It's Got Game (But Microsoft Hopes for More)
With New Xbox, Company Tries to Put All Its Multimedia Tricks in One Console

By Mike Musgrove and Jose Antonio Vargas
Washington Post Staff Writers
Tuesday, November 22, 2005

Microsoft's Xbox 360, which started selling early this morning, is a video game system with ambitions to be far more. It can show DVDs, play music, even host video conference calls. The idea is to unify today's digital living room into one box that looks good enough to display on a coffee table.

With Americans switching to high-speed Internet access, TV networks offering popular shows for download and people going online to make free phone calls, technology is blurring the lines between various media and how consumers use them.

The race is on to create an electronic Swiss army knife to take advantage of it all. The leading products so far tend to be portable devices -- mobile "smart phones" that can make calls, take pictures and send e-mail, and digital music players such as Apple Computer Inc.'s iPod, which can now play videos.

Sony Corp. will market its own home media center next year when it introduces the PlayStation 3. Until then, Microsoft will try to exploit its head start in American living rooms. Company plans to hype the new console include a week's worth of game-related programming on MTV and a two-day party in the Mojave Desert.

"We're trying to lead the consumer into the future," J Allard, Microsoft's vice president and chief Xbox guy, said in a telephone interview. Microsoft chief executive Steven A. Ballmer has called the project "one of the most ambitious things our company has ever set out to do."

Microsoft's vision has skeptics. Paul Saffo, director of Institute for the Future, a Silicon Valley think tank, said the Xbox 360's non-gaming features "make nice ad copy" but doubts that owners will use all the extras. It remains, he said, a video game machine.

"Maybe it helps gullible parents get more enthusiastic about buying an Xbox if they think it's a media center, too," Saffo said. But "the fortune of the Xbox rises and falls on the games."

The original Xbox, which came out in 2001, had some extra features, such as playing DVDs and music. But those were add-ons designed to entertain players between marathon sessions of games like Microsoft's hit Halo series.

The new, more powerful machine -- which comes in two packages, priced at $300 and $400 -- puts such features front and center, a bet that times have changed. Only 10 percent of original Xbox owners signed up to play online games with the consoles, but Microsoft predicts that about half of Xbox 360 owners will plug their machine into the Internet.

Broadband subscribers with an Xbox 360 in their homes will have options for free or for-pay access to Microsoft's Xbox Live Marketplace, where they will be able to download movie trailers, arcade games and demos of the next cutting-edge titles. A new online tournament system designed by Microsoft is designed to generally keep heavy gamers and casual gamers in separate online realms, so that mainstream players aren't intimidated by online matches.

The machine also can host video conference calls online and trade files with other computers in the home. Xbox 360 also is designed to exploit the dramatic resolution of high-definition television, and industry watchers are hoping it can spur sales of HDTVs.

"What we're doing is converging these different forms of entertainment," Allard said. "It's really a vision of taking consumers to a future world of digital entertainment."

To keep the device from being banished to the basement or the kids' room, Allard's team has spent almost as much time worrying over the appearance of the new Xbox as about the technology inside the console.

The controllers on the new Xbox are wireless to keep the console from annoying neatnik moms who might not want wires littering the living room floor, Allard said.

The first Xbox was black, bulky and featured poison-green accents, but the new one is sleek, white and curvy. The new Xbox is designed to fit neatly on a home entertainment stack even as it tries to put some of the other components out of a job.

Those who don't like the looks of the front end of the machine can customize it with faceplates, purchased separately. Some are wild tributes to hot game franchises; others are more sedate, such as a simulated wood-grain faceplate.

"This is a gamble for Microsoft, trying to court two different markets at the same time," said Brian D. Crecente, a senior editor at the gaming Web site Kotaku.

The fact that the Xbox 360 is being sold as more than a game machine is a risk, "but it's a risk that will likely benefit Microsoft in the long run," said Shannon Cusick, president of the Austin-based Orbis Games LLC, publisher of online games aimed at women.

"This will sound kind of silly, but telling women that they can do all these other things -- play DVDs, play solitaire, play their iPods -- in this game machine is a very good selling point."

So far, the games created for the new machine haven't impressed critics as much more than somewhat slicker versions of games they've already seen.

Game-publishing giant Electronic Arts Inc. said the stadiums for the Xbox 360 version of its Madden NFL 06 game contain 50 times the detail of previous versions of the game, for example. But Dan Houser, vice president at Rockstar Games, the developer behind the hugely successful and controversial Grand Theft Auto series, said gamers buy new consoles for new game experiences, not slick graphics.

"If the machines don't offer stuff that is fundamentally different than what you can do currently -- and I don't mean fundamentally prettier -- people won't buy them," Houser said. "There has to be a game that comes out that is worth paying $500 for, or whatever it ends up costing." Though Rockstar has games in the works for the Xbox 360, he wouldn't describe them for fear that competitors might steal his company's ideas.

For the vanguard of gamers who want every cutting-edge machine first and who don't care much how much they spend for the game experience, the Xbox 360 is a must-have. EB Games in Pentagon City said more than 300 people pre-ordered Xbox 360s. There is so much demand at GameStops in Wheaton Plaza and Alexandria that they stopped taking orders back in August.

Microsoft viewed its first Xbox as an investment to gain credibility in the gaming world, and it has yet to make a profit from it. But this time, hopes are high. "We're going to make somewhere between a lot of money and a lot of money," Allard said.

Clinton, Md., gamer Nicholas Bonds, a 17-year old high-school student, hopes to get an Xbox 360 for Christmas because he wants the console that will play the next Halo game whenever it's released.

Even though he's a serious gadget fiend, the type who builds computers in his spare time, the console's multimedia features interest him only hypothetically. "I probably won't use half that," he said.

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