In which we chat with Microsoft's Kevin Unangst about the media death knell over PC gaming, the digital distribution boom, the new PC-centric GFW Live interface, what's coming in DirectX 11, and the possibility of Xbox Live free.
Game On: When the press sounds the death knell for PC gaming based on retail sales declines, guys like Gabe Newell (Valve, Steam) and you respond by claiming online sales are picking up the slack and in fact booming. But we never really see the actual hard data. Do you have any tenable numbers you can share?
Kevin Unangst: We've looked at the analysts who've been both projecting and reporting the data, we're working closely with NPD, and we're as excited as I think many are to see NPD do their analysis and actually start their definitive reporting. When you look at folks like DFC and scrutinize their projections, it gives us I believe a pretty fair estimate of where the growth of PC gaming is actually happening on a worldwide basis.
The other thing you need to do is talk to the Nvidias and AMDs of the world, because when you see them continuing to sell, although it's not directly related to digital distribution, they're still selling a lot of graphics cards, selling a lot of GPUs. And we're seeing nothing but growth on those sides. [GO: See the second part of my January interview with Nvidia for more on this, "189 Million GPUs: Nvidia Unplugged and Uncut, Part Two."]
So I think that when you look at every indicator except U.S. North America retail PC game sales, worldwide PC game sales are blowing growth right out of the water, and in fact I think continue to look like they're going to lead for the foreseeable future. The simple fact that we're reacting with Games For Windows Live and Marketplace reflects that trend, reflects the fact that we see that growth happening online, and we're going to continue to invest and make sure our focus is there.
Look at World of Warcraft. You may buy World of Warcraft in a retail store once, and then you're going to continue to buy those upgrades all digitally. How is that revenue being attributed? The same type of model is going to happen, we believe, with the rest of the PC gaming market, where the monetization as well as the delivery of additional content which may be completely free is going to happen online and through various services. That's a big part of why we're moving in this direction.
Insert: The following PC games sales numbers were provided post-interview by Microsoft representative Paul Levy:
- Yankee Group estimates that online gaming on the PC in North America generated $1.6 billion in 2007.
- DFC says people worldwide spent more money on Windows gaming in 2007 than on any other platform -- $11.3 billion.
- According to NPD, the Windows PC is the driving force in online gaming. The Yankee Group expects online gaming on the PC in North America to reach $3.89 billion by 2012.
- The PC gaming market is predicted to grow 73% from 2007 to 2013 (DFC Intelligence)
GO: Can you talk a little about the new PC-centric GFW Live interface. How are you planning to make it more keyboard and mouse friendly?
KU: First, the emphasis is going to be on how you interact with the service. And then there's differentiation in the kind of content you'll see. We're not talking in detail about content differentiation at this point, but it's important for readers to know that we view these services as connected yet distinct, meaning that this is not some one-size-fits-all approach. The Xbox Live team is going to build the best service they know how to for a console in a 10-foot, controller-based, you know, living-room style experience. Whereas we're [the GFW Live team] looking at the PC to say "How do you really make this a mouse and keyboard friendly environment?"
A very tactical example is in the existing Games For Windows Live service. Before today, before the fall update, the menus pop out of the middle and it's very blade-like, and you navigate with a controller. With the new version, the menus will drop down from the top. You've got close buttons, you've got forward and back and home buttons. The navigation is completely different, so you've got accelerator keys and you can just navigate it like a PC user would expect to. Again, it's all about listening and studying and doing usability research with PC users to say "How do you want to interact with a game service?" and not necessarily bifurcating the two.
The new interface drops down from the top of the screen instead of obstructing the game by blocking the middle.
Drill-in on the top-bar, showing the Gamertag, score, online status, number of friends, messages, etc.
GO: Are you still focused on keeping GFW Live and Xbox Live players interacting?
KU: We had to do the hard work of bringing the platform over, and when you do that, when you re-lay the foundation, there are things you may carry over that are not 100 percent the right fit for that audience. A year later we've done all that work and I think you're going to see that iteration. Likewise, over time you're going to see both services [GFW Live, Xbox Live] have different features. They won't offer all the same content, and there'll be exclusive things that happen on Games For Windows Live that are available to Windows gamers that won't show up on the Xbox and vice versa.
Where it makes sense, we'll still enable that crossover. You may be able to get a game on both services because some games are universal. Cross-platform play is still an important part of what we want to make available. If you want to incorporate that as a Windows developer, we're going to make sure that's supported. We're going to keep both services compatible, but the way people interact with the services will be optimized for each platform.
GO: Let's talk about DirectX 11, which you also just announced. Most gamers would probably say they saw a pronounced difference transitioning from DX8 to DX9 back in the day, but that it was less so going from DX9 in XP to DX10 in Vista, especially since DX10 it was more of a baseline code-rewrite to benefit developers. With that in mind, what's the story on DirectX 11?
KU: You know, I think if you look at contrasting the changes between DX9 and DX10 versus DX10 and DX11, the size of the change [in DX10] where you're rewriting the graphics engine and rewriting the driver architecture and hardware wasn't available until closer to Vista's availability from a development perspective. That made it really challenging for these developer partners to write code. The fact that you had to develop on Vista because DX10 wasn't supported on XP, things like that contributed to the fact that it took longer to get really exploitive content out there.
With DX11, I think you're going to see a significant acceleration in that, because we're bringing DX11 back to Vista and we're going to support the DX10 and 10.1 hardware with DX11. So all the investment developer have been making and accelerating forward with DX10 is going to happen on DX11, as well as the fact that we're not doing that kind of a driver architecture shift again. We've made the big leap, and now we can focus on letting the developers take the time to use the quality improvements and really show the differentiation.
Games like Age of Conan, for example, are going to be really interesting, where they [Funcom] took the approach of "do the best job they could with DX9, focus on great gameplay," and then they'll be introducing DX10 enhancements at some point in the future that'll just be a natural update to the gameplay. And I think for a developer who's had the time to work and really take advantage of those tools, you'll start to see some more differentiation, and all that work will be leveraged in DX11.
GO: Should PC gamers expect to see more radical shifts in the visual architecture of DX11 games?
KU: You're going to definitely see with the transition from DX10 to DX11 and the availability of DX11, games more easily able to take advantage of the graphical improvements and the differentiation, because developers will have more tools and more lead time to make that a natural part of the gameplay, versus trying to tack it on based on some schedule.
GO: Are the changes coming in DX11 more hardware or driver/software driven?
KU: There will absolutely be DX11 features that down-level to DX10 and 10.1 hardware and of course several new features that are unique to DX11. We're not detailing all of that breakout yet, but for example, you'll see things like the ability to do better multithreading and multi-core support. All that's going to be universal among DX10, 10.1, and 11. There'll be some shader improvements and a few other things we've done that I think are going to make it much easier for developers and consumers to get the benefits on existing DX10 and 10.1 hardware, even on Vista.
GO: Let's turn to the million dollar question: Will Xbox Live eventually go completely free, too?
KU: The GFW Live announcement has no bearing at all on what we're doing with Xbox Live, and I think if you look at the Xbox-related announcements we just made at E3, we're going to continue to deliver even more value to Xbox Live gold subscribers. Frankly, Xbox Live members are going to get more people to play with as a result of the GFW Live announcement, and I think that community will get exponentially larger as a result of what we're doing on Windows. They're different services designed for difference audiences that happens to be connected and share a Gamertag.
In some ways you can think of it like Zune, where Zune uses the same Gamertag, same friends list, and you can use the points that you may spend on Xbox Live or Games For Windows Live Marketplace to buy songs right on Zune. I think you start to see that we're going to take that underpinning of the Live service, then on the console we'll deliver a new experience, add more things like the Netflix announcement, things like the party chat and the one-versus-one-hundred, etc. Likewise for the GFW Live service.
GO: Is Xbox Live "for free" even a hypothetical though? I'm probably inviting a "no comment," but say at some point the digital distribution model is generating enough revenue and Sony's offering the same basic online functionality for free.
KU: I think you predicted my answer on that, which is, "There's nothing I'm going to speculate on that front."
GO: Thanks Kevin.
