Yusuf Mehdi, senior vice president of Microsoft's Interactive Entertainment Business, just sat down alongside Nancy Tellem, Corporate Vice President at Microsoft LA Studios, to kick off this year's rendition of D
ive Into Media here in Dana Point, Calif. The first session of the evening is being piloted by AllThingsD's Peter Kafka, and naturally, the topic of conversation is Xbox. For starters, Mehdi affirmed that Microsoft is witnessing an unmistakable transition of the Xbox 360 "from a gaming console to an entertainment console." At present, the install base is up to 76 million (up from around 70 million at the close of September 2012), with US-based users using the console for some 87 hours per month.
In fact, he stated that 18 billion (yeah, with a "B") hours of entertainment have been consumed on Xbox, and while Netflix is obviously the driving force, it might not be that way for much longer. He was quick to claim that Sony's PlayStation 3 "isn't as good of an entertainment console" -- something he feels that "everybody knows" -- and insinuated that the next-generation Xbox will stick to "big and premium." In other words, don't expect Microsoft to kick out a $50 Roku-style content box. Mehdi wants to ensure that the future of Xbox enables voice control, interactivity, and "other stuff that's big and beautiful."
Kicking the conversation over to Tellem, she affirmed that Microsoft is going to invest in premium content -- and in fact, said that she "hopes" for some of it to actually hit end users this year. Not surprisingly, folks are going to be asked to pay for it, but she wasn't willing to talk specifics. Of course, existing Xbox Live users are technically already paying, so it's possible that this new wave of content will be bundled into that monthly cost. When asked if Microsoft was planning to fund its own shows (much like Amazon and Netflix are doing), she seemed open to the idea, but also noted that Microsoft will absolutely partner with existing studios and content creators in order to give them yet another outlet (read: not pay-TV) to get people hooked.
Finally, she noted that there's "more latitude" in what kinds of material they can produce given that console distribution isn't as regulated as traditional broadcast. And, while a good deal of it will aim to satisfy the 18-24 male demographic, we're told that womenfolk and families will be looked after, too. Oh, and as for these Microsoft-funded shows hitting other distribution outlets? According to Tellem, that's unlikely -- at least at first -- but a sizable enough check from the likes of Hulu, Amazon, Sony, etc. could very well change that. In response to a question from TechCrunch's Ryan Lawler, Tellem noted that Microsoft's desire to churn out original, interactive entertainment is a way to both "move consoles, create new relationships with consumers and to expand [Microsoft's] audience," and from a higher level, to create the next generation of TV and "have it be a hit."
