Microsoft now has an installed base of over 76 million Xbox 360 consoles around the globe, which is three times the number of original Xbox consoles sold. The Kinect sensor now sits next to roughly one third of those Xbox 360 consoles as Microsoft has sold 24 million Kinect sensors since launch.
And gamers aren’t just playing hit games like Halo 4 and Gears of War 3 on the console. Last year marked the Xbox’s biggest year for entertainment and games usage. Users gobbled up over 18 billion hours of entertainment in 2012, with entertainment app usage growing 57 percent year over year globally. Last year in the United States, Xbox Live Gold members averaged 87 hours per month on Xbox, an increase of 10 percent year over year. The Xbox Live community has grown to 46 million members, a 15 percent growth since last year.
Nancy Tellem, who left her role as consultant to CBS chief executive Leslie Moonves to join Microsoft as president of entertainment and digital media, has been busy explaining to Hollywood movie and television studios the opportunities that Xbox 360 and Kinect open up for consumers. Tellem talks about how new technology is changing the way Xbox gamers are consuming entertainment and interacting with ads in this exclusive interview.
How have you seen the recent evolution of social media and other technologies impact the way Hollywood looks at interactive entertainment?
I’ve gone to the agencies and studios and a lot of people really don’t fully understand what the Xbox platform is. They view it in the sense of it’s their kids’ console that plays games and they don’t really play games, so they don’t really understand it. Part of my role here is trying to explain exactly what we’re building. It’s really opening people’s minds as to what the power and the capability that the Xbox platform has. What’s happening as you look at more traditional media, and particularly the social aspect of it, whether you’re looking at the Grammys where you actually see through social media that the West Coast feed engenders much higher ratings just because of the conversations that are taking place with what they’re seeing on the East Coast. Or you can see certainly during the Super Bowl where Twitter really lit up during that power outage time. You can see all the traditional networks are really using Facebook and Twitter as an opportunity to market and promote. There’s clearly openness and embracing of the social media and the value of these interactive experiences.
Are there still a lot of executives in Hollywood who don’t understand the gaming space?
From a gaming standpoint, there is a lack of understanding about what the gaming world is all about, but there is clearly an openness to the interactivity of what gaming offers, the complexity of the stories that are told with the layers of involvement that the gamers actually have with the content. There’s a higher amount of awareness that the gaming world and the stories that come out of it and there’s a lot of alignment with what we do in television creation and production.
When it comes to that interactivity what did you learn from the Grammy Awards and Academy Awards coverage on Xbox Live?
When you’re looking at both of those live events it gives a wonderful opportunity to engage as you’re watching the program to share with your friends and to have real-time conversations about what you’re watching. It’s a much different experience than sitting alone in your living room watching these events. The potential of what we can do to really light up these events is huge and hopefully in the next year or two we’ll be able to show in full splendor the value of this interactivity when you’re dealing with these live events.
What does Kinect open up to the entertainment experiences you’re developing?
From the Kinect standpoint it’s about using voice control without the need of a controller. It also allows you to curate in some respects or search for something through voice control. Gesture comes into the experience when you look at experiences like Nike + Kinect Training, which we developed with Nike. It’s a tremendous opportunity where you can really have a sense of who is in the living room and how you’re exercising. It can actually highlight what you’re doing wrong and help you get better. The idea there is that Kinect technology can really enrich any experience, whether it’s exercise or our Sesame Street experience with kids being able to be a part of a video and interact with the characters on the video. That kind of thing is so unique to our platform and we’re looking to expand that as we’re developing content.
What do you see NuAds opening up when it comes to Hollywood being able to connect with a gaming audience ?
The interesting thing is that we did have some interactive ads involving Subway and Toyota and what we found is that of the people that were watching ads, 37 percent actually interacted with it. That’s an incredibly high amount of interaction and certainly the kind of information that an advertiser would most definitely love to do. There are ways in which you can really engage. We did the presidential debates with NBC News and Rock the Vote, where effectively the way that we engaged people was to listen to the debates through the game implication of the debates. We would ask questions and people would vote in real-time and the engagement level was much, much more. From a creative standpoint and certainly being able to use this interactivity that the advertisers are looking to do is something that we can really deliver on Xbox and we can do it to a targeted audience. We can do it in a way that isn’t necessarily in the traditional way. It may make watching ads or connecting with these ads in a much more fun way and that’s where these NuAds have really shown the potential and the opportunity.
How are you expanding your voice controlled entertainment apps on Xbox?
We have over 100 voice controlled apps, which involves all sorts of entertainment partners like Hulu and Netflix and a great range of movie, TV and sports offerings. We’re adding 40 more apps which will involve the CW and other partners. We’re doing this on a global basis with apps that are in various markets.
How will Xbox SmartGlass technology enhance entertainment experiences?
With HBO Go, they tell you to go online to find out more about the cast. With Xbox SmartGlass technology this allows for this to be happening simultaneously on your device of choice. You can be watching Game of Thrones on your tablet and you can come home and throw it on to your TV. You can also experience the second screen experience on your tablet in real-time and sync to the content that you’re watching on the television. That’s the kind of things we’re working on with HBO about to really light up the Xbox SmartGlass technology.
How will all of this new technology that we’ve discussed impact the type of entertainment you’re developing?
Our focus is really building on what we’re doing now, which is creating a great television experience that is really engaging and robust. As we’re developing original content, either on our own or with partners, that’s going to be first and foremost what our focus is going to be. Developing compelling content is key and making sure that the interactivity, whether it’s with the Kinect technology or other interactivity, we’re working is organic and meaningful to the content itself. It’s showing that TV is truly best on Xbox and it’s a unique experience that you really can’t find anywhere else.
