Microsoft tells us how Xbox One will win the holiday and why consoles aren’t dying

Gaming’s biggest battle of year is here: holiday season.

This is when Sony and Microsoft bring out the big guns and try to tell as many consoles as possible. However, Microsoft is coming out especially aggressive this holiday, thanks to big releases like Halo 5 and a large selection of bundles.

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We got to talk to Aaron Greenberg, who leads the marketing team for Xbox’s first and third-party games, at Microsoft’s headquarters in Seattle. We discussed the company’s holiday strategy, which attempts to differentiate itself from its competitor, Sony’s PlayStation 4, by focusing on a strong first-party line-up and introducing a high-end controller designed for serious gamers.

Greenberg also told us why consoles are healthier than ever, despite warnings from some that the traditional console market is nearing the beginning of the end. We also learned the thought process behind making all of those bundles Microsoft is creating for the holidays in an attempt to attract new consumers.

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GamesBeat: How did the bundle philosophy become so prevalent at Microsoft?

Greenberg: Every year we end the year and we look back and say, hey, what have we learned this previous year? One thing we learned coming out of the last holiday was that giving customers more choice and more offers with bundles was a good thing for the business.

Customers responded well. When we launched new bundles, like when we did the white Sunset [Overdrive] bundle, we saw a jump. When we did the Call of Duty bundle we saw a jump. This year, we started to plan and we had two things. We wanted to offer customers more choice, so whether you’re a fan of Madden or FIFA or Tomb Raider or Lego — something more family friendly — we have an option for you.

The other piece is that we frankly have so many games this holiday that we want to take advantage of that. We want to give customers choice, but also give them great value with all the big games that are launching. That allowed us to do more bundles than we’ve ever done in the history of our business.

GamesBeat: What’s the thought process when you make a bundle? Is it about specific games? Or is it more about themes? What attracts people to a bundle?

Greenberg: There tends to be two big buckets. One is the limited edition consoles, where we do a really neat design. Those are much harder to do and cost a lot more money and take a lot more time. We have to qualify them so that they can be manufactured a certain way. Depending on who is the owner of the IP, if it’s a third-party partner, we have to work with them on a lot of approvals. If it’s an internal team like the Halo team, we work closely with 343 on the Halo bundle. It’s a longer process. Those are more special. We tend to limit how many of those we make. They tend to be premium priced, limited edition products, like you see in all different types of industries.

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The other bundles tend to be what we consider value bundles. If people are looking to buy an Xbox One, often they’re timed with the release of a given product. We have the Tomb Raider bundle coming. We had the Madden bundle when Madden launched. If you’re in the market for an Xbox One and you can get that game for free when that title’s launching, that’s a great value. If you’re trying to decide which console to buy and you know you want to play Madden, the Xbox One has Madden included for free. We see that does drive preference and share for us.

The other piece there is that we want customers, when they do buy an Xbox One, to have a great first experience, a great game out of the gate. Giving them a triple-A game like that is great. If you look at other things where it’s like, hey, we’re looking at holiday, whether it’s Black Friday or the week after Christmas — when people have heavy gift-giving, that’s where, If you look at our Holiday Value Bundle with Ori, Gears [of War Remastered], and Rare Replay as an example, that’s an example of an amazing amount of value. They’re all great games. If you have teenagers or older gamers in your home who want to play Gears, that’s great. Ori is great for all ages. Rare Replay the same, largely for all ages. It’s something for everyone.

GamesBeat: Is that, the Holiday Value Bundle, being positioned as the big holiday bundle, if you’re not specifically into one game?

Greenberg: You’ll see that we’re not selling Xboxes without any games attached. We want people to have a great value. We want to be competitive on value. That one I think is probably our best competitive value SKU. They all have different volumes. That one we’re making quite a lot of. We expect that to be a big seller this holiday. It’s our lead value bundle, if you will.

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GamesBeat: How did you pick those three games to include?

Greenberg: We evaluate all the different games. It has to work financially. The games have to be high quality. We have to feel like the appeal of that offer will resonate with customers. Looking at all three of those products, those were games that were highly rated, that we think will be a great value. To be able to come back and put all those together is pretty impressive.

We have to work with the teams that manage those products internally to make sure they’re okay with the offer. But all the teams are supportive. We’re pleased we’re able to make it happen. Sometimes you try and it doesn’t work out, but in this case we were able to put together a pretty competitive bundle offer.

GamesBeat: I played Ori when it came out. That was one of the most stunning games this year. Has that been performing well for you guys as a digital exclusive?

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Greenberg: It did very well for us. The game was a small title from an investment standpoint, a small team at Moon Studios. Those guys have been great partners. We were very pleased with how well the game sold. With a lot of those digital games, though, over a period of time you eventually  — they’re no longer front of mind for people. The challenge for us is, how do we make more people aware of them and let them get access to such a great game? It was one of my favorite games of the year. Being able to bundle it, ideally millions of customers will now play it. It’ll allow people to access that franchise who might never have played or bought the game. That’s a good thing for us and for Moon Studios and for that IP.

GamesBeat: What about Rare Replay? How has that been doing? It’s kind of a crazy endeavor, getting that many old games together.

Greenberg: I remember being out at Rare — I was there last week with the team. We talked a lot about it. But I remember sitting down with them a little over a year ago and talking about their 30th anniversary and what we could do that would be special. They had this great idea, to pull together this amazing collection of games they had in their archives. Getting down to 30 games was probably the hardest part. They have these stacks and stacks of cards with the product description on one side, like the single laminated sheet equivalent of box front and box back for every game they’ve ever made. We spent hours getting totally distracted by that, reliving our childhoods.

Then we got down to, okay, what are going to be the 30 big games we think can drive here? It was something they had — it was a labor of love for them. You could see all the video bonus content and the making-of stuff. Even some of the unfinished things they included I thought just made it a great value. We worked with them on, hey, what’s the right number? How do we think about pricing this? The 30 years, 30 games, 30 dollars felt like the right place to land. We looked at other compilations and how they performed. But for us Rare Replay did a couple of things. It was the first title in our holiday lineup, starting in August, what we consider the greatest games lineup in Xbox history. Kicking that off it did a great job.

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The title’s done very well. It’s way ahead of forecast. It’s selling extremely well. Ratings were really high. In fact, the first week we launched the game, we had stock outs at retail. We had to chase demand on the physical version of the game. We’ve been pleased with that. We had a great review with the team. We’ll continue to promote and do things with the title so more of our people can — we think it’ll be a great — all the new console buyers this holiday, come January, after millions of people have bought Xbox Ones and they’re looking for — what’s a great game to add on? I think it’ll be one of those titles people will want to buy. It’s evergreen to me. I can always go back to it. Whenever I want to play Conker or RC Pro-Am or Battletoads, there’s something fun there for everyone.

GamesBeat: It gives you a unique opportunity. You don’t necessarily have as big a history to tap into for nostalgia’s sake. But you’re getting to that point, where the original Xbox of all things is becoming retro. Are you aware of that at all? Are you trying to tap into that?

Greenberg: Gamers are definitely aging up. That’s the beauty of backward compatibility. We’re allowing people to go back and play a lot of games that they’ve invested in, games they’ve purchased. They’ll be able to play those, whether they have the disc or they digitally buy them and it instantly shows up in their library. That’ll bring back a lot of the nostalgia.

The people here, we’re all gamers. We love games. We share the same type of passion and memories that people out there do. We’re excited to see some of those great 360 titles become available through backward compatibility. But at the same time — Rare’s a pretty unique studio. To have the kind of heritage they’ve had making so many great games over so many years, and not only that, but then now, what they’re doing with Sea of Thieves, which is a project we’re extremely excited about — their history isn’t done. They’re writing new chapters. It’s exciting to be able to give fans a gift of 30 years of great games, but then also to say, and now here’s what we’re creating for the future.

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GamesBeat: Do you think we’ll see more of Sea of Thieves next year?

Greenberg: Yes, absolutely.

GamesBeat: It seems like there was a point where the Xbox One and PlayStation 4 were becoming very similar systems. It seems like you guys are taking some steps to differentiate yourselves with things like backward compatibility and the Elite controller.

Greenberg: You always want to try to differentiate against your competitors. Where we’ve focused first and foremost is on games. We know that games are why people buy the console. We want to have all the best quality games. We want to have the biggest blockbusters. But then frankly we’ve invested at a scale that may be unprecedented from a first-party standpoint in building exclusives. With Halo and Gears and Forza and Rare Replay — we have Fable Legends. What we’ve done with Tomb Raider as well in the partnership with Crystal [Dynamics] — I think the games lineup we have this holiday, the exclusives we have this holiday, it’s probably the biggest we’ve ever had. We believe that will fuel the ecosystem and fuel a lot of differentiation.

If you want to play any of those games, you have to buy an Xbox One. If you’re a shooter fan and you want to play Halo, want to play Gears, want to play Call of Duty and Battlefront, there’s one place to do that. Shooters are the largest genre in the industry today, representing about a third of game sales. That’s the tip of the spear on how we differentiate.

And you’re right. Investing in innovation is the way we think about it, whether it’s the Elite controller, where we’re building the kind of pro-level controller, the best controller we’ve ever built, arguably the best controller ever made — and then what we’re doing with the new user interface in the New Xbox One Experience, making that faster and more intuitive, capturing a lot of feedback we’ve heard from fans, and with that bringing backward compatibility, which was by far the number one thing people had asked for. We didn’t know if we could do it, but the team has been able to deliver, which is great news. I’m excited with how much we’re getting done in such a short period of time.

GamesBeat: Sony had some delays this holiday season. Uncharted was the big one. It’s hard to look at the lineups of exclusives and say Microsoft doesn’t have an advantage. It seems like you’re pushing pretty strong this holiday.

Greenberg: We’re executing and we’re delivering. We’re delivering high quality games. We’re proud of that. With all that said, we know this is hard. It’s a hard business. We’ve been there. We know what it’s like when projects take a little bit longer or whatever. We totally appreciate that. We believe you shouldn’t rush games. You should ship games when they’re ready.

Fortunately we’ve planned and invested and spent a lot of time to make sure we could deliver this holiday. Halo 5 anchoring our greatest games lineup in Xbox history. But whether you’re a racing fan or an action-adventure fan — we had a great plan and we’re executing it very well. I’m proud of what the team’s accomplished. With that said, we’ll be there too at some point in time. We know how it is. We know it’s hard. We’re just grateful we have teams shipping quality games on schedule this holiday, which is great for our owners and our fans.

GamesBeat: The Lara Croft deal seems special in its own way. Do you think about doing more deals like that?

Greenberg: We’ve had a long relationship with Crystal [Dynamics] and with Square Enix, a long history with Tomb Raider. Ever since they rebooted the franchise, we fell in love with the creative direction they were following. We showcased that title at a number of E3s in partnership with them. This became an opportunity where we were able to publish the game on Xbox One and Xbox 360. We’re excited to do that. It’s been a great add to our portfolio. It complements our lineup.

They’re all case by case opportunities, but we did that at launch with Dead Rising 3. That worked out well for us, where we were able to publish that title and take it on as what we call a second-party game, where we support the game and help market and sell the title and publish the title. That’s what we’re doing in this case with Tomb Raider. We’re selective about what games we do, but I think we’ve made some good bets and we’ll continue to follow opportunities like that.

GamesBeat: Was Tomb Raider a deliberate choice? Looking at your typical first-party lineup, which is more shooter-heavy, this feels like something you guys aren’t necessarily doing internally.

Greenberg: Absolutely. From a portfolio standpoint, we’re looking at what gamers want to play. We’re looking for opportunities that complement our portfolio. Tomb Raider 100 percent fit into that strategy. This is a really deep action-adventure style game that has a rich heritage. It very much complements what we’re doing from a first-party standpoint with Halo and Forza and other big titles. It’s been a great add.

If you’ve seen our marketing campaigns and how we’re talking about this being the greatest games lineup in Xbox history — we’re doing some TV media around that right now. We’re featuring Lara and Tomb Raider in that piece. It fits in the hand of cards, if you will. It’s great to have another face card in the hand.

GamesBeat: Another thing I saw at last year’s E3 was a bigger push for indie games, things like Cuphead really standing out. Would you say that’s another bigger part of your focus these days?

Greenberg: We’re seeing a big growth in both indie games and in digital games. Those kind of go hand in hand. We’re finding that there’s a lot of really high quality games that are at that kind of — they tend to be at lower price points, $20 and below. Some do get above that. With the ID Xbox program, we wanted to allow indie developers around the world to get access to development tools and kits so they can make games on our platform. We want to enable them. From two-person shops to five-person shops to as big as 15 to 20 in some cases, they’re making great games.

Cuphead’s a great example of that. The two brothers there are making something special. We’re excited to support that title. The response to that has been unbelievable. The creativity there and the types of games that are getting made there are very different than what we’re seeing in the triple-A blockbuster game space. So it is complementary.

I’ve had a lot of fun playing all kinds of indie games this year, from Goat Simulator to The Escapist to even playing Cuphead in advance of launch. There’s a lot of great titles there and they’re performing well. They’re selling well. We’ve been able to support and market those titles. Every week we have a number of them that release. The pipeline of how many indie games are out there is pretty incredible. The challenge is, how do we support them so they can release their games every week to fans that want new games every week? And then also, how do we pick out of those the bigger ones that we think are really unique and special? We’ve done that with certain titles that we’ve really gotten behind. Cuphead is an example. Goat Simulator is another one. We’ll continue to do that.

GamesBeat: We heard from analyst Michael Pachter at our conference this past week — some people buy into this notion that consoles are dying. Maybe not next year or in a couple of years, but as devices like Apple TV start to take over. What’s your take on that?

Greenberg: I love Michael Pachter. I’ve known him for years. He’s never short of opinions, often right and often wrong.

GamesBeat: As we all are.

Greenberg: Totally. From our standpoint, what we’re seeing in our business right now is that Xbox One is performing extremely well. If we look at month by month how it’s comparing to Xbox 360, we’re selling more Xbox Ones for the same period of time than we did Xbox 360s. That’s an interesting data point.

Another one is that we’re expanding the gap. We’re not only outperforming ourselves, but we’re also continuing to improve the trajectory of how well we’re outperforming ourselves. If you look at the health of the software market, how well our third-party partners are doing, EA and Activision — look at EA’s stock. Look at how well EA is doing. The console market has never been healthier. We’re seeing extremely high attach rates. We’re seeing record game sales. We’re seeing record console sales. We’re seeing strong Live adoption.

All the signs to us are very positive. If this was a patient, you’d say they’d never been healthier. Now, you could predict that suddenly the patient’s going to get very sick, but right now all the signs are very positive. Customers determine, ultimately, the success of this industry. This holiday — just look at how many great games we have. Halo and Forza and Tomb Raider and Call of Duty and Fallout 4 and Star Wars Battlefront. There are so many great games. I think we’ll see a record holiday for game sales. We don’t believe that will stop. There’s a market and a customer and an industry for console gaming that will continue to be very strong for many years.

GamesBeat: We’re starting to hear some rumors about what Nintendo might be doing next. Honestly, nobody knows what they’re going to do. But is it a worry? We’re going to have this system come out in the middle of a normal console cycle. Maybe the console cycle is going to be disrupted in a weird sort of way? Is that something you’ll have to deal with?

Greenberg: I’m not sure what Nintendo’s doing. I hear the same rumors and stuff that you do. I guess we’ll react to that when we know more. Nintendo’s always been innovative. They’ve always differentiated in their own way. They’ve always danced to their own tune, if you will. It wouldn’t surprise me if they do their own thing when the time is right. What they’ve done is unique and different. How they’ll compete with us remains to be seen.

GamesBeat: One final sales pitch? I’m going to the store and buying a console for this holiday. Why am I picking Xbox One?

Greenberg: If you’re buying a console for games, you’re buying an Xbox. Xbox is the platform with the most games, the most exclusives, and probably the most anticipated game of the year in Halo 5. If you’re a fan of Halo, if you’ve ever played Halo, you know how special Halo 5 is. If you never have, the rich story with Locke and Chief and what’s been created — I can tell you, I’ve played through the entire campaign. It’s the greatest Halo ever made. It’s stunning. It’s worth the investment. That game alone is worth the investment.

Plus, if you like Forza or Tomb Raider or any of the other big titles like Fallout or Call of Duty, we have them all. On top of having the premier online gaming service in Xbox Live. If you want to play with your friends, that’s the place to play. That would be my pitch. And we’ll do it at a great value. Starting at $349, we have some great holiday bundles. I don’t think you’ll regret the purchase. The other commitment we make to you with backward compatibility — over the next year we’ll continue to innovate and improve on the console month after month, just like we’ve been doing since we launched Xbox One.