Xbox Live Arcade is a distribution mechanism for smaller-size games. They're not the Halo 2's or the games that you'll walk out to EB and buy. They are bite-sized bits of entertainment that you'll play because they're fun and addictive and engaging. They're things that you'll play in a five to fifteen minute time-slice that could last for five hours depending on how you get engaged in it.

The key for us, from a Microsoft Casual Games perspective, is that Xbox 360 is one of the platforms we work with. In that case, it's all about making sure that the content that we bring to that platform is appropriate for the demographic of the people that are playing it. So what you'll see on Xbox Live Arcade, things like Geometry Wars, Joust, and things like that has somewhat of a different flavor than something you'd see on a web game. So keeping that demographic in mind is part of our commitment to our players. Our belief is that we should make what we do fun, which is what casual gaming is all about. It's not about a long learning time. It's not about reading a big manual. It has to be quick and approachable and fun. And you can do that on the Xbox 360, and you can do that on the web, and you can do that on phones. But in each case you're talking about a slightly different content mix.

On the Xbox 1, we did Xbox Live Arcade, but that came out after the Xbox launched. And that was a disc-based product. So you had to get a CD (which was free) to get on Xbox Live Arcade. What we saw was that it was a very successful business model. It resonated well with the people who got it, and the conversion rates were high. That proved the model for us internally, but it also did great things for the developers. What it did for developers was to open up a distribution channel so you don't have to be making a $15-25 million dollar game to get on a console. That model was proven to us internally so now Xbox Live Arcade is built in to the Xbox 360 as part of the operating system. Are you familiar with Xbox Live Arcade?

Okay, I'll show it to you later. What you do is you select Xbox Live Arcade while you're connected up to the internet. You don't need to be a paid subscriber to use it. There are two tiers of service, free and silver. You'll see a selection of games, and each of those games are available for download on a trial basis. For example, you see Geometry Wars, so you download it and you play it and at the end of 60 minutes you have the opportunity to buy it. Those games that you buy, you now own. You can even take them to your friend's house, log in as yourself, and play it over there. But when you log out, it reverts to a demo version over on his machine.

While there are community-type games, what we're pushing is that there is some kind of community involvement if you want it, but there really doesn't have to be. For example, the leader boards. Let's say that I want to play Bejeweled or Hexic. Do I care who the best Hexic player in the world is? Probably not, because they're way better than I will ever be. What we did with the Xbox 360 is that you get a leader-board that's related to your friends, so you actually do get the opportunity to be number one.

Right. The approach of the community is that it's relevant if you wish to go there. You can play by yourself and log off and never interact with anybody else. But as you start to make friends, and as you start to have people in your friends group, you'll see their scores. And the same voice-chat is enabled. Our experience on the web side shows that there's a broad audience of people who do it from a social aspect and who socialize while playing games. And the 360 opens up new opportunities for that. Not that I'll ever see my mom with a headset, but there are people for which that will happen.

The other focus is that many of the games, the arcade games, coming out have a multiplayer mode, so you'll have an opportunity to be social there as well. Are you forced into a community? No. Do you have the opportunity to join a community if you want? Absolutely.

Pool is another good example. Pool is a very social game.

Right. Also, all the traditional card and board games have huge communities on the web. And as those games come around to the Xbox, there will be many social aspects to those as well. Chess, backgammon, spades and hearts, those games have great communities surrounding them.

Heh heh. Are you familiar with, on the Xbox, the concept of the "gamer's score"?

Any Xbox game has the concept of achievements. It's sort of this lifelong value of how good of a gamer you are. When a person says "well, I'm not that good of a gamer" and you look at his gamer score and it's well into the thousands you can say "well, you're not that good of a liar". On the other hand if a person says "I play that game all the time" and his gamer score says otherwise, you'll know. It's an ongoing measurement of that kind of thing.

Why that's relevant in the casual space is that you can look at yourself side-by-side with other people and see the other games that they have played. It's sort of a reference to say to yourself "what other sort of a thing might I be interested in". And since it's a free download and a free trial, more of that social aspect is there. It's a little bit "removed" because I'm not actually talking to you about my favorite games, but as long as you're my friend, I can look at your scores and what achievements you've earned.

One of the things we did at this conference is that we sponsored the mobile track. Part of that is so that we can show our move into the mobile space with our casual games. There are a couple of games we have that we're just putting out, which is why we have all the phones right here. For example, we have this game here.

Okay. Hexic and Mozaki Blocks are two games that we developed internally with Alexi Pajitnov, the guy who designed Tetris. The purpose of all the phones is to show off one of the underlying messages of Microsoft Casual Games overall. And that is the ability to play the games regardless of the device or platform you have.

For example Hexic [phone starts beeping merrily] you can play on a phone or the web or the Xbox 360. Your game experience can go with you wherever you are. If you like playing Hexic or you like playing pool, it doesn't matter what you have.

Have you played Hexic?

Okay, here, you just press the button to rotate and [phone again beeps merrily]

That's the point. You're fifteen seconds into playing and you already know the basic mechanic. The second part is the fun part. While it is a simple mechanic, it's approachable and fun and has a quick payoff. And you can play it for five minutes or for a longer period of time.

It is a challenge. And there will be games that will only be available on one or on only a couple of platforms. If you think about games that need a large amount of screen space and have fairly fast action, Joust for example, wouldn't be the best for a mobile phone. Especially because of all the up and down and flapping that would be needed to make it work. The games that we are encouraging are the games that would appeal in the right places.

Chess is a good example. You can play chess on your phone, and you'll have tiny little chess piece icons. That's what I expect. If I play chess on an Xbox 360, though, it will look a heck of a lot different. It might be Wizard's Chess for all that I know, but I wouldn't expect to see that on my phone.

We also want to play across those experiences. We want you to be able to play chess on your phone against someone playing it on an Xbox. On your phone, it would look like icons, but on the Xbox it would look like full blown 3D graphics. Having fun is more important than what platform you want them to be on.

Well, thanks for stopping by!

There are Flash games, yes.

One of the keys to Microsoft Casual Games is that it's a platform to get games to people. And to do that most effectively, we'll have to engage in some non-Microsoft display or delivery technology. For example, the number of SmartPhones versus the number of total phones out there would mean that we basically wouldn't be going into the mobile phone-space. That's not what this is about. This is about making the Microsoft Casual Games platform available for people to play. If you think about it as an ecosystem where you can play your game on your phone or on your Xbox 360 or on the web, that's where we're going, and if that does necessitate using other technologies, then we're going to go there.

Yeah, there's some history behind that.

We only write about 10-15% of our own games, and for the rest we rely on the development community. They are a vital part of what we do, and our efforts are centered on how we make toolkits or API's to make better games. Better from the standards of communities that can be built-in or better from the standard of platforms. We have to have other developers. For one thing, we're just not that smart to be able to make all the great game ideas. We will continue to innovate and create great content, but we also want to get the best of the content that's out there and provide opportunities for things that maybe you can't do today if you're making a game as a one-off.

I hope that developers will look at our stuff and say "hey, nowhere else can I take my game concept and make something that will appear as a console game, as a downloadable game, and as something that will appear on a phone and have them all be interrelated, even if that just means saving a game on one platform and picking it back up on another. I hope that's some freedom that we can bring to developers.

One of the things we have is Messenger and the Messenger Development Kit. It has the ability to, while you're chatting with somebody, to start a game. What we've done recently is to make an API toolkit that will allow you to develop game applications using Messenger as a platform. 170 million people worldwide use Messenger on a regular basis, and a lot of 'em play games. Nine or ten of the most run applications on Messenger are games.

Okay, you click on games and chess and click on "invite". Then she gets something on the screen that says "John has invited you to play chess". She says "yes", then you both get a little fly-out window and you can now play chess in that little fly-out window.

That can be C++, they can be Flash. That toolkit is the API layer. While there are also two-player games, there are also single-player games that you can play in a competitive mode. So I could play against you in Bejeweled, but all you see are out simultaneous scores. We're IM-ing together and we're both playing Bejeweled, and I'm seeing my score versus your score.

Right. We're letting people use Messenger and all of its technology behind that like matchmaking and buddy-lists, and the developer writes the game that uses all that. It's the fun part. As you know, most game developers want that.

Wait, you don't want to write the e-commerce engine too?

And that metaphor still holds for the Xbox 360 because we've got a toolkit for it as well. You're able to concentrate on writing your game, and you can take advantage of all the infrastructure that's already built into Live, like matching people up and the points system where you're showing leader-boards and achievement and things like that. And the chat system and the voice system. It's all there. It's all a ride-along, and you write the game.

There are two ways, and it somewhat depends on the platform. In most of our platforms, we have developer license folks or portfolio planners, and that's what their job is. They take submissions and look over content and give feedback and plan what the portfolio is going to be with the folks who run the services. On the web-downloadable side, we work with an aggregator, Oberon Media, and they serve as that filter for Microsoft. If it's a web-only game, you'll be taking it to Oberon and talking to them, and they present a subsection of what comes to them to us. Because we found we were getting swamped.

I guess the follow-up question would be "what would be something that would be interesting to us?" Partly it depends on the platform. If it's something that's going to go on the Xbox 360, it depends on that demographic and the question of whether that content would fit there. And part of that also depends on what we already have. We don't want ten pool games. There might be a couple of pool games because there are game-variations, but we want games that will fill holes in the portfolio.

As for what games do appear, games that run on multiple platforms are much more interesting. Developers who are willing to take our API's and build in the score reporting features and the leader-board system and the achievement system are much more interesting. If you take advantage of the community features, that makes a game much more interesting from the standpoint of us, the host.

But I have to say, the core of all of it is "is the game fun?" Is the game approachable and does the game meet those elements of what a casual game is. I believe that's the agreement that we have with our players. We're going to put games out that are fun. That's our commitment. It does me no good to put out 500 games if 450 of them are bad.

There's been a lot of press recently about the Xbox 360 and its coming launch. Xbox Live Arcade is a potential way for game developers to get a lot of products out to the console marketplace in a much easier fashion than they have before. I'm not talking about the full game, but the fact that you'll have 50 megabytes or less of games that you can make and you can get it onto a console that will have millions of people for distribution. And there's a purchase and e-commerce engine built into it means that people will have more room to experiment.

If you look at the list of developers that have signed on to that, it ranges from one-man shops all the way up to UbiSoft's and EA's.

And I've seen some developers take some latitude with that. For example, Geometry Wars was done by Bizarre. They're a regular core-game [top shelf] developer, but they were able to take advantage of some downtime between projects and turn ideas into a profitable venture. That's resonating well, and that's picking up.

Generally an Xbox Live Arcade title is 52 megabytes or less, because that's the minimum size of an Xbox memory unit, and we make our games so that they will fit on a single memory unit. It technically could be larger than that, but that's our recommended size.

Oh yeah. You're usually downloading between 5 and 15 megabytes. Hexic is actually pre-installed on hard drives, so you can play that one right out of the box.

One other thing. Since our platform mix is so broad, we have a huge demographic to develop for. No matter what your game, we have a platform that will work with that. If you're a shooter/hardcore guy, we have a platform that will work with that. If you write puzzles and word-games, we have a platform that will work with that.

We're also looking at expanding web games into the more traditional parlor game space, and the online Settlers of Catan is our first effort there. It's up there now as a multiplayer web-game and there's also a downloadable version that you can play online. That's a game that wouldn't work well on a phone, but it would move to the Xbox fairly well.