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Game Console Ecosystems – Part 2, Strategies (Now What?)

2 Apr

In Part 1 I wrote about content, price, and lifecycle patterns of game consoles and described ways they are blocking their own adoption. This second part describes now what? strategies for consoles, micro-consoles and others in the TV, CE and video, with the exception of Valve/Steam which is complex enough it deserves its own post. In another future post I’ll talk about something even more important to me: how to place your bet as a developer, and how VR (and AR) will radically impact developers and the CE space.

Many super smart people wonder What’s going to happen in TV? After Amazon’s FireTV announcement and the Android TV leak, even the most dull-witted among us now realize that small, inexpensive, network-connected, cloud-backed, UI-excellent, rapidly improving devices easily replaced every 12-18mo are the most natural product to deliver content to less-frequently purchased & expensive “big pieces of dumb glass” (televisions). The United States has an estimated installed base of 270M TVs (2.24 per household), 240M are sold worldwide annually, and the worldwide installed base is estimated north of 2B. Americans spend 5+ hours each day around their televisions. Selling internet-connected devices, services and content to that big an audience is not a hobby.

I’m a big console, now what?

The big-three consoles are in for a world of hurt as fast-improving, cheap-to-update, lower-cost mobile hardware and an enormous ecosystem of mobile developers transition into this market, either through a variety of Android-based micro-consoles (including Amazon’s FireTV) or an iOS-based Apple TV, or simply if TV’s begin to lose user attention to video streaming and games on tablets and phones. At the same time the most lucrative and loyal hard-core gamers and developers are drawn to high-end PCs which out-perform consoles by increasing margins and are easier and cheaper to work with. High-end PCs are likely to arrive in a TV-friendly form factors via Valve’s Steam box initiative by this holiday season. The question is how quickly and how hard, not if, this world of hurt descends on existing consoles.

Putting content and usability mis-steps aside for a moment, the past two generation of consoles have tried to ride a particular spot on the price-function curve in their graphics hardware and content arms-race, a spot that has pushed their price up and made them and their developers dangerously dependent on blockbuster hits. Chasing hits that fully exploit expensive custom hardware causes hardware and software that are fundamentally over-priced and increasingly over-squeezed.

To defend themselves the big consoles’ best chance in direct consumer sales is to reduce their competitors’ advantages and increase their own. On the hardware side:

  • Accelerate the current generation subsidy. Since micro-consoles, Amazon FireTV and Apple TV competitors will be priced at $99-149 in the 2014 holiday season, subsidize to $169-199 to make consoles an easier choice. It may be possible to strip some storage space or software services out for the upcoming season, but be prepared to spend on this defense even if nothing can quickly change. Creating better bundles with a contracted service subscription, unbundling Kinect and the controller and adding support for older XBox, Wii and DualShock-3 controllers which consumers already have are some ideas; there are many others to be found. Crazy to subsidize so heavily, you say? How could you possibly subsidize 10-20M units per year? To that I say – hey, if you are lazy, do no work to reduce manufacturing and sales costs or to understand your supply-chain and have to subsidize at $300 apiece it might cost you $15B over three years – are you saying that a beachhead entertainment device is worth less than what Facebook is paying for WhatsApp?
  • As part of subsidizing, use 2-year service subscription contracts. You can only do this if subscriptions are more like Playstation Network and Steam membership (full of value, free games, sales) and less like today’s XBox Live (subscribe and pay so that you can even use Netflix and other apps – stupidity), as most consumers won’t see any value. See also Spotify-style subscriptions described below under micro-consoles.
  • Commit to yearly hardware updates and forward and backward game compatibility over three to four years to defend against yearly micro-consoles updates which will follow the app compatibility model from mobile devices. This makes sure new hardware has an existing catalog of titles instead of resetting every generation, which is attractive to consumers and developers while still giving developers and users access to the cutting edge. Another side-effect: this model appears to match Valve’s public strategy and so may counter a Valve and Steam machine OEM advantage.
  • Introduce yearly staircase pricing: each year a model phases out, last year’s model steps down the price ladder and a new, faster model takes its place at the top. In 2015 drop the current hardware to a steeper $149-169 subsidy and introduce more interesting hardware, hopefully less subsidized if you’re doing your supply-chain work, at $199-249. Rinse and repeat in 2016. Throughout this time period the goal is to create a many-generations road-map with a razor-focus on reducing hardware costs so that the subsidy costs come down while function improves. The larger goal is to get your console to a more price-defensible position on the price-function curve, keeping it enough ahead of peak function coming from mobile CPU+GPU hardware in micro-consoles that better games are possible but not so far ahead that you chasing the arms-race of cutting-edge PC graphics, which is too expensive. All consoles lose some high-end PC and Steam Box gamers, but this should help block lower-end Steam Boxes from capturing a large chunk of market.

On the software side:

  • Make your platform wide-open for independent developers. Kids, students, anybody with skill and spare time who owns one of your devices should be able to download free tools (for PC and Mac) and write games that they can give away for free, sell in your app store, or just show their friends. Review apps to prevent junk, spam, and copy-cats, curate lists of great content to put it front-and-center in your store, but most importantly just let any developer write software for their own console using free or very inexpensive tools. Don’t just speak about it and slowly roll it out over a year or two, do it immediately; remove the strange sign-ups, verification, approval, wait-list nonsense. Remove the strange pricing rules, size limits, trial periods and overall regulations found in Microsoft’s XBLIG/XBLCG and SCEA’s Indie Outreach. Let the community of developers share code and support one another without hindrance.
  • Offer a better “App Store,” let prices float, but don’t drive to zero. Draw the best of simple finding, paying, and in-app-payment as well as curation from the iOS App Store and the best of sales, membership and deals from XBox Live, Playstation Network and Steam. Remove the constraints and restrictions that held prices extremely high but don’t
  • Perform a immediate radical dissection of your user experience, particularly around how you navigate and watch or play content and around how you find and purchase additional content to watch or play. Use voice through phones, tablets, and remotes, not by yelling at your TV. Simplify first-run and every launch to speed access to content. Simplify billing, account setup, account recovery, subscriptions. Speed up launch and software updates. Eviscerate all error messages. Make backup/recovery, roaming your gamer profile, and restoring to a newer console work seamlessly.
  • Do even more to allow control of the device, its services, and the TV through mobile and tablet “remote” apps and bluetooth hardware, and open up the control mechanism to third-party mobile app developers through free SDKs, hardware development kits, open protocols, and tools.
  • Invest more deeply in exclusive game content, minimally for time-windowed exclusivity.

To summarize, the goal is to truly level the playing field in simplicity, usability, and price as a defense against lower-cost devices that can’t yet deliver high-quality game content while also creating a broader defense to a multi-tiered, multiple-OEM PC market through more frequent updates and console-exclusive content (more on that play, which is Valve’s Steam, in a future post). This should be a sustainable gaming location for several years. Microsoft is at a slight disadvantage to Sony in adopting this PC-isolating approach as it is more difficult for them to choose exclusivity of content between PCs and consoles; Microsoft is not sure whether PCs or consoles are going to be the larger volume, dominant devices long-term.

I’m a micro-console, now what?

Apple TV, micro-consoles like Ouya and now Amazon FireTV (and potential Android TV devices) have an advantage over current consoles in being a profitable piece of hardware at a reasonable and interesting consumer price-point. Ouya and Amazon FireTV don’t have a depth of supply-chain control and they have to pay more middlemen for parts, so Apple’s 35-40% hardware margin at $99 retail will be out of their reach initially. Over a few years if they achieve high volumes they can either find higher margins or drop their prices below Apple TV (their retail strategy will likely be the latter, which suits Apple just fine); future cable operator subsidies and Apple’s brand strength may obviate any retail price advantage vs Apple for most consumers. In any case micro-consoles could be self-profitable on hardware alone, and they will definitely provide a profitable distribution path for existing subscription streaming partners like NetFlix and Hulu. To have gaming content help drive their growth and to grow gaming and an app ecosystem, though, they must create:

  1. Must-have, exclusive, break-out content that helps move 5-10M units of the hardware.  Initial hits are needed to seed the market which in turn causes more content developers to focus on exclusives for the device, to see its market potential, and to see a viable customer base for doing business long-term. For games this is particularly important since “console” games tend to be longer and require longer development cycles. Amazon has primed its pump for FireTV with original streaming content (which has been somewhat well received but not yet as critically acclaimed as NetFlix) and is at least trying on the games front with the acquisition of some strong game teams and a commitment to first-party titles, and a big outreach to many game studios. There are no two ways around the fact that Ouya really must scout out and invest money (if they have it) in an exclusive must-have game title which showcases its excellent little product.
  2. A virtuous-cycle ecosystem where money can be made by content developers. This is more than an app store with a 70/30 revenue split, it’s more than supporting payments seamlessly or supporting in-app-purchase. Its about an overall business model and community culture that ensures long-term profitable businesses can be built in the environment, not just get-rich-quick schemes or games that prey on addictive behavior or psychological chicanery. Directly copying the current iOS App Store is not without risk – many aspects of the pricing and free-to-play/in-app-purchase model have soured game development on mobile, leading to an exodus of great game developers back to PCs and Steam. In the last year Ouya’s everything-has-free-trials policy (now rescinded) was quite a bad mis-step in my mind because it set customer expectations on “free” and it also put developers immediately into the free-to-play/in-app-purchase mindset of get-rich-quick schemes dominating in mobile. The Amazon FireTV slide describing the average selling price of paid games as $1.85 sets up a similarly low and cheap expectation which may prevent the creation of break-out game content. My spidey-sense is that as Apple has already spotted the negative customer satisfaction impact from free-to-play and unlimited in-app-purchase as well as highly creative developers shifting their attention away from iOS and are poised to make App Store rule adjustments. I won’t try to read Apple tea leaves, but some suggestions for other micro-console ecosystems to avoid scaring away developers are
    • proactively block clones and knock-offs under guidelines such as Apple’s 2.12
    • adopt time-window constraints on the frequency and amount of in-app-purchases (perhaps introducing several different categories that apps can choose which best fit their game mechanics), with the underlying goal of disrupting app dependencies on “whales
    • introduce Spotify-style subscriptions of all-you-can-eat daily, weekly, or monthly access to groups of games and pay developers in proportion to the amount of time consumers spend during the period in their game, with the underlying goal of encouraging the creation of content users like to spend time with (time spent being an imperfect representative of their enjoyment)
    • If I personally ruled the world I would also set a minimum base price of $0.99 or $1.29 for apps, just to keep consumers aware that content has value.

The complaints I have previously leveled against consoles and which I suggest they fix – better UI, easier setup & account management, faster game loading, etc – are a baseline for micro-consoles as well. Though they start at a simpler place than consoles and bring less baggage, they still have room to tighten up, and getting ease-of-use just-right in the $99 space is going to be how they differentiate and sell. Apple TV is in solid shape, though voice search in FireTV ups the ante quite a bit. FireTV UI looks good, but until I set it up later this week and play with it for a while and get a software update I won’t truly know. Ouya is a pretty rough around the edges, but they have been making updates and have a good software team; I think they know these issues are important for their future, I look forward to seeing what they do.

The final point for micro-consoles is having an excellent bundled content remote and an excellent bundled or separate game controller. From what I’ve seen, FireTV has nailed the remote, especially with voice integration – I’m looking forward to trying it. Both Ouya and FireTV are not off to a strong start with their gamepads, though Ouya supports Playstation DualShock3 controllers and wired XBox 360 controllers, which is smart. Iterating aggressively on their own game controllers or drafting off the excellent open-protocol Bluetooth DualShock3/4 controllers is a great idea (I recommend the DualShock4 – the speaker is a surprisingly great addition to the controller). Apple’s TV remote is excellent – it only remains to be seen if they integrate voice in the next version. I expect Apple to design a really great gamepad as well as supporting existing customers with DualShock 3 & 4. It would cost a licensing fee to integrate XBox 360/One controller support since Microsoft uses some (stupid) proprietary technology – I doubt Apple or any others will choose to support it.

I’m a streaming stick/dongle or mini-set-top-box, now what?

Right now these are exciting little products for consumers. The sticks and dongles remind people of convenient thumb drives. They are incredibly inexpensive and can be justified as an impulse purchase just to get Netflix or Hulu – most consumers have a spare HDMI port on their new television and what the heck, it’s only $35! The mini-set-top-boxes are small and don’t take up much space near the TV or cause much additional house clutter – your partner won’t complain. Existing Smart TV software is so bad and changes so slowly that when someone sees a better looking UI demo reel they want to give it a try.

In this category the Roku products are excellent. The Chromecast is fairly underpowered but somewhat good; my best guess is Chromecast sells well to Androidees who want to project their pictures, videos, and youtube to a television, which I love doing with my iOS devices and Apple TV, but I have only anecdotal evidence that this is how Chromecast is being used. Myriad other teeny dongles out there which offer photo or video streaming or Netflix/Hulu are mostly meh in quality.

But even as the hardware improves and prices come further down there is a fundamentally narrow range within which general-purpose sticks and dongles can operate given their size. You can’t dissipate much heat from such a small device volume, and so you can’t draw much power or carry much storage or content. Pure video streaming isn’t a problem, but buffering multiple streams quickly is, and you are barely going to get smooth UI transitions and compelling graphics or even carry a lot of software or content, especially as screens grow in density from HD to 4K. No matter how Moore’s Law progresses, the stick/dongle form-factor will be too far down the price-function curve to be super appealing. Technically sticks and dongles can be carried easily to a friend’s house or on a vacation, and while this a niche use has utility today, I suspect it eventually dies in a cloud world. The $99 mini-set-top-box which has dedicated power and a larger volume to dissipate heat is the most interesting form-factor for the foreseeable future.

So what to do?

  • Focus on software. Making your software exceptionally easy to use, modular, and easily licensed and rebranded. Rethink and innovate on the tough issues on TV like discovery, search and parental controls. Unless you’re Apple, pick Android as your base so you can appeal to developers and improve your own application development. (Note: this is where I think Roku, otherwise executing with excellence, will be in trouble with its Linux+Brightscript SDK)
  • Make your devices controllable via smartphone “remote” apps and bluetooth. Create a free SDK for mobile and hardwared developers to use to write custom controllers – don’t think that you can do the best job. Rapidly and generously buy up the best solutions from your software and hardware developer community rather than trying to copy them in-house; don’t alienate developers.
  • License your software and hardware solutions directly to “Smart TV” manufacturers who need to get out of the software business. Promise them better software, more frequent updates, and better customer support.
  • Use the stick/dongle and Smart TV integration as the free/cheap entry to your broader software platform. Assuming you have long-term ambitions to be part of a TV ecosystem, take a look at how Roku has created a set of devices that span the portable/cheap stick to a plugged-in form factor with more hardware horsepower potential.

Is there room for single-purpose free or cheap HDMI sticks and dongles to do things like just video conferencing or just displaying photo albums or just letting you do presentations from your phone or tablet or streaming games from a PC? Absolutely there is room for these niche players doing this for several years until apps and high-powered $99 mini-devices take over completely, just don’t expect to build a huge business; use sticks and dongles during the transition.

I’m a “Smart TV,” now what?

Because of the slow replacement cycle of TVs and the accelerating pace of computer and graphics hardware improvements I’m pretty skeptical that it is useful for the “smarts” of a TV to live inside large & expensive TVs. Evidence suggests that even inexpensive tablets have long replacement cycles (perhaps they are used primarily as portable TVs?). In the short-term you can solidify your position as the best piece of dumb-glass moving forward as follows:

  • Don’t ship another single unit carrying your worthless, unusable, frustrating custom software.
  • Pull every stop to partner and integrate 3rd-party software with great UI by the 2014 holiday. At the moment I’d recommend Roku, though Ouya is a smarter choice due to the Android base (their UI is not quite as refined as Roku, though), but soon we should hear what Android TV’s licensing terms are. Please don’t roll your own Android version, custom store, and UI – you are not a softare company.
  • Be sure to integrate AirPlay, iView and the protocols underlying Chromecast so that your TV is accessible by the majority of mobile devices without users having to think about or buy an additional device. There may be other protocols specific to your geographic or cultural market – the key is to choose a partner which has some form of application SDK so you can add features and target specific models of your TV quickly and easily (this is Roku’s one big challenge at the moment, and why Ouya or another Android-based system stands a chance)
  • Focus on usability and customer service. Hey, what do I know, but here are some suggestions: Streamline setup. Be faster to turn on (with less of your logo). Ideally detect but also OK to let me name my inputs – like “XBox One” and “Cable” and “DirectTV” instead of “HDMI-1” and “HDMI-2”. Don’t make changing inputs vs. changing channels modal – go watch families struggle with TVs, it’s not rocket science. Each time the TV turns on, show me thumbnails of all my named inputs – what could be more frustrating than a blank screen showing “HDMI-2” when the last person left a different (now turned off) source selected? Revamp your manuals.
  • If you’ve got a speaker, support audio playback even when the screen isn’t on. Integrate Spotify through Roku and let people have ambient music, controlled by their phone or tablet.
  • Bonus points for TV/AV folks: Buy Sonos or partner deeply with them instead of trying to copy their features poorly in your line of sound-bars, TV’s, A/V receivers and 5.1 speaker sets using barely functional Spotify, Pandora, TuneIn, and Rdio integration. You do not have the software chops to build your way to a solution, you should just buy: they are doing a much better job than you possibly can because they focus on software and hardware working harmoniously.

Fundamentally, you are in a really, really tough spot long-term as a purveyor of dumb glass – but these are my suggestions for remaining differentiated while you figure out your next step.

I’m a cable- or satellite-operator with my own set-top-box, now what?

All your set-top-box hardware, remote controls, and software have been universally condemned and unconditionally criticized as slow, difficult to use, lacking in cutting-edge features, and slow to update – even back when you blatantly copied TiVo or built in their technologies. Because you aren’t a software company, because you have a huge installed base of odd TV and stereo configurations you fear weaning from traditional remotes, and because you completely subsidize the cost of the device or charge a small monthly fee, your goal is to simply minimize the cost of the hardware, software, and support associated with it. You have been either actively creating barriers to prevent your set-top-box from being a gateway/hub for other web-based or local-to-the-home photo & video content or have been integrating it poorly with custom-built apps. Your own set top boxes are not a competitive edge and continuing to invest in them will never lead to you growing your market share or improving customer satisfaction. There are two things you have traditionally done that you should keep doing:

  1. Secure content exclusively to your own networks, especially video content, especially sports. Most video content is becoming commoditzed, so you need desirable short-shelf-life exclusive content like sports as well as a broad tail of ideally exclusive niche content. Be willing to spend big to secure exclusive content.
  2. Improve your service. Faster internet speeds, better reliability, better customer service. Lower prices than your competitors is great, but dramatically better service is always the strongest long-term differentiator.

What should you do differently? You should either ease your way out of the hardware and deep software business by using off-the-shelf packages like Android TV and white-labeled hardware, or you should partner with a company already selling game console or set-top-box hardware to the public directly and draft on their business model. In either case you should sell, rent, or help subsidize new device to all your customers as quickly as possible, taking yourself out of the hardware and deep software business and into the app business. Integrate your tuner hardware and DRM technology if that is technically necessary.

If you are not going to use Android TV and white-labeled hardware, you have three serious choices for third-party complete ecosystems at this time: Microsoft XBox One, Apple TV, and now Amazon FireTV.

My guess is Microsoft will make XBox One available to many different cable operators as one choice for consumers among the set-top-box options available from the operator, and they are looking for a small subsidy assist or subscription percentage. It is typical for Microsoft to pursue consumer choice & perceived quantity over deep quality. (This isn’t meant as a dig – it is just their traditional method for hedging bets and keeping multiple OEM or other partners happy and more future moves available). The fact that it has on-board storage, a cloud infrastructure, and reasonably good programming guide integration makes it an attractive looking option. Unless it’s subsidized deeply to the free-$100 range, though, I’m skeptical that consumers will readily choose it over basic set-top-box options, but there may be some attractive ways to bundle it with new services which surprise me. It is also physically a little bit big and requires more complex physical integration and setup.

In contrast Apple would I think be looking to initially partner with a single operator to get a better time-window exclusive and to help further pull down the consumer price-point, to increase the subsidy so that the operator gets the cachet of exclusivity, drawing new subscribers. Recall AT&T and the iPhone – which cable operator wouldn’t want to be AT&T in 2007? The leaks around content deals with a combined Comcast/TimeWarner are mostly random noise without much depth, but in-between the lines I see indications that an Apple TV distribution partnership with new content is actually the deal that’s pending. Whether or not XBox One is also an option for Comcast/TimeWarner customers, I suspect the next generation Apple TV will be available as a free or <$50 option to Comcast customers and will include deep direct program guide and custom Comcast app integration. Apple TV will also be available at retail, like an unlocked iPhone, for the higher $99 (or future $149?) price-point. I’ve written that the next Apple TV will support gaming, and I even that I thought games would be its launch focus. But reading about content negotiations, thinking about Eddie Cue and how Apple typically chooses a single product facet for launches in order to have crisp messaging, I think the pending Apple TV update will focused entirely on user-interface issues like search and parental controls, new streaming content partners, and a Comcast/TimeWarner distribution partnership with live- and time-shifted-tv programming guide integration. Though it will have the hardware specs and iOS capabilities to support apps and specifically games later, that will likely be a separate fall/holiday 2014 announcement.

As a cable operator I would certainly be reaching out to Amazon if they hadn’t reached out to me already, because the voice-search, parental controls, Android ecosystem, UI/support and overall sizzle are what I need, but I suspect that in 2014 Amazon FireTV is a pure consumer play and they haven’t had time to pursue deep cable operator integration and getting into this form of subsidy.

If I were a cable operator or ISP of any kind, I would be reasonably worried about partnering with any of these companies and would be drawn to retaining control over my own destiny by sticking with custom STB hardware or choosing the path with the most opportunity for customization (perhaps Android TV). This would be a poor choice, though. Cable operators should look to the history of the past 7 years in wireless operators and smartphones: long-term you do want to support many different devices, but short term you want the most compelling product deeply integrated so that you can acquire more contracted customers. You want to be the AT&T of this round, you want the exclusive Apple TV.

Thus ends my current thoughts on navigating the connected TV, set-top-box, console, and micro-console landscape – a bit adjusted at the last minute to account for Amazon’s FireTV announcement and stripped of references to Oculus VR and Facebook while I try to get my head around what that will mean. Feel free to tell me I’m wrong in the comments or harass me on twitter, I’m @natbro. You perhaps won’t be surprised to hear I sometimes consult and brainstorm with companies in the CE industry about these issues in more detail; if that interests you, I can be found through


x’ing my fingers about xBox

21 May

No surprise I wasn’t invited to the big tent. Despite my recent venting of frustration on the state of xBox, I’m honestly crossing my fingers that the xBox-720/xBox-8/xBox-∞/neXtBox XBox One announcement goes well today and they have a successful launch this fall.

It will go well if they demo a game that blows our mind and that we want to play. It will go poorly if there is no unique game demonstration and we are instead shown a lengthy set-top-box-tv-app-platform-bullshit-bullshit demonstration.

Great must-have games, sell consoles. PacMan, Pitfall! and Asteroids moved the Atari 2600. Mario sold the NES and Super NES. Zelda, 007-GoldenEye and MarioKart sold the Nintendo-64. Tony Hawk, Metal Gear Solid, and Grand Turismo sold the Playstation 1. There was that Halo xBox thing that seemed to have worked pretty well, also. This isn’t a truism just about consoles – this is a truism for all computers and operating systems and phones and tablets and e-Readers and devices as well. PCs were originally mostly purchased for Multiplan – there’s always a “killer app” or set of apps or content which kickstarts the market. Since the new xBox and Playstation 4 aren’t going to be backward-compatible with their old titles… there had better be some very unique and must-have content ready for launch.

Sony’s Playstation 4 announcement event and PR did a good job focusing on games and game-tech, and everything about the event, the graphics, the PR was fine-tuned to gamers. This was solid and refreshing versus the guide-tv-movies-netflix focus that Microsoft has been spewing of late. I remain impressed that Sony are holding back on showing the physical console – this is terrific restraint and gives them strong opportunities to take back press coverage from Microsoft post xBox-announce today. But the games – inFamous Second Son, Killzone: Shadow Fall, Watchdogs, some others – while truly fantastic looking, did not look particularly approachable or compelling to me. I think Sony better have some very compelling games up its sleeve for launch. These are good but not buy-a-new-console good, in my opinion. And I don’t seem to be alone in this opinion.

Alex St. John (another former Microsoftie and, oddly, also an Alaskan) wrote an insightful post giving his perspective on the new xBox — it’s worth a read, I agree with quite a bit of it. His point that xBox is being run and guided by non-hardcore-gamers and old-dudes who think more about places to watch Sponge Bob and listen to music than they do about games is particularly spot-on. I also agree that technologically it’s good that Microsoft is returning to more of a PC architecture and hopefully more of a PC operating system kernel (likely since Dave Cutler is working on it these days). I was the original proponent of xBox using the Windows kernel so that we could share technology and improve the PC+Windows experience with everything we learned about stability, fast-boot and UI/UX from consoles. This goal took a bit of a back-seat in the original xBox and was completely tossed-out in xBox 360, and as Alex notes, it caused damage to the PC game ISV community, as they became fractured — DirectX was consistent between PCs and xBox, but everything else about programming them was different.

Like Alex, I’m not overly excited about the expected hardware. I do think it’s interesting that it will have HDMI-in as well as HDMI-out, there are cool things to do there — if done right (a big “if” given who we’re talking about) you could make the console the primary input and control point for the TV, as I pointed out in my post about what I’d want in an Apple TV device. This is a strategic point to own.

In any case, I’m looking forward to watching the live-blogs of the launch. If the device is quiet, small, and really fast and has at least one cool games, I will of course get one.

Actually, I’m lying. Even if it’s big, loud and slow, if it has a kick-ass unique game that looks playable and approachable and fun I will buy one and many others will as well, despite whatever horrific TV-guide and Blu-Ray and Netflix and lame third-party apps are announced and demonstrated in the big tent today.

(update: the announcement was almost the very worst of every horrible possibility I could have imagined. TV-focused. No live-game demos. Bad jokes. Horrible presentation. No game footage at all until 35m in – overall we saw more Price is Right footage than game footage. It’s not clear yet if the launch titles will be super-compelling, we’ll have to wait until E3.)

Stupid, Stupid xBox!!

12 Feb
Fone Bone saying 'stupid, stupid rat creatures!'

Fone Bone attempts to escape his pursuers by jumping on a small branch, thinking they wouldn’t be stupid enough to jump on. Obviously, he is wrong.

I was a founder of the original xBox project at Microsoft and gave it its name. Almost 14 years after the painful, pointless, and idiotic internal cage-match to get it started and funded, the hard selling of a compelling and lucrative living-room product to Bill (and then Steve as he began to take over), a product that consumers would want and love and demand, I am actually still thrilled to see how far it has come, how many installed units it has, how it is crushing its original console competitors, how the brand has grown and endured, and especially how great the games have become.

But the past 5 years, and the last year in particular, have been simply painful to watch. Coasting on past momentum. Failing to innovate and failing to capitalize on innovations like Kinect. Touting strategic and market success when you’re just experiencing your competitor’s stumbling failure (yes, Sony, Nintendo – you are, I’m afraid, stumbling failures). A complete lack of tactical versus strategic understanding of the long game of the living room. It culminated for me in recent coverage1 of interviews with Yusef Mehdi and Nancy Tellem and reports of the goals of a new LA xBox studio to create interactive content.

My gripe, my head-smack, is not that the broader content/entertainment business isn’t where you want to go with a living-room-connected device. It absolutely is. Indeed, this was the point of xBox, that was why it was the Trojan horse for the living room, where we could land and be welcomed by millions of console customers with more hardware and better software and network connectivity than the non-console devices (webtv, cable set-tob-boxes) we had been pursuing. No, more and better content was always the point and the plan. My gripe is that, as usual, Microsoft has jumped its own shark and is out stomping through the weeds planning and talking about far-flung future strategies in interactive television and original programming partnerships with big dying media companies when their core product, their home town is on fire, their soldiers, their developers, are tired and deserting, and their supply-lines are broken.

xBox’s primary critical problem is the lack of a functional and growing platform ecosystem for small developers to sell digitally-/network-distributed (non-disc) content through to the installed base of xBox customers, period. Why can’t I write a game for xBox tomorrow using $100 worth of tools and my existing Windows laptop and test it on my home xBox or at my friends’ houses? Why can’t I then distribute it digitally in a decent online store, give up a 30% cut and strike it rich if it’s a great game, like I can for Android, for iPhone, or for iPad? Oh, wait, I can… sort of. Read some of the fine-print at the xBox registered developer program page (that “membership” would cost you $10,000/year and a ton of paperwork, with Microsoft holding veto power over your game being published), navigate the mess through to learning about XBLA (also costly, paperwork and veto approval) and you may end up learning about a carved off little hard-to-find store with a few thousand stunted games referred to as XBLIG where Microsoft has ceded their veto power (and instead just does nothing to promote your games). This is where indie developers have found they can go in order to not make money on xBox, despite an installed base of 76M devices. Microsoft, you are idiotic to have ceded not just indie game developers but also a generation of loyal kids and teens to making games for other people’s mobile devices.

xBox’s secondary critical problem is that the device OS and almost the entire user experience outside the first two levels of the dashboard are creaky, slow, and full-of-shit. From built-in update and storage features to what they have allowed through negligence to appear in games, here are just a few of my favorite confusing and exhausting screens and messages:

Daddy, what’s a Hard Drive? Why do I keep having to choose Hard Drive when I’m playing Kinectimals? Why does Kinectimals take 10m before I can start playing? Can I use the iPad while it’s updating or whatever it’s doing?

I'm too dumb to update safely. I'm to dumb to know if more updates or restarts may, may, may, may be needed.

Hi, I’m xBox. I’m too dumb to update safely. I’m to dumb to know if more updates or restarts may, may, may, may be needed.

I'm too dumb to know if it's a game or an app. Why should I choose where you put it?

xBox: I’m also too dumb to know if it’s a game or an app. Me: Why should I choose where you put it?

4MB, thanks for that info. Wait, what? What are the consequences of being signed out of Xbox Live if I update?

Me: 4MB. Gee, thanks for that info. Wait, what? What are the consequences of being signed out of Xbox Live if I update?

My all-time favorite: each game dreams up an indicator that it uses while writing your save-game data. Saving securely without needing UI sure doesn't seem like a system-level service Microsoft should provide.

My all-time favorite: each game dreams up an indicator that it uses while writing your save-game data. Saving securely (e.g. atomically) without needing UI sure doesn’t seem like a system-level service Microsoft should have provided for xBox in 2003.

Every time I leave a game, even right after saving in the game, the system presents me with this little scare. Every. Single. Time.

Every time I leave a game, even right after saving in the game, the system presents me with this little scare that I may lose progress. Every. Single. Time.

These messages and many others – impossible Xbox Live sign-in and password recovery, accounting/membership, to name just a few – are made all the worse by the huge amount of time that passes while waiting for content to load. You don’t turn on your xBox to play a game quickly — it takes multiple minutes to load, flow through its splash screens, and then get you playing. It doesn’t surprise me that most people spend more time watching videos or listening to music on xBox, because it takes too long to screw around with discs and wait for games to load.

These are the 2 fronts Microsoft is going to lose on in the living room battle with Android & iOS. It’s not going to be based on whether they have (a more expensive) Netflix, whether they have original TV/video content or interactive kids television shows which integrate with Kinect. They will lose unless these two things are sorted out well and quickly.

Microsoft is living in a naive dream-world. I have heard people still there arguing that the transition of the brand from hardcore gamers to casual users and tv-uses was an intentional and crafted success. It was not. It was an accident of circumstance that Microsoft is neither leveraging nor in control of. xBox was for years the only network-connected HD-ready device already attached to tv’s that had multi-use potential (games, DVD, Netflix) in the household to justify and amortize its high cost of purchase to the family’s bread-winners. The hardcore/soft-tv transition and any lead they feel they have is simply not defensible by licensing other industries’ generic video or music content because those industries will gladly sell and license the same content to all other players. A single custom studio of 150 employees also can not generate enough content to defensibly satisfy 76M+ customers. Only with quality primary software content from thousands of independent developers can you defend the brand and the product. Only by making the user experience simple, quick, and seamless can you defend the brand and the product. The transition they are seeing (87 hours per month of use, more TV/music use than game use) will continue to happen despite their active “strategic” efforts to encourage it and get more Xbox Live subscribers.

Which brings us to…

Apple is already a games competitor broadly, even if Apple-TV isn’t yet a game platform or a console. Mobile generally and iPad specifically have grown the total hours of game play and grown the overall game market. Only in the last 18-24mo has that overall growth turned from a segment-expanding rising tide to a tsunami swamping the console game vendor profit boats hitched to the docks. It is accelerating. Apple, if it chooses to do so, will simply kill Playstation, Wii-U and xBox by introducing an open 30%-cut app/game ecosystem for Apple-TV. I already make a lot of money on iOS – I will be the first to write apps for Apple-TV when I can, and I know I’ll make money. I would for xBox if I could and I knew I would make money.  Maybe a “console-capable” Apple-TV isn’t $99, maybe it’s $199, and add another $79 for a controller. The current numbers already say a lot, even with Apple-TV not already an open console: 5.3M sold units in 2012, 90% year-over-year growth — vs. xBox 360 — about 9M units in 2012, 60% YoY decline.

So, because these two critical issues – user expereince and indie content – are not nearly in order and I see big investments in future interactive content happening, as well as idiotic moves to limit used games or put harder content protection into place than exists in mobile or tablets – i predict massive failure and losses here. And it makes me sad. Because it just doesn’t have to fail, even though it has been punted around poorly for 5 years. xBox just needs somebody with a brain and focus to get the product in order tactically before romping forward to continue the long-term strategic promise of an xBox in every living room, connected to every screen.

among many others.