Throwback: Inside Xbox 360 (Premium)

With Microsoft poised to launch the Xbox Series X this year, I thought it would be fun to look back on an earlier Xbox launch: I5 years ago, I was given an early peek at the Xbox 360.

Here’s my original write-up, with a few notes as needed.

Inside Xbox 360: An interview with Jeff Henshaw

In an earlier showcase, MSN: The Inside Story, I noted that part of MSN’s aura comes from its physical isolation from Microsoft’s main campus in Redmond. But MSN, ensconced in the so-called Red West campus, is at least located in the same neighborhood as the main campus. The Xbox team, by comparison, is miles away at the Millennium Campus, found in the far end of Redmond. Sandwiched between an extremely rural area and the type of rapidly growing suburb that now dominates Seattle area’s West Side, Millennium Campus might as well be on a completely different planet from the main Microsoft campus. It’s that far removed.

The differences between the place the Xbox team calls home and the main Microsoft campus are further amplified when you walk in the door. Everyone there seems to understand that they’re in the business of entertainment, from the receptionist who instantly started joking around with me to the Master Chief statue that guards the entrance: A now-wilted flower had been taped to one of the Chief’s guns in an apparent bid to tone down his otherwise violent pose. On the walls in reception are shipment awards, commemorating various milestones such as Halo’s 1 millionth sale or Project Gotham Racing’s 3 millionth.

Then I found out I was in the wrong building. Hey, it was my first visit. When I arrived over in Millennium B (I had walked into Millennium D by mistake), I discovered that even the Xbox team’s meeting rooms were different than those found throughout the rest of Microsoft. Instead of the Death Star meeting room effect that dominates so many of my Microsoft meetings, the triangular meeting room in Millennium B features plush chairs, an HDTV flat panel display, a 5.1 surround sound speaker system and, oh, an Xbox 360 prototype system with four wireless controllers. Yippee.

Of course, at this stage in the game, the Xbox 360 is really three linked Power Mac G5 development systems. But Microsoft has already made progress since the Xbox 360’s debut last month at E3 and I was able to get a few demos that only recently started working, such as portable audio player and digital camera support.

I distinctly remember this prototype, mostly for its size, which was enormous, and the amount of heat and noise it generated. Microsoft had just revealed the Xbox 360 form factor before my visit and I asked Jeff how on earth they were going to fit the processing power from those three Mac towers into the tiny white case. He said, “Oh, we got guys working on that.”

I met with Jeff Henshaw, the Executive Producer for Xbox Digital Entertainment at Microsoft. Jeff was part of the team that launched the original Xbox, and these days he’s behind the push to make Xbox 360 a mainstream entertainment device. This was the second time I’d discussed Xbox 360 with Jeff, but the first time in person. Jeff is a great guy and, as you might expect, he’s passionate and enthusiastic about Xbox 360 and its potential to change the face of entertainment. Who wouldn’t be? He’s got the greatest job in the world.

The bastard.

Jeff: I manage the software and a leeeetle bit of hardware—not too much, just the occasional peripheral. My team is really focused on the core system software, the platform software that goes into the console, the tools and assistance that we give to developers who are writing cutting-edge games for the Xbox platforms, and then also a lot of the new digital entertainment experiences we’re building around Xbox Live. I’ll give you a glimpse of that stuff today, both in-game and out of games. I’ll show you a mix of things that happen while playing games and the evolutions and revolutions we’ve built there, as well as some of the new digital entertainment features that we’ve built that are completely outside of games. Half or maybe one-third of what you’ll see doesn’t take place in a game but appeals to a broad audience of consumers as an entertainment value proposition. These are things like digital photos, digital music, real-time communications, and video chat. They aren’t necessarily hard-core competitive gaming [features] but they work really well on a console, and they’re really fun for a broad audience.

You’re going to hear me really drive home three key points about the next generation of console gaming. This is really how we tee up the entire Xbox 360 program that we’re going to be launching later this year.

Leading the high-definition revolution

Jeff: The first real wave of revolution that we think Xbox 360 is going to bring to gaming worldwide is high definition gaming. You heard this a lot at E3. If you walked out of E3 without hearing high-def, it would be a miracle.

Hi-def to us is, partly, about pixels on the screen. Every Xbox 360 game is going to be 720p minimum, high-def resolution, 16 x 9 aspect ratio. It will look great on both high-def and standard-def televisions because we built in enough graphics horsepower that Xbox 360 in real time can scale down high-def images to standard def.

Paul: Is it scaling down to the same aspect ratio? Or is it scaling it down to 4:3?

Jeff: We will actually give the game developers a choice. They can either have the Xbox 360 automatically crop or scale. Or, they can render a different aspect ratio scene of their game if they want to. Or, a game developer can say, “let the user choose.” And there will actually be a setting in Xbox 360 to tell the box what it should do. And game developers can just hand it over to the box to decide what’s best from a user’s perspective.

This all sounds very familiar now, doesn’t it? Microsoft uses the same language to describe the choices that developers have now with Xbox, but the resolutions, frame rates, and capabilities are dramatically better.

Paul: Not to get completely off topic, but there are a couple of things from E3 I’d like to cover. One of them is that Sony talked about 1080p, and there was sort of an … issue … there about whether that was even real or not.

Jeff: The total number of 1080p-capable TVs on the planet today is … zero. There are none. Sony has got a dual … I want to make sure I say this right, because it’s science fiction. They had dual HDMI outputs off the back of the console. And I think that there’s some theory that you could take dual 1080i signals and interlace them together to have a progressively rendered scene. But again, there are no TVs that actually support this. I think most people are going to actually take one of the HDMI outputs and just feed it out at 1080i.

As you may recall, Microsoft eventually supported 1080p on the Xbox 360, and I remember thinking that such a thing wouldn’t be possible. But I guess it was.

Our focus is on really recognizing that people today are buying HD-capable sets as a mainstream purchase. The price points have really come down. You’re starting to see really basic tube-based HD sets now for just $200. So people have got hi-def capable sets at home. Occasionally, you’ll see someone with an HD cable or satellite feed–I have HD cable at home–but people are screaming for content to really exercise these hi-def sets that they’ve bought.

Meanwhile, our retail partners are screaming for something they can show in the stores that promotes the value of hi-def programming and lets them bring customers into a location and show them hi-def content, and let them hear surround sound, and experience that. So they’re not just selling a game console, they can also get that TV sold or that surround sound system sold. Both our customers and our retail partners are looking at Xbox 360 as the catalyst that will really get the hi-def revolution burning.

All of that is focused around 720p and 1080i today, and occasionally even 480p on the lower end. That’s what people have, and that’s what people are continuing to buy. With 1080p, I don’t know when 1080p TVs are going to hit the scene. I don’t know what they’re going to cost. I don’t know how quick the adoption curve is going to be. We’re focused on the adoption curve that we see happening over the next five years, which is 720p and 1080i. And that’s why we’ve architected the Xbox 360 system to shine on those sets and protect the investments that people have made.

Paul: So Sony’s 1080p claim is just…

Jeff: Marketure. Let’s sit down and look at a 1080p game on a 1080p console on a 1080p television as soon as those things are all there. I’m eager to see it. We can all guess as to what year that might be.

Hi-def to us means more than just the graphics resolutions we’ve been talking about though. It also means how people hear the game. On Xbox 360, every single game will support Dolby Digital 5.1 surround sound at a minimum. Many games will go higher than that, will use 1080i graphics and 7.1 channel surround sound. But 720p and 5.1 channel surround sound are the minimal hi-def visual and audio aspects of Xbox 360. So hi-def is really that first key pillar for us.

Always-connected entertainment

Jeff: The Xbox 360 will also bring “always-connected entertainment” to people. And by always-connected, I mean no matter what game you’re playing, users will always have access to their friends online through Xbox Live. On Xbox 360, every single game is Xbox Live enabled because the system itself is Xbox Live aware. So even if you’re playing a single player offline game that has no multiplayer functionality at all, you still have the ability to receive invitations to play with your friends. You also still have the ability to bring up your friends list and see who is playing what, and see whether you’d like to join them.

That goes beyond just gaming. If you’re listening to an audio CD, or watching a DVD movie, you’re still always connected to that group of friends. Even if you’re watching live TV through Media Center Extender, you’re still connected to all of your friends.

Paul: On the Xbox today, when you’re playing just about any game in single player mode, it’s not really possible to get that sort of thing, is it? Or is that something that individual games can choose to support?

It is. On Xbox today, it’s up to the game developer to decide when the game is online and when the game is offline. Of the overall [Xbox game] portfolio, about 90 percent of the games are pure offline games. They are completely unaware of Xbox Live. Now 10 percent of the games are Live enabled, and they actually connect to the service for multiplayer gaming. And when you’re in a multiplayer match, you have access to your friends. And a few of the games, even when you’re playing single player, they’re smart enough to still connect to the service.

Paul: Halo 2 is an example of that.

Yes, Halo 2 is an example of that. Even when I’m playing single player in campaign mode, I’m still connected to Xbox Live and my friends can still send me invites. Another example is Ubisoft’s Prince of Persia, which is interesting. Prince of Persia doesn’t even have multiplayer mode, it just works in story mode. But Ubisoft is such a huge supporter of Xbox Live that even the single player, offline, non-multiplayer game still connects people to Xbox Live so they can keep in touch with their community. I found that I really loved playing Prince of Persia because my friends could always get a hold of me. If Sean [Marshall, Xbox PR rep] wanted to invite me to play, even though I’m just playing this story mode game, he still had access to me. And then when I went back to the next offline game that didn’t have that functionality, I felt like someone had disconnected the phone and pulled out the cable. I felt totally isolated. It’s a bad experience.

Paul: So on the Xbox 360 version of Live, this is no longer an issue?

On Xbox 360, this is absolutely no longer an issue. Every single game will have that always-connected functionality built into it. Always-connected means connecting to devices as well as your friends. So I’m going to show you some demos of how you can connect digital audio players and digital cameras directly to Xbox 360 and get at the content on those devices that people care about, in a really easy, plug-and-play way.

Personalized for your enjoyment

Jeff: The third and final pillar is “always personalized.” You’re going to see personalization everywhere in what I show you today. It begins with the hardware. On Xbox 360, we actually let people pull the front faceplate off of the console and put a custom faceplate on there. It extends into the software, where users will be able to download custom themes and skins to make the software look exactly the way they want. And it even extends online, in [users’] digital identity, where they can customize their online profile. And that stuff I’d rather just frankly show you because I’ve already customized my profile and you can see exactly what that looks like.

Wanna see some software?

Paul: Not really.  Oh wait, yes.

That’s what you’re here for. I know that’s what you’re here for.

[Laughter]

A look at the hand controllers

[Paul plays around with mockup hand controller. There are six controllers in the room in total, three each of two different designs. Jeff uses a controller that represents the final design.]

Jeff: One of the key elements of that hi-def pillar is high-definition communication between user and console. In this case, it’s all done wirelessly. Every Xbox 360 console is going to support wireless controllers out of the box.

[Paul turns the controller over in his hands, examines squared off bulge on bottom.]

Paul: This is the battery pack then?

That is the battery pack.

Paul: And it looks like you’ve moved the white and black buttons to the back [of the controller].

[Instead of a single pair of R and L buttons on the back of the controller, the Xbox 360 controller features four buttons, two on each side.]

We have. Those have become what we call Shoulder Buttons. The right and left triggers are the same, and you’ve got four analog buttons, a couple of thumbsticks, and a d-pad [directional pad].

Paul: Right.

On Xbox 360, everything is wireless. You’re going to see me do this entire set of demos wirelessly except for one part that we’ve mocked up on an Xbox 1. And when you watch me connect to this Xbox 1 with a wired controller, I just get miserable, because I’m chained to that corner of the room. Wireless is really becoming the de facto way for people to interact with their consoles. There are no cables with dogs and kids tripping over them or pulling them out just as you’re about to beat a game. It’s definitely the way to go.

I later asked Xbox PR about what technology they were using for the wireless controllers. I was told, “The Xbox 360 Wireless Controller will feature integrated 2.4GHz wireless technology for high-performance gaming up to 30 feet, and will be designed to work in a high interference wireless zone without latency or lag. The wireless controllers will last up to 35 hours of life on two rechargeable AA batteries. When the rechargeable batteries are running low, gamers will be given ample warning so they can connect a Play & Charge cable for uninterrupted play.” It’s hard to believe this now, but at the time, no one trusted wireless controllers because of latency issues.

Ring of Light: The Xbox 360 Friends List and Invites

Jeff: So I want to start you out in a game called Crimson Skies, which is actually an Xbox 1 game, which I’m just using as a backdrop to show you some of the new platform innovations that we made. With Xbox 360, our heart and soul is all about thrilling the hard core online gamers, so I want to start you out in this experience with an Xbox 360 version of Crimson Skies.

One of the first things you’ll notice is that I’ve gotten one of those gamer invites. You know what those invites look like on Xbox 1. On Xbox 1, literally, all you get is the Gamertag of the person that is trying to get a hold of you. Online, I’m [Gamertag].  So if I were going to try to get a hold of you on Xbox Live, you would see something pop-up from [Gamertag]. You would have no idea who I am or what I want unless you happen to know the person behind the Gamertag, which in my case you wouldn’t. You just get an invitation, it tells you nothing.

On Xbox 360, we’ve really innovated with the invitations themselves. They include a lot more detail, right there in the invite. In this case, I can see that Sniper Monkey is sending me a Friend invite, which means they want me to be on their Friends list. We’ve also added what you see there on the left, what we call the Ring of Light. The Ring of Light is one of those really consistent design elements that you see elsewhere with Xbox 360, like around the power button on the console itself and around the Xbox 360 button on the controllers. And you’ll see it in the software in exactly the same way. It’s a design element we made common throughout the entire family of Xbox 360 components, so that people have a very familiar experience no matter what they’re doing.

In this case, the Ring of Light is also functional. You’ll notice that the upper left quadrant is lit up there. It maps to my upper left quadrant being lit on the controller. And this tells me that this invite is specifically for me. This way, if there are four people all playing together on a couch with wireless controllers, and you get four invitations lined up across the bottom of the screen, everyone knows which one is for them.

Oh boy, I forgot all about this aspect of the Xbox 360: The round “ring of light” on the front of the console would light up according to who was who. I feel like this went nowhere.

Paul: So it’s the same quadrant that’s lit on yours?

Exactly. You know who its for just by looking at your controller. [The onscreen invitation] also has the Xbox 360 logo flashing there in the middle of the Ring of Light. That tells me that the key to unlocking the experience that’s behind this invitation is activated by pressing that Xbox 360 button [on the hand controller]. And when I press that Xbox 360 button, an entirely new user interface, designed just for Xbox 360, appears. We call this the Xbox Guide.

The Xbox 360 Guide

[The Xbox Guide slides seamless in and out of the left side of the screen and overlays about 50 percent of the screen.]

Paul: So that kind of overlays the game screen.

Jeff: Exactly. I’m glad you noticed that. It overlays right on top of the game. What that means is that these Invitations and the Xbox Guide are available any time, in any game, or any other Xbox 360 experience. The game will usually pause, if it’s a single player game. In this case [the demo version of Crimson Skies] the game is still running, but most games will pause. With online multiplayer games, we’ll let the other people continue to go at it. But it’s up to the game [developer] to decide what it does here.

But the key here is that I haven’t had to exit the game. I haven’t had to get up and eject a disc. All I’ve done is pressed that Xbox 360 button and immediately that Guide is available. And I could have been doing anything else that Xbox 360 can do [when the Invitation was received]. I could have been watching digitally recorded television [using the Xbox 360’s Media Center Extender functionality], I could have been having a video chat, I could have been listening to an audio CD, anything. In any experience, this stuff is always available.

This limited form of multitasking was considered a real innovation in 2005. Video game consoles were famous for their inability to one thing really well but they weren’t able to do two things at once at all.

Now because I brought up the Guide while this invitation from Spider Monkey was on the screen, this version of the Guide actually shows me more information about who this person is. We’ve got what we call a Gamercard here in the upper left, which you can think of as a quick thumbnail view of what this person’s all about. In this case, Spider Monkey has actually customized her Gamercard with her own photo, that she snapped with the Xbox 360 camera. The camera will give people a really great way to snap a photo and blast it onto their Gamercard, giving it a really personalized look. She’s also got some key, top-line statistics here, based around what kind of gamer she is. Some of that comes from community reputation, a score that comes out of game play–the more games you play, the higher your score is going to be–and ….

Paul: How does that map to what we see now in Halo 2? I know in Halo 2 [on Xbox Live] you have a rating that goes up and down. Is this based on that?

Jeff: This is a ubiquitous score across all games. The Halo 2 rating would feed into this. You can actually drill into someone’s digital profile and see which games are contributing to this score. If a game has a lot of specific stats, which Halo [3] will, you’ll be able to drill into those specific stats here as well. They contributed to this score.

We didn’t know the name of the next Halo game at that time. I theorized that they might call it Halo 360.

Let’s say you’re online and you have a Gamerscore of 5,000 and you see Spider Monkey has 5,300 and think, “well, we’re pretty close in terms of overall accomplishments. But let’s see what kind of player she is.” 4,900 points in my score came from Halo. Let’s see where hers came from. And you look and find out that she only plays soccer. All 5,300 of her points come from soccer. She doesn’t even own Halo. That will give you a little more detail, and in this case tell you that maybe you don’t want to hook up with her.

But overall, Spider Monkey looks like a pretty cool person for me to hook up with, so I go ahead and accept the Friend Invite. Now, it’s going to drop me right back into the game. I can pick up the action right where I left off.

That Xbox 360 button is a really cool tool for bringing up the Guide to field information on the system in real time. If I press that button while there is no invitation on the screen, I will get some view of the Guide that’s based on what I’m doing right now. It’s system wide. Any time I press that button, I’ll get the Guide. If I’m listening to an audio CD and I press that button, the Xbox Guide is going to appear and give me a little bit of information about the artist and album or whatever.

Paul: So you’re in Crimson Skies right now and one of the things you can do is download new game content.

Jeff: Exactly. And this version of the Xbox Guide is focused on me. It has my picture, my Gamerscore, it’s got access to my community, and–even for offline players who have never connected to Xbox Live–the Guide still has value.

[Paul points out some music controls in the Guide and asks whether that has something to do with music that’s been ripped to the console.]

Those are music shuttle controls that will let you replace the game’s built-in music with your own custom playlist.

Paul: So you’ve customized this game to play your own music.

Jeff: Exactly. And that can be music that I’ve ripped onto my Xbox, or it can be music that I’m streaming from a PC or a Media Center [elsewhere on your home network]. Any music source can be piped in to your custom music that plays instead of the game’s built-in music.

Xbox 360 community features

[Paul asks about the Community buttons on the Guide].

Paul: Is that email?

Jeff: That’s actually not email. It’s what we call the Xbox Live Message Center. It’s very similar to email, but there are a few key differences. If you’ve used email, this is going to be very familiar. It gives you a list of messages just like your email Inbox, but this isn’t connected [directly] to the Internet. This is part of the Xbox Live service. So all of those messages are going to be gaming-specific or entertainment-specific messages from trusted people that you’ve given the OK to.

[The Message Center has messages from people (like invites) but also messages from the companies that made the games that they’ve used. Some of these are for new game content.]

Paul: So you’ve got an invite from Spider Monkey there. This is the same invite that we handled earlier, right?

Jeff: Yes, it shows up in both places. The thing that appeared on the screen let me know that this [message] was here.

I can also get an invite to chat, have an audio chat with someone. But with Xbox 360, people that have a camera can also send video messages to anyone, whether [the recipient] has a camera or not. And then they can play those video messages back.

Paul: Now, would any one of these messages would pop-up up a notification if you were using the Xbox 360 when it came in?

Jeff: Yeah, but only if you have it set up to do that. By default, we’re not going to pop-up every single received message, it will just be invitations from people. If you want to be notified when any message comes in, you can turn it on.

As for the other Community buttons here, one of them is your Friends list. If you play Halo 2 online, which I know you are doing, then you know what the Friends list looks like. The big difference here on Xbox 360 is that this Guide and this Friends list is always available, in any game. So even if you buy an offline game, this still works.

The other thing that’s brand new, that you haven’t seen in your Friends list in Halo 2, is what we call the Recent Players list. And I’m glad you’re a Halo 2 player because some of the press we’ve talked to aren’t.

Paul: Now, Halo 2 does have Players list.

Jeff: Halo 2 introduced the concept of a Players list, yes, where even if people weren’t on your Friends list, you could at least go back and look at previous matches and write down people’s Gamertags and then send them an invite if you wanted to. With the Xbox 360 Recent Players list, that works ubiquitously across all of the games. So you can step back in time and sort the list chronologically, or by the game you were playing, and see all the people that were in there, and go back into that list and invite people to play again, or to be in your Friends list, or to give them a rating.

This is one of many ways in which the early Halo games influenced the design of Xbox Live more generally, especially with regards to multiplayer gaming.

Paul: What information do you have about what you did with them?

Jeff: It will tell you the game that you played, when you played with them, and usually who won, or what the score was. There is a game defined field that [game makers] can fill in. Depending on the game, some might just say, “You lost by 3 points,” others might say, “This guy slaughtered you by 4 frags,” it will be up to the game developers. It will give you a bit of context.

So that is all of the support that is available on top of any game or on top of any entertainment experience in Xbox 360.

This article was originally split into two parts because of its length. This is where part one ended and part two began.

Taking it up a notch: The Xbox 360 Dashboard

Jeff: The other scenarios I want to show you, some of the stuff that begins to go a little bit broader than just the quick messaging and the invitations and the Friends list functionality, is software that we’ve built that is powerful enough that it requires all of the resources of the Xbox 360. That’s all three of the CPUs, all six of the hardware threads, all 500 MHz of the graphics processor, and all 512 MB of system RAM. With the Guide, we’re just sharing resources with the game. The game continues running and gets 99.6 percent of the resources, and we take 0.4 percent.

For some of the experiences, we actually want to leave the game altogether and go to what we call the Xbox Dashboard. You’ve seen an earlier version of the Dashboard on Xbox 1; it’s that green wire frame thing, the kind of spooky looking thing. We have completely redone that for Xbox 360. Unlike Xbox 1, where you have to get up and eject the disc to get into the Dashboard, which is a pain, anytime you have the Xbox Guide up in Xbox 360 you can now press X and it will take you out of the game and drop you right into the Xbox 360 Dashboard. And you can get right back into the game, if you want, without having to get up once again and reinsert the disc. You can even power up and down the console with your wireless controller.

[Paul examines the Dashboard, which is a full screen experience.]

Paul: So this has some of the features from the Guide…

This has all of the features from the Guide, plus some of the stuff from the Xbox 1 Dashboard, plus a whole bunch of brand new Xbox 360 stuff as well.

Paul: So this is like a million times better than the Xbox 1 Dashboard.

Jeff: Oh my God. That’s music to my ears. Thank you, Paul. We put a lot of work into really polishing this. We worked really, really hard to make this look really fantastic.

The Xbox Dashboard is organized into what we call Blades. The Blades are these curved surfaces, like the Ring of Light we talked about earlier. The Blades are also one of those common design elements. You can see that sides of the [Xbox 360] console are just a little bit concave, similar to the Blades and to the inverse of the edges of the controller.

The Blades UI eventually gave way to a panoramic experience, similar to what we’d see later in Windows Phone and Windows 8.

Some of these Blades have some of the information the Guide on them. And in fact, you can actually bring the Guide up on top of the Dashboard by pressing that Xbox 360 button. Like I said, any time you press that button, that Guide appears. This set of Community links is identical to what we saw in the Guide and I can go and access them through the Dashboard in exactly the same way.

[In each Blade, the upper left item is typically highlighted by default. However, if you highlight a different item, then move to a different Blade, and then come back, that item will remain highlighted.]

There’s no place like Home Blade

Jeff: The first place that we start out is called the Home Blade. The Home Blade is for both online and offline gamers. It’s kind of a thumbnail, top-level view of all the gaming related information that matters to you. If you’re an offline gamer, it’s going to have a list of the last games that you played and potentially some high score information. You can have an Xbox profile whether your online or offline, so in this case you can see your own profile right here on the Home Blade. We give you quick, one-button access to downloadable content that matches up to the games you’ve been playing recently. For Xbox Live players, we’ll give you a personalized calendar of events listing things that are coming up on the Xbox Live service. And you’ve got those Community links which, like you noticed, are exactly the same that you see in the Guide.

A day in the Marketplace

Jeff: One of the biggest innovations here [in the Dashboard] is what we call the Xbox 360 Marketplace. Let’s drill into it a little bit because this is the stuff that I probably get the most excited about. Think of the Xbox 360 Marketplace as your one-stop-shop for all of your downloadable content, both for games and for other forms of digital entertainment.

It’s not just games, but obviously games are at the heart of it. The first thing you’re going to see is a list of new downloads for the games that people are playing right at launch. This is also the place that you’ll be able to come and adjust your Xbox Live membership. You’ll be able to download fully playable game demos and even standard and high definition video footage of game play. That will help people figure out what their next game purchase is going to be without having to go over to a PC in another room in the house to do that research. This is also the place where people will download skins and themes for the software, in order to personalize it like we talked about.

Rethinking Xbox Live

Jeff: We had an incredibly fast ramp-up for Xbox Live adoption. We went from 0 to one million subscribers faster than any paid online service in history. We ramped to one million faster than AOL, faster than HBO, faster than any other paid online service in history. We’re creeping up very quickly on two million right now.

They’re creeping up on 60 million today.

But we recognize that … I hate to say we have a fundamental flaw … but we have a fundamental flaw in the service today. And that flaw is, in order for us to give users access to anything on Xbox Live, they have to [first] pay a subscription fee. And that subscription is mostly targeted at hard-core, online gamers. Halo 2 guys like you. If there are people that never want to go head-to-head, that never want to shoot, or do battle, or play sports games with other people online, they can’t do anything on Xbox Live today. There are tens of millions of people who play single player platform games today who would love to have a new level. Many of them would even be happy to be able to buy a new level for those games. But in order to get access to the catalog of content, they have to pay the hard-core gamer subscription fee. For them, it’s not just about buying a $5 level; it’s about buying a $55 subscription, plus the level. And that’s a huge barrier for people.

We’ve fixed that with Xbox 360 by introducing what we call the Xbox Live Silver membership. It’s free. If you can get broadband to your box–wired or wirelessly–you can do everything I’ve showed you so far. You can create an online profile, start accruing some credibility through the games that you play, send and receive messages with your friends online, and come here to the Marketplace and browse, sample, try, download, and buy content. All without having to pay a subscription fee.

Xbox Live Silver still exists today, of course, but it’s just called Xbox Live now. And there are more expensive subscriptions in the form of Xbox Game Pass.

The only time you have to pay an annual or monthly subscription fee is when you actually want to engage in head-to-head multiplayer play. That way, the hard core people that want to compete get the ability to do that without scaring off the tens of millions of people who just want to want to go up and buy a new level. We think that this change is going to rocket us past the one to two million type of market and get us up into the 10 million to 20 million market, where we actually have a serious percentage of all the console owners participating.

[Paul talks about the problems with most of his Halo Havoc friends not getting levels on Halo 2 because they’re not on Live.]

Paul: You’re not requiring people to be part of this Silver membership, right, this is still optional?

Jeff: It’s still optional. If people want to go online, they’ll need to be Silver members, but it’s free. We don’t collect your credit card number or billing address, or any of that tedious typing that people have to do today. That’s just all gone.

So let’s go look at what it will be like to download a game here in the Marketplace. Xbox 360 is smart enough to realize that in a world where we want tens or even hundreds of thousands of pieces of content coming down, it’s actually going to go and look for the content that’s related to the games you’ve been playing lately first, and bubble those up to the top. That will make it as quick [and relevant] as possible.

Micropayments and microtransactions

Jeff: We’re also going to have some free games for people to check out on the service, and get them used to downloading content and trying things out. Checkers is a good example of that, and I can click on “Checkers” and it’s free. You’ll notice that the Xbox Guide pops up because that’s what handles all the billing infrastructure. You’ll notice that you already have a balance on your account. That’s because Xbox Live with 360 supports micropayments and microtransactions. So you can stuff an account balance onto your account and then spend it a little at a time.

[The account balance reads 11,000.]

Paul: So what is that? You’ve got 11,000 … what?

Jeff: These will be called points. You will buy a balance of points. A parent might buy a child $20 worth of points, and that might be worth 20,000 points. And then you can go spend those a few at a time. That gives game developers the ability to produce really small pieces of content, like a paint job for a car or a new potion for a game, rather than have to do a full level. Now they have the granularity of billing and can charge a very small amount.

Ah yes, Microsoft Points (MSPs). What a disaster. This lasted through the Zune generation before Microsoft finally just started accepting normal currency like a real company.

This [Checkers] is actually a free game, so I don’t have to worry about it deducting my balance. I can just click Download and because this is a broadband account, it downloads that version of Checkers to my system quickly. As soon as it’s done with that, it takes me over to my Games Blade. This is the place where I can go and access all of my game content. I can look at the saved games I’ve got on my system, I can launch the downloaded games I’ve purchased, and I can launch the casual games that are part of Xbox Live Arcade, which is now built-in to Xbox 360, and not a separate disc that you have to put in the system. And I can watch those game demos and trailers. Some demos and trailers will be free. Some will be fee-based, you will see both. My guess is that 80 percent of them will be free. But I can definitely see a case or two where a game publisher might want to release a first level of a game–fully playable, not time-bombed in any way–for a fee. Maybe $5. And then if you want the other 50 levels, you have to pay $50 for the whole game.

Paul: Do you think companies will actually make major games available for download?

Jeff: We’re already testing the waters with that with Xbox Live Arcade, where it’s mostly mini-games but they’re fully downloadable and playable in place [without a disc]. Those range from a couple dozen KB to a couple of MB of RAM each. There’s one that is 40 MB or so. There are some pretty decent-sized games. But an Xbox 360 game is 9 GB. I do think in some regions you might see fully downloadable games. It will depend a lot on the broadband offerings. In the US, frankly, our broadband is not well-tuned to support this kind of thing. In Japan, where you have a megabit down, it’s more likely we’ll see huge downloads there. What I think is more likely is that we’ll see some game developers go and really innovate with episodic content where you can download a level at a time and maybe they release a new level every few days or every few weeks, and it’s a gradual game that you play over time, and you can kind of pay as you go.

An Xbox One game today can easily exceed 100-150 GB.

Game updates and service packs

Paul: You don’t see this a lot with console games these days, but one thing you can do with this is actually update games, fix bugs.

Jeff: You know, that’s true even on Xbox Live today. But it’s dangerous water. And I’m going to give you two answers here. Today, Xbox Live definitely gives us the opportunity to keep the gaming environment safe and secure. So if an online game goes out and there’s a serious cheating threat, or there’s a serious security threat, Xbox Live is a great tool and a closed environment where we can fix that. That’s the obvious stuff. The second part of it is that Xbox Live and the ability to download new content is not a crutch to ship crappy software. And too often on the PC–I’m going to be blunt here–in the PC gaming space, games get out that developers know have problems because they know they can patch them later. They know they can force updates. And the act of playing [games online] becomes a pain in the ass, because you put the disc in and then you gotta download the patch and you gotta download the service pack and you gotta download the security hot fix, and then you gotta apply those things and reboot your machine. That’s not an entertainment experience. That is not fun. That is not “pick up the controller and play.”

I feel very strongly about this. One of the things that we’re hard core about with Xbox on our customers’ behalf is that Xbox 360, like the original Xbox, is a pick up the controller, pop in the disc, and play kind of system. Always. That is the experience you can count on. It’s fun, it’s easy to get into and it’s consistent.

So if there are updates, they’re usually done quickly and silently. And we are much, much more cooperative with our game developers about making sure those kinds of problems are fixed up front such that hot fixes and service packs and other maintenance are kept to an absolute minimum. It does happen. It happens on Xbox 1. We’ve done many security implementations for games on Xbox 1. Most people don’t know about it because they’re fast and silent. When was the last time you hot-fixed Halo?

Paul: I’ve never hot-fixed Halo.

Jeff: Yes you have. [Laughs] This is my point. You’ve never felt any pain around it. We never want users to feel pain.

Paul: You should talk to the Windows guys about this some time.

Jeff: Actually, that’s one of the really cool things that’s going on at Microsoft right now. The amount of technology sharing and the amount of insight and context sharing that’s going on right now between groups is reaching … I’ve been hear for 15 years. I think it’s reaching a new high, which is really cool.

Connected digital entertainment experiences in the Media Blade

Jeff: Before I launch Checkers, there’s one other key area of this Dashboard I’d like to show you. That’s the Media Blade. I know that’s some of the stuff that really excites you.

The Media Blade is one of those places you go for the out-of-game digital experiences we talked about. The key thing that I think the Media Blade is going to help Xbox 360 accomplish is to really get out there and speak to a broader audience. And I’m going to include myself in this audience, and my wife and kids. We’re not hard core gamers. We do love to play. But my daughter doesn’t get to play Halo 2; she’s only 5 years old. I don’t want her playing Halo 2. In fact, she thinks the Covenant guys are dragons, and she tells me not to hurt the dragons. She thinks they’re friendly.

The Media Blade is the place you can go to experience connected digital entertainment experiences without any of that hard core competitive stuff. Obviously, we’ve got great support for music and photos here. Music can be ripped directly from a CD to the Xbox 360, but that’s actually not the optimal scenario. The optimal scenario is when you’ve already got your library of music ripped to your PC. Or, you’re a digital photographer and you’ve already got a photo library built up on your PC.

On any Windows XP PC, on a home network with Xbox 360, the 360 will connect to that XP PC and stream, wired or wirelessly, all of that music and all of those photos over to the console.

Paul: What do you have to do on the XP PC to make that work? Is this Windows Media Connect?

Jeff: Yes. And you’ve already got it if you’ve got Automatic Updates enabled. Windows Media Connect exposes the music and photos from that PC. Xbox 360 is a Windows Media Connect client.

If you have a Media Center PC, that takes it to an entirely new level, because you’re remoting that entire Media Center experience–the enhanced music, the enhanced photos, the live and digitally recorded television–to the 360. But the cool thing is, when you’re experiencing that through Xbox 360, from Media Center, or from an XP PC, you’re connected to the gaming crowd, your list of friends. You can send and receive invites and bring up those messages, and bring up the Xbox Live Marketplace. You still have access to all of that stuff.

Taking it to your friends

Jeff: Where things get even cooler is–where Xbox Live really revolutionized gaming on the console by taking it online with your friends–Xbox 360 is going to revolutionize music and pictures by making those experiences shared with friends too. With Xbox 360, you’ll be able to share your music playlists, and actually broadcast your music out to your buddies who are online with Xbox Live. Or, you can share digital photo slideshows with friends on Xbox Live.

[Henshaw moves over to the Xbox 1 unit in the corner of the room.]

I want to show you what that’s going to look like right now. This is the part where I get really cranky because I’m tethered to cables. This is something we’ve mocked up on Xbox 1, and what we’ve done is, we’ve taken what will eventually be the Xbox 360 camera and we’ve mocked it up with an Xbox 1 camera. Paul, I’m going to put you live on camera. And I have got my good buddy Larry, who is [Gamertag] on Xbox Live, and … Hi, Larry, how are you?

[Larry appears onscreen in video chat session; Paul is in the lower window.]

Larry: Hey, I was a little busy reading the SuperSite for Windows.

Jeff: Oh, excellent, excellent. So we’ve got Paul here and, Paul, this is the version of Checkers we downloaded. [Checkers game appears onscreen, with the two video windows intact.] And this an example where we can take a shared experience like the game of checkers, which is an easy to play, multiplayer kind of game, and actually get video chat running at the same time as the game. You’re going to see this with a lot of card, parlor, and board games, as well as things like shared music and shared photos.

[Larry makes a dominant move and the game audibly trumpets his success.]

Jeff: That was really nice, Larry, thanks so much. Checkers is a great example because it gives us the ability to have a fun game that provides a lot of network bandwidth for video chat. It’s not a network intensive game. And also because it doesn’t require a lot of intellectual bandwidth. I can play checkers and chat at the same time. So Larry, we’re running behind schedule, so I’m going to go ahead and cut this off. We really appreciate you joining in with us. You’ve provided a spectacular example of shared experiences on Xbox 360.

[Laughter]

Larry: Bye Jeff, bye Paul.

Jeff: Enjoy the rest of your morning dude, bye.

So you can envision us releasing Checkers … with a shared photo album. Or a shared music playlist. And having the social dynamics around listening to music and looking at photos coupled with real time communications like video chat. We think that it’s going to provide an entirely new set of experiences to people on consoles, who might otherwise not have had a reason to buy one.

Paul: Given how much better this is than, say, instant messaging on a PC, have you had any discussions with the MSN folks about maybe working together…

Jeff: We have constant discussions with the MSN guys and our roadmap includes a ton of oss-platform integration. The utopia that Microsoft is striving for is ubiquitous connectivity to anyone anywhere. Any user on any device. It shouldn’t matter that you’re at your office on your PC and I’m at home on my 360. If we want to talk, we should be able to talk. It’s absolutely the direction we’re heading in. We want to talk with voice, we want to talk with video, and we want to talk with text. We should be able to do that. You won’t see that right away. Initially, it will be Xbox to Xbox. But over the next few years, I wouldn’t be surprised if we roll out some other things. Cell phone. Whatever.

Portable device integration

Jeff: Sharing music and sharing photos is cool … if you have access to music and photos. And if you’ve got them all on your PC and you’ve got a home network, that’s great. Many people have their photos and music these days. But not everyone has the home network. And that’s still a barrier for a lot of people.

Xbox 360 has fixed that by adding really simple, fast, fun device connectivity to the console platform. It’s never existed before on any console. You’ll be able to take your digital audio players–like the Rio Carbon I have here or an iRiver, or an iPod, or even a Sony PlayStation Portable (PSP)–put music and photos on it, bring it over to your Xbox 360, navigate over to the Media Blade, connect that device via USB 2.0 to the 360, and stream it all over in real time to the 360. In the Media Blade, we scroll down to portable devices, and it will give me a list of all the music that’s on this device.

[Henshaw scrolls through the list of artists on the Carbon.]

Do you have a favorite artist that’s on this list?

Paul: Do I? Um. Coldplay is fine.

Jeff: OK, pick a song and … [music begins playing] Yes. This music is actually being streamed from the device in real time, through the Xbox 360, and into my home theater with its HDTV and surround-sound system. And I can do anything with this music that I can do with music I’ve ripped directly to the Xbox. If I want to share that music with friends, I can do it. If I want to use that music as a custom game soundtrack, like we did earlier, I can do that.

Paul: Now you can play that music and then go back and do other stuff, right?

Jeff: You can start a game while the music is playing, you can start an audio chat while the music is playing…

Paul: It’s not happening in isolation.

Jeff: No, it’s not.

The other trick I’d like to perform, if you don’t mind me snapping a picture of you, and I promise I won’t publish this, I can take this picture … [snaps a picture with a digital camera] and plug the camera directly into the Xbox 360, navigate to the Media Blade, same way, via USB…

[Paul calls out the icons on the Media Blade screen]

Paul: What do you have there? You have media sources…

Jeff: Media Center PC, a mass storage USB device, a Memory Unit, an iPod or other portable audio player, a digital camera source.

So I go into Pictures, and this will show me my pictures library, locally or on networked PCs. I might have a USB drive with a photo library. In this case, I just click the camera icon. [The pictures on the camera come up onscreen]. I can go through these one by one, or I can view them as a screensaver, or I can share this photo album with friends online. In this case, I’ll just view a slideshow. And this actually gives me a high definition view of the photos directly off the camera.

[Paul notes the Media Center-style transitions between each photo.]

Yeah, we’ve got lots of transitions and they’re customizable. You can select fades or wipes or whatever. You can also do some effects like black and white or sepia. It’s all pretty simple, playback-oriented kind of stuff, but it looks really cool in high-def. [Picture of Paul comes up.] That’s a keeper right there. That I will publish.

That’s how easy it’s become to get digital photos directly from your camera to your high-def television set. For people that don’t have a home network, or just want the pure convenience of being able to just walk up and plug something in, and get it on the TV with surround sound, Xbox 360 is going to make that easier than it’s ever been before.

That’s the stuff I’m really excited about.

[Henshaw drops the Xbox 360 controller onto the concrete floor.]

That’s only a $60,000 prototype. I’m sure they’ll appreciate me breaking this.

Assessing the competition

Paul: One thing I wanted to address was that you did your thing at E3 last month, and then Sony kind of trashed you. I was sort of surprised you didn’t come out more strongly to defend yourselves.

Jeff: You know, here’s the thing you have to keep in mind. Leading into E3, we had about four weeks of exclusive press coverage. We did the MTV announce, we did a constant stream of press releases, so that it was nothing but Xbox 360 for the four to six weeks leading up to E3. At E3, Sony had all the new news, because they were using E3 as their sole announce. They had a newness, or new buzz, around them and what they were talking about.

They key thing for us with Xbox 360 is that even after the Sony announce, we feel like we’ve built the right product with the right set of features for customers at the right time. And as we launch, and as we are the exclusive hi-def gaming platform this holiday season, I don’t think we need to get into a tit-for-tat with Sony. We’ve already shown that the hardware is basically a jump ball. Each system has its highs and each system has its lows. They beat us in floating point and we beat them dramatically in integer.

There are a few areas that we think speak for themselves. Sony’s lack of an online strategy continues to be this huge, glaring, bottomless pit, where meanwhile, Halo 2 is redefining how online gaming happens. And we’re taking that to the next level with all these shared connected experiences in Xbox 360.

It doesn’t make sense to play tit-for-tat with the hardware. We realize that real innovation in the next generation is taking place with software and services. When you have the equivalent of a jump ball on the hardware, software and services are where we take possession of the ball. We’ve got the software and services. It’s what we’ve spent the last hour talking about. How much did we talk about hardware? We talked about the wireless controller and the camera. But that was about it.

OK, I mentioned the processors and the memory too. But it’s all about software and services. And Microsoft is the company that knows how to deliver innovative software and services over time. Sony can continue to do the gadgetry demos, and they can continue to do the science experiments with the rubber ducks falling into the tub. But when it comes to building great games, and delivering great consumer entertainment experiences, it’s right here.

So that’s my usual answer to the press. The private Jeff answer is that this holiday, Christmas 2005, when people are going to unwrap presents under the Christmas tree and they’re excited to play hi-def games, there’s going to be exactly one console that they’re doing that with. Exactly one. And it’s Xbox 360, by the millions, not Sony. By the millions, this Christmas, people are going to be playing high-def games. And they’re going to be doing it on Xbox 360. Meanwhile, Sony’s going to have a bunch of PowerPoint slides and rubber ducks falling into a tub, and people aren’t going to care at all.

Putting it all together

Jeff: This all started with games. We started in a game and really gave some cool enhancements for the hard core, Halo-playing masses. There’s stuff in Xbox 360 that’s really going to captivate that hard core audience. But we’ve also built Xbox 360 to be a system that will appeal to a broader audience than I believe any console has ever appealed to. While kids or the hard core males in the house are driving the initial purchase, the services in Xbox 360 will speak to the younger demographics, the older folks in homes, the parents, who aren’t necessarily going to be playing the hard core games. There are casual games here, the Xbox Live Marketplace, there’s shared music, and shared photos, there’s something in here for almost anyone who likes to be entertained in any way.

And across all of those experiences, you’ll notice that the hard core, the casual, the demographic broadening, the in-game, the out-of-game, all of these were high definition, connected, and personalized experiences. And those things just come out so loudly in everything that we show and everything that we talk about. Xbox 360 really, really does set the bar for the next generation of game consoles.

So what do you think?

Paul: Eh. It’s not bad.

[Laughter]

Jeff: You’re thrilled with this, I can tell.

Paul: I can’t stand seeing stuff like this because it just ruins the rest of the year for me. My stuff sucks now.

[Laughter]

Jeff: I know the feeling.

Paul: I get the same feeling from this that I got when I first saw Media Center [in January 2002].

Jeff: It just changes everything for you. You expect to be able to pause and rewind TV now. With Xbox 360, I expect all of that stuff, but I also expect you to be able to invite me to play Halo. If I don’t have that, something is wrong with my system. If I’m sitting in front of a television, I expect to have access to my Friends list, in the same way that you expect to have IM running on your PC all the time. It just becomes an expected part of the experience.

I also think this video chat stuff is going to be big. My kids are going crazy with it. When I’m at the office, I get 20 video chat invites a day. It’s just how they talk to daddy. And frankly, without a way for them to do that in a really friendly way on the on the TV, and without me being able to do that from my office, I feel uncomfortably disconnected from my family. Xbox 360 is going to bring people closer together, because of that always-connected nature, in ways that are going to really revolutionize the way people think about communications.