How HoloLens and backward compatibility fit into Xbox’s grand strategy

LOS ANGELES — Shannon Loftis has had a long career making games for Microsoft, from the original Xbox to a variety of Kinect releases. She also managed the now-defunct Microsoft TV business, Xbox Entertainment Studios, and she is now the head of publishing for Microsoft Studios, the game division at Microsoft.

Loftis reports directly to Phil Spencer, head of the games business at Microsoft, and she talked to us 1-on-1 at the Electronic Entertainment Expo industry tradeshow in Los Angeles, where Microsoft on Monday talked about how it will make Xbox 360 games playable on the newer Xbox One video game console.

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We talked to her in a wide-ranging conversation about Microsoft’s big games, the rise of female heroes, the fate of Kinect, the new HoloLens augmented reality technology, and Microsoft’s new controller for pro gamers.

Here’s an edited transcript of our conversation.

GamesBeat: Did you have your applause meter out for the press conference to see what everyone was excited about?

Shannon Loftis: We were following social media reactions, fan reactions. Having 500 fans of the floor, we could have had a local applause meter. The energy was so good.

GamesBeat: What got everybody the most excited?

Loftis: There was a positive reaction to backward compatibility. Minecraft on HoloLens, there was an audible gasp. People responded well to the Elite controller as well.

GamesBeat: Backward compatibility seems like a big investment. What was some of the thinking that went into it?

Loftis: Gamers have been asking for it since we launched. Recognizing that it’s important to our fanbase, that people have made significant investments in time and passion and money in their 360 collections, we wanted to make sure that value extended into the Xbox One. But it wasn’t easy. It wasn’t simple. We’ve had engineers working on this for a long time.

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GamesBeat: I remember there was an internal debate about that topic on the 360. On the one hand, talented software people are a scarce resource, versus a feature that people seem to want, but often don’t use once it’s there. One thing that settled it was that online games had a longer life. If you go to a system, that doesn’t happen, which is an inhibitor for the new system.

Loftis: That’s right. Many of the 360 games are so deep and rich, so beloved, that people aren’t ready to give them up yet. It’s easy to just not make it a choice between the two. You probably already know this–We had scarce engineering resources. But because it was it so much in demand, and because people were enjoying games online so much, we put some people on it. They’ve created 360 emulation in software within the Xbox One architecture.

When you put your disc in the drive, we download a little shim that allows it to talk to the 360 emulation. We load up a bit of the Dashboard, and then you launch your game from there. But you still have access to all the Xbox One features.

GamesBeat: Does it use what’s on the disc, or does it go up to the cloud and play something from there?

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Loftis: It uses what’s on the disc. Your digital games will just work automatically. They’ve started to show up for some folks in the preview program already.

GamesBeat: It seems like you’re guaranteed pretty good quality of emulation, if you’re using what’s on the disc.

Loftis: Absolutely. That was one of the key reasons we held back talking about it. We needed to try a spectrum of games to make sure that we were able to deliver that quality.

GamesBeat: Is it everything, basically?

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Loftis: We have 18 games in the preview now. By holiday we’ll have about 100. It’s dependent on what people want. We’ve opened up our forums and asked gamers to tell us what they want. Also, we have to talk to publishers and make sure this is something they support on a game-by-game basis. So far there’s been tremendous support from the publishing community.

GamesBeat: How do you handle some of the tougher things, like used games? If somebody bought it and sold it to somebody else, does the first person get to play it, or does it pass along with the disc?

Loftis: If you have the disc you can play the game. If you have a digital game, of course, that’ll be existing in your connection with your account.

GamesBeat: Did you already get some feedback that this will be something that matters to people?

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Loftis: Judging by the response, both at the time and in the press since the announcement, on forums and on Twitter, I think it will have an impact. People who are maybe still playing on Xbox 360, but considering an Xbox One—This is the time.

GamesBeat: I heard from the Treyarch people that they still have 9 million people a month playing Black Ops.

Loftis: Exactly. It’s a fun program.

GamesBeat: What else has been getting attention?

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Loftis: Halo 5 was a big headline, particularly War Zone, the massively multiplayer new mode for Halo 5. It really resonates. Especially now that people are getting their hands on it, they’re coming out with a super positive impression and a lot of enthusiasm for the game.

GamesBeat: It was fun. It felt MOBA-like — as in a multiplayer online battle arena game like League of Legends — in that you have to accomplish goals and move forward.

Loftis: It does have an interesting MOBA-meets-sandbox feel to it, with the wide-open playing field. Personally I’m less skilled in the multiplayer arena, but I love the campaigns. I’ve been following the media releases. Of course, I have friends at 343, but I’ve asked them not to spoil it.

GamesBeat: I was spawning Warthogs and driving out there and getting them killed and leaving the Warthog for the enemy to take, over and over. Supplying Warthogs to the other team. But no, it was cool. Gears of War 4, too.

Loftis: Lots of excitement about Gears of War. The promise that the franchise is going to continue to deliver on those incredibly high-fidelity visuals, as well as the cover mechanics and super-disgusting creatures. I mean that in the best possible way. There was a great reaction to that. People seem to really—maybe this is just me reading my own emotions into it, but Rare Replay, bringing back a lot of the games we grew up playing—I think there’s a strong nostalgia surge right now. Gamers are growing up and begetting gamers. You want to share some of your early experiences with your kids and return to them yourself. It’s such a good deal, too.

GamesBeat: It seems like there’s this choice that publishers and developers have to make. Should I do classics? Should I do reboots? Should I do something brand new? You have audiences for all of those options.

Loftis: Choice is good. Returning to Phil’s mantra of gamers at the center of everything we do, that’s the number one thing. They want variety and choice. They want a broad spectrum of options for gaming.

GamesBeat: What do you think your focus as a first party should be, then? Do you still want to deliver variety, or do you count on third parties for that? Is it a mix of those? What distinguishes you?

Loftis: We serve as the canvas for the platform to push and try out new features and define new features. We work very closely with the platform team to listen to gamers and try to think about what features we should implement. We get them into first-party games to prove them out, to prove to gamers that this is a fun place to play, and to prove to developers that it’s worthwhile to make games for Xbox.

We are going after variety. Obviously we have our tentpole franchises — Halo, Forza, Fable, Gears of War, Minecraft. But we are constantly seeking new IP. ReCore is a game we teased during the keynote. At Gamescom we’ll be diving more into future titles and new IP — Quantum Break, Crackdown, Scalebound.

GamesBeat: There’s a fair amount of strong women in your games now.

Loftis: Gamers form the deepest bonds with the content and have the most immersive and engaged experiences when they have something they can relate to on the screen. Adding a more diverse array of characters invites a more diverse set of gamers. Making gaming more inclusive is good for everybody – good for gamers, good for developers, good for people in general.

GamesBeat: People have been figuring out that some of the most popular games ever have had women in the lead.

Loftis: That’s right. Lara Croft is someone I’ve identified strongly with for years now. Player choice is another thing. The more we give people the opportunity to customize their experiences to suit their tastes, that’s great.

GamesBeat: It seems like graphics was a limitation in the past. Now there isn’t any technical obstacle to offering those choices.

Loftis: I’m blown away by the way games look and play in this generation of consoles. Especially now, adding cloud compute power, it expands our ability to deliver experiences to consumers.

GamesBeat: How do you approach studios like Rare and figure out what they should be delivering? They’re taking their time. Do you want them to take their time?

Loftis: Rare’s been a great studio for us. They’ve delivered when we’ve needed them to. They created the Kinect Sports franchise. They helped us realize the vision for Kinect. The titles they announced this year with Rare Replay and Sea of Thieves, these were titles born out of the passion at the core of Rare’s design team. It’s both a celebration of their long history as game creators and a dive into something entirely new for them, but also very true to what Rare delivers – super charming, very fun, unexpected games that bring people together in a new way.

Gregg Mayles was one of the primary creators of the idea of Sea of Thieves. He’s worked with the team at Rare. I love seeing him continue to create more and more.

GamesBeat: How do you make something like HoloLens fit into all of this Xbox business?

Loftis: HoloLens, Oculus, Windows PC, Xbox, all being fueled by Windows 10—The idea is to give experienced creators as many venues to deliver their experiences to consumers as possible, and to make that easy. You’ve had the HoloLens experience, and you understand. There are some very unique experiences you can have with HoloLens. Hopefully with the announcement of Minecraft coming to HoloLens, and some of the demonstrations we’ve been able to do here and in January, we’re inspiring a new generation of game creators.

GamesBeat: Valve got a 30-second mention as well.

Loftis: They did, yeah.

GamesBeat: It seems like that could use a little more explanation.

Loftis: And more explanation will be coming. Valve is an amazing company with amazing game creators. They have a vibrant service that’s much beloved. They’re important to Windows. It’s great that we’re able to partner with them.

GamesBeat: Specifically on the VR things?

Loftis: That’s right, specifically on VR.

GamesBeat: That adds up to not going with any one particular candidate. You have some choice there as well.

Loftis: That’s right. Many different companies are approaching a lot of different ways to experience games. Creating a pipeline and ecosystem based on Windows 10 makes it easy for game developers to decide what’s best.

GamesBeat: Kinect is not really part of the bigger strategy at this point?

Loftis: Kinect is still part of the strategy. It’s another way for people to deliver experiences. It’s still available for gamers who choose it on Xbox One. It’s a great experience to use Kinect and Cortana in the new Xbox UI. People are still innovating with Kinect, the way they always have. Games are being developed for it. It’s there if people want it.

GamesBeat: Where did the new controller come from? Is that a long-term project that just got finished?

Loftis: We’ve been pushing more and more into eSports, into professional gaming. The Halo World Championship, Killer Instinct at Evo. When we talked to professional gamers, they told us that this is what they wanted. It’s not exclusively for pro gamers, but it came at the request of pro gamers. It has a nice, high-quality feel to it, but the key is the customizability, the ability to swap out parts.

GamesBeat: Why do they need this from you? How are they hoping to get a leg up on the competition?

Loftis: It’s the way that it feels in your hand. What’s the most natural way for you, the elite gamer or the aspiring elite gamer, to interact with the content on the screen?

GamesBeat: How do you feel about how Xbox is fitting in to the changing parts of gaming? We have mobile gaming, the MOBA phenomenon. Things are changing all around the core of console gaming. The edges are getting interesting. When you think about where Xbox and Microsoft need to go—how do you decide to fit in?

Loftis: It’s an amazing time to be a game developer. There are so many options, so much change. It all feels like it’s for the better. Our investments in the Xbox platform, bringing Windows 10 to Xbox, bringing Xbox Live to Windows 10 as part of the kernel of the operating system, our continued development of the Xbox Live community and our commerce capabilities, these are all designed to make Xbox a flexible place to create games.

We have free-to-play games on the console. We have Happy Wars, World of Tanks. We’ve done quite a bit of experimentation with different kinds of gaming models. They’re all very well-received by consumers. As long as gamers keep asking us for it, we’ll keep delivering it.

GamesBeat: How do you feel going head to head against Sony this year? Do you have the exclusives? Do you have the competitive advantage?

Loftis: I’m super excited about the holiday lineup we have — headlined by Halo 5, supported by Rise of the Tomb Raider, including Forza Motorsport 6, Gears of War Ultimate Edition, Rare Replay, our indie games. We have an incredible lineup this year. I’m excited about what we’ll deliver this holiday and beyond for gamers.

GamesBeat: Did you draw any lessons out of Halo Anniversary? What might you do differently in Halo 5?

Loftis: We did. Halo 5 is the first Halo built from the ground up for Xbox One. We ran a beta last December and learned a lot, between Master Chief Collection and the beta we ran, about the right way to set up a robust multiplayer service that lets people get on and enjoy gaming for as long as they can. I feel great about the launch for Halo 5.

GamesBeat: Halo Anniversary seemed like a very big engineering challenge. In some ways it wasn’t surprising that it didn’t go as well as it could have. It was very ambitious.

Loftis: It was ambitious. We wanted to basically thank the Halo community for years of support. It was four different engines, not made to work on this console. The team has delivered, I think, a good experience now. We paid close attention to what people told us about what was happening. We incorporated all of our learnings into Halo 5.

GamesBeat: Nintendo didn’t have a ton to brag about today, but what they can point to is that their games get rated highly. Is that something you guys think about as well? Is that part of your ambition, to get to that same kind of critical acclaim?

Loftis: Absolutely. We take all forms of input. Anywhere somebody tells us we’re not doing well enough, we’re going to try to do better. Nintendo has some great games. Xbox has great games. Sony has great games. The key, really, is to deliver to gamers what they’re asking for when they’re asking for it, and do it with high quality.

GamesBeat: It seems like it’s still giving them what they want, but also surprising them at the same time.

Loftis: They do want surprises. That makes it fun to roll out something like ReCore. It feels like we’re at a real peak this year. This conference feels like the most positive that we’ve had in a long time. All over the floor, you see things celebrating the past of gaming, the present of gaming, and the future of gaming. There’s never been a better time to be an Xbox gamer.

GamesBeat: I thought we’d see a Joe Montana football game.

Loftis: Personally, I’d like a Terry Bradshaw football game.

GamesBeat: I don’t know how you view the switch Activision did, taking Call of Duty’s 30-day DLC exclusive to PlayStation 4.

Loftis: Xbox is a great place to play Call of Duty. We still have more people playing Call of Duty on Xbox than anywhere else. This fall, Xbox is the only place you can play Call of Duty and Halo, Call of Duty and Forza. It’s a great box to have those social, intense PvP experiences.

GamesBeat: Any personal favorites?

Loftis: I can’t wait to play campaign mode in Halo. I love the indie games. Fable is a franchise I’ve long been associated with. I played every single Fable until it fell over. I’m part of the Fable beta right now and I can’t wait to get online with friends.