Messenger game development, perhaps an easy set of tools for PC game porting. There's an opportunity to create something like the Xbox 360 Live Arcade in the Messenger framework. You click on a button, and you go into Messenger Arcade, and you can download games.
Do you plan to get third-party developers involved in your mobile-games efforts? We view cell phones as a huge opportunity. It's a large and growing market, and we have a lot of games that are relevant to that audience. Up till now, we've done some work with mobile-game publishers In-fusio and Jamdat, which took some of the Microsoft Game Studios' properties into the cell-phone environment. We've also just announced that developer and distributor In-fusio will do Halo games for mobile.
So we're starting to get a toe in the water through licensing. Going forward, we're interested in doing our own mobile-game development. It's definitely an amazing space and an exciting time.
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