Xbox pricing, PC plans and more: an E3 interview with Mike Ybarra

Amidst the announcement of the Xbox One X and its release this Fall, Polygon had a chance to sit down with Microsoft’s corporate vice president of Xbox and Windows Gaming Mike Ybarra to talk about the new console and the company’s strategy moving forward — including how the company plans to sell a console with difficult to explain upgrades, and what kinds of sacrifices may have been required to sell for a lower price point.

Arthur Gies: I run 4K stuff on my PC at home, through to my TV.

Mike Ybarra: Yeah, so do I.

Which is a giant pain in the ass. That’s one of the reasons that I’m personally interested in the Xbox One X, as someone with the 4K/HDR/Atmos setup. But for normal consumers, how do you sell people on a feature set that’s so difficult to demonstrate or explain?

I think that consumers know, from SD to HD, that transition, so when they see something from 720 vs 1080 vs 4K, the fact that it’s 4x more pixels is something consumers I think understand. I completely agree with you, seeing it real time makes it really come to life. But having a conversation about 8 million pixels on the screen, more than just pixels on the screen but high-dynamic range is important too, spatial audio, the Atmos demos we have going on here, that’s really what we call true 4K and we talk about that to consumers. They really latch onto “wow, four times as much as 1080p, that’s got to look amazing.” And that gets them the interest to go into the store to see what that difference looks like. And I think retail outlets do a good job of showing, usually movies, here’s this screen versus this screen and seeing that difference. People invest in 4K TVs — second highest gift last holiday, so that trend is going well. Even for 1080p TVs, seeing that supersampled — again, you have to see it, but being able to see that shows the difference in terms of antialiasing that happens too. So it’s a conversation we have. But consumers know, 720, 1080, 4K — those differences must be big, let me go see it.

Do you think the presence of 4K media options on the Xbox One S dilutes the value proposition of the Xbox One X, that it makes your job more difficult in selling a much more expensive console?

I don’t think so, because we talk about the family. Every Xbox One S customer, we want as many as possible, price sensitivity is on that line. That value proposition is great. UHD 4K discs, 4K Netflix, upres’ing everything to 4K. Xbox Box X is really for the core gamer that wants the most immersive, best versions of games possible on their 4K screen. That’s really simple to articulate, and I think people are understanding that pretty easily to far.

Why does the Xbox One X cost $499?

When we created this box we weren’t thinking about price. We said “What’s the technology we need to deliver real 4K experiences in the living room?” We could have come out with something last year similar to what a PlayStation 4 Pro is today, but that value proposition to us wasn’t clear at all. It isn’t true 4K in the sense of what we’re delivering and the power that developers told us they need.

When we talked to developers, they said, “We need the following.” It was a long list. We had to figure out when can we could come out with that box at a price point that made sense. This was the best product.

The Xbox One S is something that we’re still 100 percent behind, because as we introduce hardware more often, not only the games, even 15 years ago with original back compat, but all the games, all the hardware, the look and the feel of this box ... for us it’s a choice. You have $249, $499. I you want to go spend $1500 or whatever on a PC, rock and roll. Gaming is gaming to us.

And I hope much like Minecraft announced yesterday, we can get to a point where it doesn’t matter what glass you’re on, people are playing together and sharing those experiences together. We feel good about the price points we’re hitting.

Regarding that sort of philosophy, I hear a lot of confusion in the press. It’s stuck out to me in the last year amidst the Xbox Play Anywhere initiative, a blurriness that’s manifested. People don’t seem to understand what the message is, even though it sounds simple. Do you think that blurriness undercuts the reasons for Xbox existing?

No, I think that the console and gaming in general has been very device specific ever since its creation. Ever since … forever! Even Commodore 64 or Atari, all of these were specific devices that did one thing and never connected people together the way Xbox Live and 360 — and (our competition) as well — have brought. With that connectivity I think we’re changing the mindset of people saying, “Wow, we love the exclusives and we love the games on this box, but we also want to play with everybody that’s playing these games. So it'll take some time for sure because I think it's you know, a legacy of 30-plus years of a mindset there. But certainly something we’re after, being kind of the caterers of both the Windows platform and the Xbox platform in terms of what we’re trying to do. Just give people more choice on what they do. You buy a game on Xbox, you should be able to play it on Windows without having to spend another $60 there. That’s the Xbox Play Anywhere program. Xbox Game Pass, the Netflix of gaming. 100-plus games, a low monthly fee. Here’s all the games that you have. Those things resonate very well, largely because Netflix is so established in everybody’s mindset as well. But buying and playing on two platforms is something that — 18 titles now, 20 more coming — that’s ramping up.

If that’s the case, why haven’t we heard any sort of discussion about Xbox 360 games on PC, or now original Xbox games on PC?

Yeah, I mean trust me — Phil comes to my office and says, ‘Hey, let’s get going on this.’ The engineering challenge there is hard. You have a very fixed, specific set of hardware. Interbusses, network capabilities, and a console versus PC. From memory, how much dedicated memory you have. This is a custom version of Windows 10; it’s not just Windows 10 you throw on a desktop and you start playing. DirectX on Windows 10, very different than DirectX here. I have access to every single register on the hardware (on an Xbox One). There (on Windows 10 PCs), I’ve got abstraction layers. Game developers do amazing work to target what are exactly in these boxes, and when you take that and you try to put that on a PC, the engineering challenge is dramatic in solving that and making it run (the way) the customer expects. Not just from Xbox to PC — look at emulation on anything. It’s always a challenge.

Xbox/YouTube

Is this something that you’ve specced out? Is there a min spec that you think you would need on PC to even begin to offer that kind of backwards compatibility?

We haven’t looked at it that deep.

Going back to the press conference a little bit, the end with the price announcement sort of mirrored in a lot of ways the price announcement of the original Xbox One back in 2013. As a company that has sort-of acknowledged missteps in ways that your message maybe didn’t resonate the way that you wanted it to, was there any concern that the optics were maybe a little too similar between the way the original was announced and this?

No. Not to us at all. I mean, I didn’t even think about that. I’m trying to think back, ‘Wow, how did we do 2013 in terms of that announcement and how it went?’ We looked at all the content that we have, and the story, and developed that show without the context of what happened in 2013 and any learnings from that.

Over the weekend before the sort of price stuff on Sunday, there was a lot of discussion and speculation about a $399 price. And clearly, Microsoft did not feel that they could hit that price based on what was in this piece of hardware. What kinds of sacrifices, what kind of trade-offs would Microsoft have had to make to hit a price point like $399 with Xbox One X?

Well, we wouldn't have been able to usher in 4K to the living room, and that was a design pillar for this box. There’s lots of goals in the program, from compatibility to everything. But one, let’s really usher in true 4K where developers don’t have to think about, ‘Wow, how do we stretch this and make it really work?’ We needed to deliver that to consumers. They asked us for uncompromised true 4K in the living room. And so we leveraged a lot of PC technology, from the cooling, the power management system that’s in this, to get it this small — while managing acoustics. That was the goal.

Sure. More specifically, or with more granularity if possible, what is a compromise that Microsoft wasn’t willing to make? What’s an example of a compromise? Does an external power supply make the box cheaper? A different type of cooling system — does that make the box cheaper?

Yeah, when we looked at the overall design, we could do less memory. We could do under-clocked components so we don’t have to have the cooling system that we have in here. There’s any number of things you could think of. The box could be twice as big. That would make it cheaper. But when you’re talking about people putting it in the living room ... they don’t want that external. They want the components and the look and feel ... the acoustics of it to be a very high-end, premium product. This is designed for the premium gamer that wants the absolute best experience. And so compromising any of those then makes that message much harder to communicate to them. We showed them the smallest Xbox we’ve ever created, the most power, the best price per performance you can get anywhere, in this box. That’s what we’re delivering. I think if you start taking away some of those items, people will say, ‘Well, what were your goals?’ And that’s an area that we don’t want that confusion to exist.

I’m sure that Microsoft pays attention to the sort of reception and ways that its competitors are marketed and messaged. Is there any particular challenge you took from the way that the PS4 Pro has been marketed or messaged in the last year, that you took to heart as something that you needed to be particularly clear on with the Xbox One X?

I think all of us watch each other. Look, I think Sony’s doing a great job. From a gamer’s standpoint, all of us — Nintendo as well. More people to buy more devices, the better for the industry, so I’m all for [that]. We work with our developers. We have our own strategy. I never like reacting to the way that a competitor does something, and so I’m confident in the plan we have and we stuck to that all the way.

Is there a particular thing that Microsoft knew would be a challenge to message with Xbox One X? Something that would be especially difficult to help the average consumer understand about the value proposition?

I would say one thing we thought of early on was, ‘Wow, it’s very rare that we launch a console,’ and at E3 it’s a special time when you launch that console. Historically, when you look at the console market, launching a new console meant, ‘All the games and stuff, great, I have to go re-buy everything.’ So we wanted to make sure when we designed it — both look and feel and our messaging was, ‘Hey, all the games. It’s added to the family. All the games, all the accessories just plug in and work.’ I feel like we’ve landed that pretty well, but we’ll continue to iterate (on) that because it’s a concern that someone might have if they’re not close to the industry. ‘Oh, this is the new thing. New console means my games don’t work. My Xbox Live doesn’t work. I’m going to have to reinvest in all of that.’ That’s not the case at all with this box.

Do you think the release of this console this year presents a level of obligation for support as far as how long the Xbox One platform will be your sort of flagship platform, before the possibility of a new console generation?

Well, when we look at when we want to create new consoles, we look at market trends, customer feedback, everything. It’s not just we wake up one day and say, ‘Let’s just introduce a console.’ We developed this because we saw 4K TV. We saw the olympics and sports coming to 4K and people saying, ‘Wow, look at that.’ It will wait for that next time, for when something comes in the industry and makes us go, ‘This is a pivotal moment for us to actually invest here.’ Certainly, when we create and release a product, there’s a customer commitment that we have being Microsoft, at the availability and the support that we’ll have for the product. And that’s all outlined in the warranty and everything like that that comes with the product.