All language subtitles for P O T S o X S01E05 The Red Ring of Death 1080p AMZN WEB-DL DDP2 0 H 264-WELP (1)_track3_[eng]

CNBC's Jane Wells live in Los Angeles

with how the 360's problems
are heating up literally.

This all came together
in this horrific perfect storm.

Some faulty Xbox 360s are literally
melting down while running certain games.

It was a slow rolling thing, like, really
understanding how big the problem was.

It started to really be concerning
and the numbers started to grow.

I had a sick feeling in my stomach.

Microsoft hasn't specified the cause,

but users say the console's cooling system

just can't take the heat of a lot of play.

We were just having failure after failure.

The problem was huge.

Mine just crashed this holiday season.

Get one back,
turn it on, it didn't even work.

No! Again!

People spent a lot of money on a console

and we're getting two
and three of them back.

Whether they were friends,
whether they were family,

whether they were people on the street.

It didn't matter.
It was all over the place.

I was mad as

Then it became the media saying
this is a piece of hardware

that has been rushed to market,
and as a result

we're seeing unprecedented failure rates.

It's broken.

Everything that I had worked for
for the last couple of years is trashed.

There's a new contender
in the video game wars.

Xbox is going to be....

- The future.
- Truly the future of video games.

Xbox.
Taking over the living room.

Limitless, connected
digital entertainment.

You guys never understood!

The company is going
to face fierce competition.

Sniper. Nooo!

It's a ticking time bomb.

It makes me very nervous
to actually play this for you.

Xbox, getting a major overhaul.

A bold vision for the figure of gaming.

It's the Xbooooooox!

Without a doubt, the most Herculean feat

of the original Xbox was that it survived.

Looking at the history
of the video-game business,

you would have given them
a million-to-one chance,

so the achievement is that
we made it to Xbox 360.

And, internally, it's fun to laugh
at lots of the missteps.

You'll see Xbox will actually start up.

Like we can laugh

that the Xbox didn't turn on
at the original unveil.

We can bring that video up?

But with Xbox 360, honestly,
even with the benefit of time,

nobody laughs at the red rings.

To understand the red rings of death,

you've gotta go back to the beginning

and all of the work we did on the Xbox 360
to build it from the bottom up.

We were absolutely focused
on getting out ahead of the PS3.

We needed to be seen
as the start of the next generation.

The 360 was five to ten times
more powerful than the original Xbox.

And so, to achieve
that level of performance,

we had to push technology and solutions

that didn't exist
in the previous generation.

This was an incredibly
hard, complicated program.

The circuit board itself is,
is a completely custom design.

And we were building these chips
which was a new process at the time.

We did our own internal design
instead of buying off the shelf silicon.

We're bringing up new hardware,

with software that isn't quite done yet,

on new test systems
that we're developing in real time.

And that had a domino effect
on the whole product.

The design was coming together
kind of late.

We were launching in November of 2005
and we did not see our first silicon

from the CPU until February of 2005.

That's just ridiculous.

That's nine months before launch.

That is an absurdly short timeframe.

The normal timeframe
would probably be like two years.

And so we're faced
with finishing the design

and ramping up production lines
at the same time.

We wanted to launch it worldwide

so everybody had it at the same time.

But that's a big challenge
because you also need

to have enough units to restock in retail,

so that the countries you do launch in
aren't out of inventory.

We need to get our yields up.

And so, we're cranking up production.

At the highest manufacturing output,
I remember hearing numbers like a console

would come off the line
every four seconds.

But, as we're ramping
production, we start to see reports

of these issues that were coming up.

Lots of inconsistencies.

Consoles would fail at test stations.

If you had built 100 of these things,

only 50 or 60 of them would work,
which is really, really bad.

Like a real robust yield rate
would have been 90, 95.

This was the fog of war
that we had to see through,

and that was, is there something wrong

with the design of the product,
or are we testing it incorrectly?

Because we were trying
to ship in high volume,

there wasn't much time to think about it
because there was so much to be done.

One way of dealing
with the failed consoles

was to put them into these nice boxes
and stack them

so that you would get back to them
at some future point in time.

In a way we were kicking the can
down the road a little bit.

We were developing
what we call a bone pile.

At the height, we created a bone pile that
was over 600,000 units deep.

And so it's, it's just like
the Lucille Ball episode

where the chocolates
are coming off the conveyor belt.

And they're coming off so fast
that they can't do anything with them.

That's exactly what was going on.

The thing about building consoles

is Christmas doesn't change,
so your schedule is paramount

and there's just so much pressure
to get it done by November.

After a hectic leadup to production,

and months of intense troubleshooting,

engineers finally managed to solve the
technical issues that had plagued the 360.

As consoles started to pass QC,
the team was finally able

to chip away at the bone pile,
in an effort to meet the demand,

which, at the time
of launch, was ravenous.

Good evening, everyone!

So who here is ready for Xbox 360?

I'm outside the Best Buy in Midtown.

It's raining here in New York
but these gamers don't care.

They've been out here in the rain
since early this morning

and they're not leaving
until they get an Xbox 360.

Finally!

When the Xbox 360 launched there was
a palpable excitement for this console.

The Xbox 360 finally got out
of your dreams and into your car.

Microsoft had their fingers firmly
on the pulse of what gamers were expecting

and they clearly had a vision
of what gaming would be for the future.

We got in with something
that was unique and revolutionary.

A gorgeous design,
the concave elements of the 360.

It really felt like in some ways
that Xbox had actually just arrived.

This new world of online.

This new world of social engagement.

This new world of building communities.

Ohayou gozaimasu!

We at Microsoft
had absolutely nailed that experience.

The demand was really, really high.

We were selling every single unit
we could ship into the market.

I know there are a lot of
fans out there that want a 360,

there's a shortage out there, you know,
is that a marketing strategy

or can you not produce enough?

- What's the real story on that?
- We are making as many as we can

twenty-four hours a day,
seven days a week, we are flying them in.

Ultimately, we got
through our challenges of production.

And we just needed to be able to catch up.

By hitting the market
a full year before PlayStation 3,

Xbox 360 had a head start
on the competition.

But Sony was still
the undisputed industry giant.

And they had every intention
of keeping it that way.

It was the year after we shipped,
when PS3 was coming out.

We were paranoid.

Sony had such credibility
that they had cultivated

from the PlayStation 1
to the PlayStation 2,

so they were riding on this tidal wave
of success and goodwill from gamers.

Coming off the PlayStation 2,
Sony had done everything right.

The most successful platform
in game-industry history,

and really just needed
to stay to the playbook.

In contrast to that, you just witnessed

Microsoft coming to market
at the right price,

a year before you're able
to come to market,

so you know you're facing
formidable competition.

PlayStation 3 is the best-of-breed
computer-entertainment platform.

PlayStation 3 was positioned

as a premium product from the get-go.

This was going to play games,
but it would also play Blu-ray discs,

so it was seen more as kind
of an entertainment machine.

We knew they were going
to be somewhat arrogant.

The next generation
doesn't start until we say it does.

And they would price their console
to where they felt they needed to have it,

because they felt
that they were untouchable.

This is sort of pre-live streaming era,

and a bunch of us were huddled
around one person's laptop,

like a 15-inch laptop screen,
streaming Sony's press conference.

And then they dropped the price.

In North America, the PlayStation 3

will be available at retail
for $599 US dollars, $659 Canadian.

Wait a minute. Did... $599?

$599.

Nobody was prepared for that.

Back then, consoles didn't launch
at those kind of price points.

It was like, holy cow,
we just got handed this generation.

We were high-fiving each other,
people were crying.

There were just all these ways that Sony
had put their own foot in their mouth.

Sony said it would be a
privilege for people to work extra hours

to afford their overly-priced console.

You have an over-engineered machine,

that's gonna be incredibly
expensive to manufacture.

And that opened a window for Microsoft

to be able to soft of say,
"Hey, like we have a great system

that's gonna play
all the games you wanna play.

We've got better online, for cheaper."

Thank you very much,
and have a great show.

Becoming CEO right after the launch
of PlayStation 3 was like

being made captain of the Titanic,
right after it hit the iceberg.

After Sony's announcement, we could not
wait to get on stage the next day.

Couldn't be more excited to be here

because we're delivering
the next generation of gaming

right here and right now, with titles
that are nothing short of spectacular.

We had a lot of PlayStation fans,
and even Nintendo fans

who were coming to Xbox,
because we had the best games,

we had the best system,
we had the best online network.

We led in every key aspect.

With the help of our incredible partners,

we're delivering
on that vision with Xbox 360.

With a high-definition gaming experience

more powerful
than anything else in the industry.

Yeah. We were riding high,
we were celebrating,

I'd say the morale was extremely high.

We had so much pride in this product.

Everything was great.

And then, the storm hit.

Before launch,
engineers had worked around-the-clock

to fix 360's early technical issues.

But, by June 2006, there were reports

of an entirely new,
never-before-seen problem.

Distress calls flooded into Redmond.

Something had gone terribly wrong.

It was in the forums and I started
to notice that something wasn't right.

There was a lot of chatter
about console failures.

Dude.
What?

Your Xbox.

You might want to take a look at it.

Oh, [BLEEP]!
Oh, oh, oh, oh!

Over time, we kept
hearing more and more about it.

We'd go to a launch event for a game
or we'd go to meet with games journalists,

then they would all start
talking to us about it, like,

"Before we can talk about new features,
we want to know, is this fixed?"

But we had no sense
of how big of an issue it was.

We didn't even know how to deal with it,
and then we saw more reports of it.

Microsoft have been in the news
with their latest computer system,

but it seems the last big product
they launched can have some problems.

That's the first time I've seen
this There it is.

Mother [BLEEP]!

The Xbox 360 had a really cool feature

where there were four green lights
around the Xbox emblem.

Each of those lights
corresponded to a specific controller

and so that's how you knew
what player you were in the game.

We also used the ring to tell people
when there were issues.

It's like
the check engine light on your car.

And this is
what we called a core digital error.

And this was an indicator of,
the system detected a major issue.

The error state was just
that there was no communication,

so the machine was just basically
telling you I can't do anything.

This would show up as
three segments in the ring being lit red

which would come to be known
as "the red ring of death."

It's the red ring of death.

Red ring of death.

I got red ringed.

Uh, everybody got red ringed.

What the [BLEEP]?
Are you kidding me?

When that mother red thing come up

and then the whole game freeze
and mother

be like,
"Man, what the is going on?

We can't play. What's going on?
Your doing that too?"

It was, it, oh my God. It was terrible.

No! Red ring of death! Again!

We have no Xbox. I'm calling support.

You wait on hold for a while.

They let you know
they really appreciate your call.

You wait on hold a little bit longer
and then they go,

"Okay, we're going to get you a
replacement unit."

It doesn't show up for a week.

All the enthusiasm's gone, and then here's
the new console and it was just like...

Wow.

This is the fourth Xbox.

Microsoft.

Effectively,
the failure rate was near 100%.

It just became an epidemic.

♪ It was the Red Ring of Death! ♪

♪ Console's hotter
than a dragon's breath! ♪

♪ It was the Red Ring of Death! ♪

No fricking way!

♪ And I'm so pissed off!
Grab the phone! Dial tone! ♪

♪ Calling Microsoft!
Now they'll see the dark side of me! ♪

♪ I'm on hold! ♪

♪ It was the Red Ring of Death! ♪

The glitches that went down with Xbox 360.

I was mad as

I'm like, get this fixed
or I'm leaving.

I'm joining the enemy.

It was simple as that.

♪ It's a faulty piece of manufacturing
from Redmond Washington Microsoft ♪

I feel kind of sorry for it.

Not really. It deserved it.

It's a big deal because,
it's just sort of the passion

that gamers have for their hobby,
like, you don't want to be away

from your console
any longer than you need to be.

We felt the customer's pain.

I had three boxes replaced,
you know, personally at my house.

And it does make you think,
"Okay, I work here, and this experience

is not a pleasant experience,
in sending your Xbox back."

Microsoft's going to ship
you a cardboard coffin,

and that's what gamers
were calling them online.

"Did your cardboard coffin arrive?"

I finally got my coffin.

But hopefully I'll get him back.

And you'd put your 360 in it
and ship it on back to Microsoft.

I remember going out
to the curb and like meeting the UPS guy

and looking in the back of the UPS truck

and seeing wall-to-wall,
you know, Xbox returns.

The fact that it was
happening to more and more people,

and Microsoft was shipping
a lot of hardware.

That just combined to this feeling,
that, hey, like,

are you guys really taking this seriously?

They're continuing to sell
defective hardware,

so a consumer could walk
into the store today,

buy a 360, take it home,
and it's a ticking time bomb.

Is there any speculation out there
what the problem is?

Um, there is a lot of speculation but,
because well, among other things,

there are 500 million transistors
and 1700 parts in each of these boxes.

- Mm-hmm.
- So the speculation could go anywhere.

Whenever we had new game launches

or new system updates, I would be out,

meeting with the top games journalists,
showing them all the new stuff,

and I'm trying to sell them on the future

and they're like, "Dude my console's
not working. Like it's broken."

For those who have experienced

the flashing red lights,
what causes this exactly?

That's kind of part of the problem
Kevin, Microsoft has been very vague

about the specific causes,
they won't cite any specifics,

they won't say exactly why.

We didn't have
all the answers at that time.

We were trying to figure this out.

Do we have a heat problem?

Is the solder in,
key components in the motherboard,

is it cracking up and drying out
and we're losing that connection?

We just couldn't figure it out.

It's a long process.

You had to test it at the board level,
you had to test it at the system level,

and then you had to test it
in a rack level, and, we had, you know,

almost a million of them
sitting in our bone pile.

We'd fix the ones in the bone pile.

We'd send it back out to the customer.

And it turns out that wasn't the problem,
and it would break again.

And I'm saying,
"Man, this is not going to end."

After the third
or the fourth issue that we ran into,

I remember thinking,
"Hey, maybe we're in over our heads."

When we got to a point where we said
we're not figuring this out fast enough,

we made the call to shut down production.

We went line down at the factory.

We wanted to figure out how to solve it

before we built any more units
to go to customers.

It stretched every bit of our imaginations
to try to figure out

exactly what was going on
and how to fix the problem.

This went on for months.

These were the darkest days of my career.

Are people going to now go
out and buy PlayStation or a Nintendo?

Are they going to leave us as a brand?

Every day you weren't gaming
was a bad day for you.

You trusted us and you'd invested
this money in us and we let you down.

Not gonna work.

This was an incredibly,
incredibly trying time.

You know, people use phrases like you
figure out what people are made of.

Having gone through it, I can
actually say, that happens.

It's a thing. It isn't just a phrase.

Todd had to manage the very complex
process of what we call root causing.

Until we knew what was going on.

2006, 2007, I dedicated a lot of my life
to this Xbox in order to fix this problem.

The breakthrough came
when we understood that the connections

that were being broken
were not located on the motherboard

but they were actually located
inside the components.

The problem was,
a connection was breaking.

The reason it was breaking was thermal,

but it wasn't because
of the peak temperature.

It was because when the unit would get hot
and then cold, hot and then cold,

every time it did that,
it would stress the connection.

All these people loved playing video games

and so they would turn
this thing on and off,

and when it would turn on and off,
you get all sorts of stresses.

And just like when you,
you bend something too many times

until it finally breaks,
that's what was happening.

Once we figured it out,
how in the heck are we gonna fix this?

Peter Moore and the executive team
faced a big decision

about trying to fix this with all these
boxes that were out there in the wild.

This was something
that could tarnish the brand,

they needed to do not just something,
they needed to do the right thing.

If we're going to save this brand,
we need first-class

consumer-service reaction to this.

The credibility of the whole platform
really I think hung in the balance.

There was only one way to do this
and that is you have to fix every console

for every customer at no cost,
no questions asked.

I think we're off to a good start.

And I remember sitting at a
whiteboard writing out some,

just some simple math on repair rates,
times a dollar, times a customer,

times an amount equals a number,
and that number became pretty big.

And I remember feeling in my stomach,

this is gonna be
a bigger issue than I thought.

By the time we looked
at the cost of repairs,

the lost sales that we factored in,
we had a 1.15 billion dollar problem.

Peter had to go to Steve Ballmer
and basically say, "Hey, bad news.

I need a billion dollars
to go fix this issue."

I'm expecting to be ripped to shreds.

Come on!

It is a make or break situation for Xbox.

If Steve Ballmer does not give Peter Moore
the money to go fix it, Xbox is dead.

Like, there's probably
no question about it.

To the credit of Steve, and I can still
see him looking at me right now.

He said, "Do it.

Just do it.

We'll figure it all out.
We'll take the hit."

Microsoft will spend at least a billion dollars

to repair serious hardware failures
with its Xbox 360 video-game console.

Over 200 million of this
was simply one-way

overnight shipping around the world.

Kudos to Microsoft for stepping up

and putting their money
where the red ring of death was.

It was one of the times when I've been
proudest to be part of Microsoft

because, we made a mistake, we owned it,
and we did the right thing for consumers.

Without that money spent,
without them taking the problem head on,

there's probably no Xbox right now.

We bet on our fans
and our brand and took the hit.

Take that hit once, do it right.

Don't ever regret it.

When the 360 died on me,
I was pissed that it died,

but I wasn't pissed at Microsoft.

I just really wanted to get the 360 again

and start playing again
because it was just awesome.

It was frustrating but they had hooked us.

So when you hook somebody, you know,
you know they're not gonna leave.

They're gonna work with you
through difficult times.

That was a good sign that people loved
the thing that you're building.

But, even a billion dollar mea culpa

may not have been enough,
had it not been for two x factors.

A library of celebrated game titles.

And support from game developers

who loved how easy it was
to program for the Xbox 360,

and saw in it the potential to take gaming
to places previously unexplored.

Gears of War, at the time,
was the best-looking game ever made.

And it became this poster child
for HD graphics and HD fidelity.

Like, this is a game that people
are gonna immediately gravitate to

and go "Oh my God, I can't believe the 360
looks that good," especially when they

compare it to PS3, because this game looks
better than anything on PS3 right now.

It was the fastest selling Xbox 360 game.

It sold like a million units
in the first couple of weeks,

and that really propelled
the 360 in a big way..

Gears of War may just be the great hope
to turn the 360 into a must-buy console.

It was a very different type of game

for Microsoft, an M-rated game
with over-the-top violence.

Everyone loved the signature weapon,
the chain gun, the Lancer.

Gears of War was about appealing
to a hardcore gamer.

The people that play Gears,
they have so much passion in it.

People get tattoos
and it's just a deep connection

they have with the franchise and the game,

it's unlike any other
franchise that we have.

That was satisfying.

And all of a sudden you see

this tide turn of every publisher
is then developing for the Xbox 360.

We had secured
a lot of big games for Xbox 360, you know

we published titles like Mass Effect.

We had Splinter Cell
from Ubisoft of course.

We really had this incredible portfolio
of games, we were the shooter box.

Call of Duty was a
franchise we had bet on early,

it was a PC franchise,
and we really established

Call of Duty on the console in a big way.

PETER MOORE:Kameo had this gorgeous, colorful game.

It was all about frame rate,
it was about smooth visuals.

Forza was built as a direct
competitor to Gran Turismo.

We're gonna go off and we're gonna build
a great epic big racing simulator game.

You had cars that had amazing
reflections of the sky.

They had reflections of other things.

You had particle effects.

You had a lot of things that just made it
look much more real than any other game.

To this day my son can
recognize cars by the engine sounds

because he played so much Forza.

If you look at Xbox 360,

that was a moment
where we got it exactly right.

It was just an incredible run
that I don't know

that has ever been topped
in the history of gaming.

And then, you know,
at the center of it all was Halo 3.

It had been 3 years since Halo 2

smashed industry records,
and Halo fans were clamoring

for the next chapter
of the epic space saga.

I think that we were really surprised by
the success, the huge success of Halo 2,

and so as we were leading up to the Halo 3
campaign, I think we did kind of

look at it all up from a marketing team,
as more of a Hollywood moment.

With Halo 3, we want to get
out in front and make people aware that

video games are not something
that are just for the boys.

Video games have come of age.

An exciting day
for video-game fans, and for Microsoft.

Master Chief is back in the
most anticipated video game ever, Halo 3.

Thousands lined up
to get the final installment

of the trilogy
when it went on sale at midnight.

I got here 6pm yesterday,
been waiting here ever since.

Halo 3.

What a massive launch event
that was for us.

They have one million pre-orders
which is pretty much unprecedented.

Halo is projected to sell
four million copies its first 60 days.

More than twice as many
as the nine runners-up combined.

It's only the biggest game ever.

We were no longer some like
tech company trying to be in video games.

We were launching one of the biggest
entertainment properties of all time.

Yeah!

Halo 3 embodies our vision
for the future of entertainment.

The franchise spawning everything

from clothing, to action figures
and rumors of a Halo movie.

Halo 3 really started to make gaming
a mainstream cultural phenomenon.

Its first-day sales could outdo

not only the final Harry Potter book,
but the debut of Spiderman 3.

When everything was tallied
we had generated over

170 million dollars in revenue
in the first 24 hours,

setting a new record for the biggest day
in entertainment history.

It was just an amazing moment.

It was one thing after another,
we had games, we had Time Magazine,

everything started clicking
and it felt like, something's happening.

We delivered the right content,
the right hardware,

the right games, the right price,
and we were showing massive momentum.

The ship had sailed,
and sailed magnificently,

and kept sailing full-steam ahead.

Only a week ago Peter Moore took the stage

in Santa Monica, California
for Microsoft's E3 press event.

A mere 7 days later
the man in charge of the 360

and the Games for Windows division
has decided to move onto EA Sports.

I left Xbox, because, I felt like
I had done what I needed to do.

Ironically, he'll be
replaced by Don Mattrick,

the former president of EA,
but one has to wonder,

with the face of the Xbox gone,
how will this affect

the 360's standing in the console wars?

Don Mattrick was a really
accomplished game developer,

as a kid he wrote these amazing games
and he was just like super smart.

Don's really an innovator,

he's a business leader,
he's really into the tech.

He really wanted the Xbox to be a product

that could reach a broader
and broader market.

When I joined Microsoft,
Steve Ballmer said, "Xbox needs

to have more than a two-product lifecycle.

And to do that, we need to place bets,
we need to move into new categories,

we need to innovate,
and create new hit products,

both in gaming and in entertainment."

When Don Mattrick came onboard,
it was more about trying to appeal

to a completely different audience
and a very broad audience.

So, there was this one meeting
where he shows up,

and he says, "We're not going
for 30 million consoles,

we're going for 300 million consoles."

And, the strategy behind that was,
we need to make casual experiences.

When the Xbox 360 launched,

we had Xbox Live built in,
we had this

very basic blade for marketplace,
and we had only game content.

One of the things
that I had been tasked to do

was go get us some entertainment content,

which was an entirely
new idea at the time.

We started doing deals with studios.

We were excited when we had one movie

and then two movies
and five movies and ten movies.

Microsoft's Xbox will transform
into a next-generation entertainment hub.

Users will be able to navigate
through music, movies, television shows.

For the first time we're
realizing that streaming

and digital-video content
was gonna be a big deal.

And then we had Netflix come on.

Xbox 360 was a big part
of putting Netflix in the living room.

At the time, Netflix was
a mail-order DVD catalog service.

Nationally, Netflix moves
more than 1.5 million DVDs a day.

There's 40 of these warehouses

- around the country.
- Right.

So that nearly every customer
gets next-day delivery.

Netflix hadn't done anything
with digital streaming,

we thought, "Why don't we call them up,
see if they would be interested

in distributing their content
through Xbox 360?"

We definitely accelerated
their growth because we introduced them

to tens of millions of devices
that were connected to a TV, overnight.

It's a great opportunity for Xbox members
to never leave the sofa,

you know, watch movies from Netflix,
play great games, it's a great platform.

And then it's like,
what should we do next?

Well we brought HBO, we brought Twitter,
we brought Facebook.

Today that may not seem
that revolutionary,

but at the time, the idea to be able to do

that all in one box
had just never been done before.

Our Xbox Live community,
the digital streaming services,

the gamertags, the achievements,
the experiences, they were things that

we would hear consumers say they loved,
and competitors say they were envious of.

Xbox Live really proved
that people wanted digital content.

I think that created this sort
of ripple effect that affected Nintendo.

They knew that they probably needed
to shift on how they did some things.

They weren't just going
to give you another console,

they were gonna give you a console
that did something different.

This is Mike.

By day, he's Mike the businessman.

But, when he picks up the new Wii remote

from Nintendo, he's Mike
the warrior-superstar-athlete man.

Holiday of 2006,
Nintendo released the Wii,

and turned the world upside down.

We're confident because

for pick-up-and-play games
there's nothing like it,

for baseball, for tennis,
games like that, it's fantastic.

But with the nunchuck,
what you're able to do

in a first-person type of game,
is a huge step forward in control.

Nintendo came out of left field
with a device that wasn't

based on technology,
it was based on a simple

entertainment experience
of being able to play a game

without being
a button masher on a controller.

It really resonated with a mass audience,
a wider audience, all of a sudden,

parents are playing video games
with their kids again.

Suddenly you heard people
talking about video gaming

as something that was good for you.

Wii Fit
is about bringing fun into fitness.

Video gaming as

an approachable thing
that everybody could do.

They went after senior citizens,
they went after female gamers,

they went after people
who are not traditionally gamers.

Clearly they expanded the audience

and they took gaming
to mainstream entertainment.

I remember Bill putting a lot of pressure
on the Xbox leadership team,

how did we miss motion gaming,
what can we do to catch up?

We need to compete,
we need to advance our game strategy,

we don't want to do a Wii-mote rip-off.

We want to do our own thing.

Don also had this vision
for controller-free gaming.

What would it be like
if instead of waving something,

we were recording movement?

We were recording state-of-people,
physically, through a camera.

The controller
he thought was this impediment

to more people playing games.

Because you had to kind of learn this
device, and his view was, like, hey,

if people could just like swat at things
or move things, or drive a car like this,

it's kind of crazy, but it's like
if you could drive a car like this,

that would make more people
more willing to play video games.

We set out to really make
the console approachable

to a whole new generation of people.

To a whole new set of people

that wouldn't otherwise think about gaming
as something that it was for them.

We had already
been doing some technology exploration

where we could map people.

Using depth sensing and RGB cameras

and microphones and stuff,
and you could have that

by your television,
rather than holding something,

you can still get these
similar types of experiences.

The idea that we were gonna
use IR kinda display,

projection and reflection,

to measure movement, was pretty magical.

Every step of the Kinect process was

an inventing step.

A lot of this work, we had to
figure out how to hack our way into it.

We prototyped probably 30 activities.

We found that the whole-body activities
were actually the most fun.

And so that's
what we ended up focusing on.

To create something
totally new for gamers.

We launched Kinect
and it was a game-changer.

I don't think anybody saw it coming.

It was something completely
new and unexpected.

- Wow, that's...
- So you can see if we wave our hands..

- Oh my gosh.
- it's tracking your full body.

- That's crazy.
- Now we're playing.

- Okay.
- So if you lean left and right...

- Oh!
- Jump, jump, jump!

In your opinion John, how does this
compare to the Wii and the Wii Fit?

Oh it completely blows it away,
and this extends far past just gaming.

It's crazy, it's Minority Report status,
that's how I see it.

When I saw the Kinect, I thought,
"Oh finally, like this is something

we're gonna use for VR eventually,

it's going to be amazing
to have you in the game."

Because it's motion gaming
people think oh it's like the competitors,

it is a completely different thing,
you have to play it to understand that.

The games were really fun.

It really unlocked
a new game experience for people.

Hiya! Hiya! Hiya! Fireball!

We started getting people
all cheering and yelling

and you know encouraging the person
who's actually playing to try new things.

The idea that, like,
you would have people over for dinner

and then afterwards everybody
would want to turn on the Xbox

and go play ping pong
or go play Kinect Sports

or go play a Dance Central,
that just gave Xbox 360

a whole 'nother sense of purpose.

In the first 60 days, we sold over
eight million Kinect sensors worldwide.

Kinect was a technological marvel,
but it totally fell flat with core gamers.

Kinect didn't work with Halo.

But Kinect was an amazing tool
for so many things like research

and how we think about augmented reality
and virtual-reality experiences.

It's been fun to watch
innovation of computer science

come not from academia or industry
but to come from gaming.

And it turned out that
Kinect creative community

just went on to do incredible things
with this device.

People got into hacking
the Kinect early last year.

Smartly, Microsoft responded by welcoming
that, and encouraging more development.

People were taking
all the IR data and the voice data,

and it was a rich source of creativity
for other types of applications.

What is neat is the technology
that is used in video games now

and how it can be applied
to other things, not just gaming.

And they're calling it the Kinect Effect.

Microsoft's Kinect
could revolutionize medicine.

Being used to aid the
rehabilitation of stroke patients.

Also by people who work
with autistic children.

Kinect today
is mostly used outside of gaming.

So, gaming has created
this piece of technology

that today drives the industry forward.

With Xbox 360,

we had an amazing product
that had finally broken through.

The ecosystem was healthy.

Consumers were engaged
in North America and Europe.

It was the top-selling hardware device.

Xbox 360 has been
the number one-selling console

every month for the last six months.

It was a pretty great second iteration
for Microsoft as a company.

Against all odds,

the Xbox 360 basically won
that second console generation.

By the end of that
generation I think people had sort of felt

the pendulum had swung from PlayStation
dominance to Xbox dominance.

There were more players
than ever playing Xbox.

The brand really was in a terrific place.

And there was no chance,
there was nothing Microsoft could do

that could possibly torpedo the success
that they had with the Xbox 360.

We're about to change
entertainment forever.

Again.

Because we're gonna
take all that we learned...

In more than thirty years of innovation...

And use it to change...

Television. Television.

- TV.
- TV. TV.

- TV.
- TV.

- TV. TV.
- TV. TV.

- TV.
- Television. Television. Television.

- Watch TV.
- Team Xbox is on a new mission.

This is it.

Xbox One.

I can't believe...

I cannot believe this press conference!

We've got
this vast amount of gamers

that are increasingly loving Xbox,

and we're building great experiences
that they've never seen before,

and now we're going
to be the connected TV,

so we're gonna have the set-top box
for the living room,

and it turned out like nobody wanted that.

Oh hell no, Microsoft.

Hell no.