Ed Fries: The Future is Live by Gamespy

[Brevity]

Microsoft's VP of game publishing talks about online console gaming, price drops and the competition.
By Steven Kent | 5/15/2003

One knock against Microsoft is that the company knows nothing about video games. Don't tell that to Microsoft vice president of games publishing, Ed Fries, however. Having published games for the Atari 2600 as a teenager, Fries considers himself well-schooled in video games.

GameSpy: Sony made an interesting move when it bundled the Network Adaptor with PlayStation 2. It almost seems like they were targeting Xbox with that announcement.
Fries: Yeah. We like that. One way you can tell who is leading and who is following is by how the participants act. We thought about what should be in our machine from the start and we built in everything that we needed. Now they've realized that you need to have an adaptor, so they're sticking it in their box.

I am sure that they will eventually realize that you need to have a hard drive and they will stick that in, too. By then, Live will be so far along [that it will not matter]. We're happy with our hardware, so we can put all of our effort into the software side.
GameSpy: Do you see XSN Sports as a major shaker?
Fries: I think of XSN Sports as an example of where we are going. We've talked about the "digital entertainment lifestyle," but what does that really mean?



Ed Fries talks candidly about the Xbox.To me, we started with Xbox, and then we added Xbox-Live so that you could connect the boxes together. How can we go beyond that to connect all of the digital devices that we have to use them for our purposes-for having more fun?

To me, if you are going to set up a league with your buddies, why not do it on the PC? Why not set it all up and be able to check it from any web device, then play the games on your console? It's just an example of how you can build an application on top of the Live stuff that we have already exposed. I hope that all the third-parties find other creative things to do.
GameSpy: You lowered the price to $179. Why? Fries: Sony has effectively lowered their price to $179. They are selling their current inventory at $179. They claim that they are going to raise their price back to $199 for the [PlayStation 2/Network Adaptor] pack-in. We don't really know whether that is really true or not.

If they are going to sell their console at $179, we'll sell at $179 as well.
GameSpy: Is Sony your toughest competitor?
Fries: Sony is our competitor.
GameSpy: Nintendo is not much of a threat anymore?
Fries: We're trying to grow. We're trying to be number one. We're clearly in the number two position right now, and we'd like to be number one one day. That is why we are focused on Sony.
GameSpy: Do you have much hope of taking over the Japanese market?
Fries: If we were number one in the United States and Europe and number two in Japan, that would be all right.
GameSpy: What do you need to do to be number one in the next generation?
Fries: We can't give Sony another head start. They had a huge head start in this generation. We need to continue to continue to build on the stuff that we have already built. We can't let Xbox-Live suddenly vanish. The great thing about what we are doing is that all of our innovation is in the software, so that innovation can carry through to the next generation. Live will be there from day one, and it will be there with all of the features that we have added to it over the next several years.

We've talked about Live Now and Live Web and Live Alerts, and all of these different ways that Live is getting better all the time. It's just going to keep getting better. We think of this being software innovation, that is what this business is going to be about.

[Brevity]

GameSpy: If you get the chance, are you going to buy Sega?
Fries: If you look at the history of what we have bought in the past, I think it is a good indicator of what we might do in the future. We have never bought a publisher before. We've focused on small, talented development groups.
GameSpy: Didn't Bungie publish a few games.
Fries: Bungie was a publisher at one point. By the time we acquired them they were not.
GameSpy: Access Software was certainly a publisher.
Fries: At one point. There's always rumors that we are involved in many acquisitions; but historically, we haven't done anything like that. A lot of these companies that we are rumored to be suiting are cross platform. It would destroy a lot of the value of those companies to take them to a single platform. That is something to consider.

You should be skeptical about what you hear.
GameSpy: That is a fair point, but you are still going to buy up more companies? By all accounts, you still have $1.5 billion of the $2 billion you promised to spend last E3.
Fries: (Laughs) I would not speculate. The kinds of groups that I like to work with are few and far between. It's like with Rare, the chance to buy Rare comes up once in every 20 years.
GameSpy: But Rare was a two-edged sword. On the one hand, you acquired a respected and prolific company. On the other hand, you stole one of the brightest gems from Nintendo's crown.
Fries: Yeah, that probably added to the value.
GameSpy: How do you see the market changing?
Fries: When I was flying down here, I pulled up the TRST Data from last year, and I counted how many of the top titles for Xbox, GameCube, and PlayStation 2 were made in Japan… top 10, top 20, top 30. On PlayStation 2, two of their top 10 were made in Japan, and two of the next 10, and three of the next 10. That's got to be a record for low games from Japan.

On Xbox, there were none in the top 10, two in the next 10, and none in the last 10. On GameCube it was six, five, and I can't remember how many in the last 10. Almost all of them were Nintendo titles. That is a big change in the market.

I think a big part of it is that as the game machines get stronger, the games get more realistic. People expect to see things that are culturally relevant. They expect to see characters the can relate to. They expect music they can relate to. In a way it's a bad thing. It's making the games business less global.
GameSpy: Doesn't it also reflect the shift toward an older audience? Japanese companies tend to make family-friendly, cutesy games.
Fries: Yes, but that is almost a coincidence. Those are not seen as cutesy in Japan. I mean, in Japan you will see businessmen with Hello Kitty toys hanging from his cell phone. You would never see that here. It's almost like things that are culturally acceptable there are seen as kiddy here. That is something that has really hurt Nintendo in a lot of ways over the last couple of years.