Microsoft Corp. took the wraps off Xbox Live, its online game service, in 2002 with ambitions of one day seeing millions of players compete online.
Today, more than 8 million people -- about 1 in 5 Xbox and Xbox 360 console owners -- subscribe. Many pay $50 a year for a souped-up version of the service, giving Microsoft a steady revenue stream as it seeks to post its first annual profit in the video games division after investing more than $6 billion in the business since it launched the Xbox in 2000.
Those subscribers have logged 3.2 billion hours playing games on the service, equivalent to more than 365,296 years of alien-zapping, grenade-tossing and general time-wasting. Lately, they’ve also rented movies and bought TV shows such as “South Park.” In December, players also will be able to download games such as “Halo,” “Psychonauts” and “Fable,” which were previously available only as boxed discs.
Microsoft has made some progress in broadening Xbox Live’s appeal beyond young males. About a quarter of its players are female, up from 10% in 2002.
Microsoft wasn’t the first to introduce online gaming on the console. Sega of America had offered Internet-connected players the ability to chat and find opponents through its Dreamcast console in the late 1990s before pulling the plug on its hardware business in 2000. But the Redmond, Wash., software giant can claim to be the most successful at it so far.
Sony Corp., Microsoft’s arch nemesis, isn’t sitting still. Its PlayStation Network has more than 3 million subscribers, and the Japanese company plans to substantially boost that number next year when it unveils a sleek online look called Home, a graphically rich virtual world that lets players create realistic avatars, hang out with friends, watch movies and play games.
Robbie Bach, the 45-year-old president of the division that runs Microsoft’s games and music business, talked with the Los Angeles Times before the five-year anniversary of Xbox Live.
When Microsoft introduced the Xbox, some saw it as a Trojan horse, a gateway into consumer’s living rooms for other forms of digital entertainment such as movies and music. How has that panned out?
The irony of this is that it wasn’t the way we thought about things back then. When we were starting with Xbox in 2000, the team was very focused on producing a great gaming experience. When Xbox Live became more successful than we ever planned, it opened a lot of new opportunities. We realized we had something bigger than games. If it’s a Trojan horse, it’s with hindsight, not foresight.
How has Microsoft expanded the reach of Xbox Live?
In a number of different ways. Demographically, when we started, you would say that it was a place for serious gamers. That has changed a lot in the last five years. It’s now become a great place for casual gamers. When one of your leading games is Uno, you realize you’ve reached a new type of customer. Secondly, it’s expanded from being a gaming service to . . . an entertainment service with a social network. We have now expanded into the world of movies and TV shows. It’s become a much broader place for people to experience entertainment.
When will Microsoft sell music on Xbox Live?
We have a broad long-term vision for connected entertainment across all platforms. That includes music, video, television and gaming. You’re going to see pieces of that roll out over time. We’re not ready to talk about the specifics.
For now, we’re focused on aggressively pushing the music scenario on Zune [Microsoft’s portable digital music player].
Are you worried that Sony’s revamp of its PlayStation Network will eat into your lead?
It’s fair to say that Xbox Live is clearly head and shoulders above anything anyone else has tried to do. We don’t have competition. Sony has done some things online, but nothing that can be called a service. We have a big advantage and we’re going to keep pressing that advantage.
We have a very strong, very powerful computer network that provides the backbone for our service. We have game demos that can be downloaded, video downloads and game downloads. It’s a broad cross section of consumer services. Perhaps the most important thing we have is over 8 million passionate members who create and define what Xbox Live is. It’s a tough thing to create, and we’re going to continue to nurture it.
What’s Microsoft doing to cut down on the smack talk and rude behavior of players on the service?
When we started Xbox Live, we thought, “Wouldn’t it be cool if you could play with someone halfway around the world?” In reality, most people on Live like to play with friends they already know offline. For families with younger children, my advice is that you want to match them up with people they know, whether it’s family or friends at school.
As far as policing bad behavior, we have a reporting system. And we follow up on those reports. We have banned people from the service. We also have sky marshals who play on the service. It is a social community. There’s no silver bullet, no magic to that. It just takes hard work. By and large, the community polices itself.
What’s next for Xbox Live?
We’re introducing some parental control features such as the Family Timer that lets parents assign how many hours their kids can play on the Xbox 360. And we’ll be introducing some new downloadable content. When you look longer term, there are places where we can expand the social spaces and the content that people have access to. There are new aspects of how people interact with each other that we want to explore.
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What: A Microsoft online service that lets players of the company’s Xbox and Xbox 360 video game consoles find and play opponents, download games, rent movies and buy television shows
Who: 8 million subscribers, most paying $50 a year
When: Launched in 2002
Commerce: In addition to selling downloadable games, Microsoft has agreements with 30 movie studios including Walt Disney Co., Warner Bros. and Paramount Pictures to rent movies. It also sells TV shows from ESPN, CBS and MTV
Source: Microsoft Corp.