Moore on Microsoft's next-gen battle

I think that we came here with a very focused view on what we needed to communicate at our press conference. I was quite frankly surprised at what Sony had to show - and I was a little surprised at the pricing announcement. We weren't quite sure about whether they were going to come clean with the pricing. Having two SKUs sounds familiar, having a global launch in November sounds familiar...

I'm trying to rationalise $500 and $600, though. I don't know what that is in pounds - they haven't announced pricing yet - but I remember the abuse we got for £279. I'm trying to rationalise whether Blu-Ray, a format that hasn't hit the market yet, can justify that pricing - and whether, when I look at their games and look at our games, I can see a $200 or $300 price differential in the quality of their games versus our games. I don't know about you, but I'm not seeing that yet.

Maybe I'm missing it, but when I see Gears of War... When I know that what you saw from Halo 3 is in-engine... Actually, blown up on the big screen, I didn't like the way it showed, because I've seen it on things like this [gestures to LCD screen] which is the way you should see it, and the game was spectacular. That was not CGI, that's in-engine work.

Then, having that little announcement of making sure that Grand Theft Auto IV debuts on our platform on day one, October 19th in Europe - when I roll all that together, and throw in this little thing called Xbox Live, and all of the opportunities that has provided for gamers to look at different ways to play, for publishers to have the opportunity to commercially transact with consumers who are totally connected. Xbox Live and Marketplace continues to be a monster phenomenon.

I add all that together, and compare it to what I'm seeing from the other guys, and I'm feeling pretty good that we're certainly in the right place. You know, having ten million units head-start - it's funny, you wrote about it at the ELSPA Summit last summer when I said that ten million was important. People kind of laughed at that and said there was no way we could do it, but we'll hit ten million way before the holiday of this year.

We think that a head-start of that magnitude is a virtuous cycle. There's a lot of goodness for publishers, there's a lot of goodness for retailers - but more importantly, we're driving Xbox Live, driving Marketplace, driving Arcade, driving fresh, downloadable content.

Providing gamers around the world - as we're dong right now, in real time - the ability to download hi-def content. We put everything you saw at the conference up on Marketplace last night, so that the guys who can't get to E3 can experience it on their hi-def TVs or whatever way they want to experience it. We're getting the numbers right now, but I can feel the heat from the servers as they handle those downloads. The Gears of War demo is being downloaded, the video of that, the trailer itself - and of course, Halo 3, the in-game video that we showed.

So I'm feeling comfortable that we're delivering what we say we're delivering. I don't think we've ever said things that we haven't delivered on, at this point. Last year was tough for us, because we took the high road; you, and everyone else, criticised us for having alpha kits running, but to me it would have been disingenuous to show videos of things that we needed to ship that year.

I haven't had a chance to go over to Sony's booth - I'm sure there's a ton of playables over there, I don't know. I want to go see Killzone, and see what it looks and feels like that.

Yeah, well. There's a surprise.

From our point of view, we're completely focused on delivering volume and supply for retail this year - because it's going to be another tough holiday if we don't step up our volume.

Despite what Sony will tell you, they really don't know - they don't know what their yields are, they don't know what issues they're going to face in production. While I hope for the good of the industry that they hit the numbers that they say they're going to hit, it remains to be seen whether you can ramp at that level. That's a lot of units ramping; they've got to start making it very soon. Complexities of Blu-Ray, complexities of Cell technology, silicon yields and what have you... They'll figure it all out, but they know it's not easy.

Well, here's the deal - yeah, absolutely. Many people would attribute the success of the PlayStation 2 to the success of Grand Theft Auto 3. It is our view that in the next generation, third party exclusives will become harder to find - so what people were missing, and maybe it wasn't made clear, is that day and date is important to us because when we do our research and ask PS2 owners why they're going to buy a PS3, they say it's because the only place they'll get Grand Theft Auto. That is empirical data that we've been amassing.

So when you talk about neutralising that, that's very important to us. Then we say to gamers - and this flooded my inbox during the night - the only place you can play Halo 3 and Grand Theft Auto IV is on an Xbox 360, and they've seen Gears of War and it blows the doors down for them.

What we look at is how you switch people on a market share basis from one generation to the other - and the ability for us to be able to say that the only platform where you can play those games is Xbox 360. More importantly, what people weren't even listening or didn't pick up on the importance of, is the exclusive episodic content, from Rockstar, for the Xbox 360.

If you think online is going to be important over the next few years, exclusive content online is going to be even more important. Having someone like Rockstar, who totally believe in our vision for what episodic content will be, downloadable content, bringing you maps, levels, vehicles, things of that nature - that ability to do that is very, very cool. People missed a little bit of the importance of that bit of the announcement. Having Grand Theft Auto IV on our platform is very important.

You'd have to ask them that. They're not going to tell me what they're doing. I don't know, I mean, how good are they feeling about the power and strength of the PS3 online network? What development environment are they working on right now, what size of installed base?

I mean, the guys at Rockstar are very smart guys as you well know. They've never really been able to do a lot on Xbox Live and that hurts them. People like Sam Houser and Terry Donovan are the most innovative guys in our industry, as you well know, and back in the UK where a lot of this is made, there's a real desire now to get with what's going on in the future, and that's driving a connected state with consumers that are millions strong.

I'm sure Sony's going to come up with something, but the proof of the pudding is in the tasting on this thing. We're there, we're going to be at six million by next E3, our attach rate is phenomenal. It's not just that early adopter any more - by having the Silver tier in there, by removing credit cards... As of last night, we now have a thousand pieces of downloadable content on Marketplace.

When you add all of that together, you've got to be able to predict an environment that you can develop into, with a predictable installed base and a consistent interface. Then we talk to them, as we did, about Live Anywhere on top of that - which Bill went through - now we're talking about hundreds of millions if not billions. That's a market that we've got to look at. We've got to address how you take a platform, that is Live, which has been given birth to on the Xbox but which is ultimately a platform play.

This is about a connected state - this is no different from the phenomenons of things like MySpace. People want to connect, and while offline gaming will still be popular, connecting your console now is not some geeky, intimidating, first-person shooter thing. It's things like Viva Pinata, which people scoff at, and that's fine. We'll prove them wrong. The boys at Rare, as always, are going to push the envelope and see where it will split. We're broadening that demographic, getting people to feel more comfortable about connecting. That's very important to us.

Well, on Xbox Live Silver you can do anything except play multiplayer. What Sony has actually announced is that they're pushing the emphasis to the publishers to figure out what they want to charge. They have said, "we're not going to charge you" - but if you truly believe that the publishers are going to build data centres, build user interfaces, network stacks, run bandwidth costs, egress costs, do compatibility with every provider around the world... For free?

Somebody needs to show me the business model there that's going to work. What the publishers are going to tell you is, not only are we providing Xbox Live as a platform - we built it, they know how to deliver into it, every single publisher is into it - but we've now acquired a company called Massive, and we're going to provide a turnkey solution for them to allow them to monetise their intellectual property. They're going to put hooks in the games, as long as that content is relevant - driving games will have a Coca-Cola sign in there, or product placement from Ford or GM built into the game; if it's relevant and pertinent to the game experience, we're in.

Sony... I'm not worried about them. They've got their own problems to fight here. We know where the future is - the future is connected state. It's not about hardcore games, although that will still be there. It's about all of us being able to talk, and interact, and play, and race, and drive - and monetising that, with development costs going through the roof, is going to be very important.

The pieces in the jigsaw puzzle are there, and we're not a company that's afraid of making bets.