Peter Moore thought he could win the console war with Dreamcast. He was wrong. Sony's ingenious PR foiled his plans, but for Moore, this was just the beginning. Part Two of our interview, takes him from the collapse of Dreamcast to the heights of Microsoft's ambitions for Xbox - ambitions that could well have destroyed the Nintendo we know today...



What was the key lesson you took out of the failure of Dreamcast?

You know, failure's a tough word! It didn't quite get there. I was angry with Sony at the time, but in their shoes I probably would have done the same thing. They did a tremendous job – and it's a story they repeated in 2005 with Killzone – where they promised the consumer something they probably believed they were going to deliver, but they never did. PlayStation 2 - it was the emotion engine it was games coming to life, Real Player was going to be on there, a full network browser… and they just never delivered.

But what they did was place doubt in the consumers' mind. It was pre-emptive guerrilla PR, in the same way that three E3s ago I got lambasted for what I did with Xbox for 360, because I was determined we were going to show real footage even if it was alpha or beta. And then Sony came up with that Killzone video – and they still haven't shipped the game! Have you seen the video?! The game will never be the video! But what they did again was they placed doubt. I mean it's a classic PR tactic.

So going back to Dreamcast vs PS2, you felt the impetus slipping away…

It was a horrible period because, all of a sudden, you could sense consumers thinking twice about Dreamcast. I was $199, it was the first online console, we had some great games – SoulCalibur, Sonic Adventure, Trickstyle, Ready 2 Rumble. When you look at them today, you chuckle, but they were on the cutting edge graphically at that time…

But [Sony] were brilliant at FUD – you know, fear uncertainty and doubt. It was a massive FUD campaign. The consumer thought twice and they started to read, 'can the Dreamcast make it?' It had a tough time in Europe, it had a really disastrous time in Japan. My job was… my personality was such that I'll go up and start being a little more on the front foot… It was like, 'well, what do you do?' You just do it yourself. You start talking, you don't wait for the Japanese to give you messaging – because PR is something they don't do very well, they just don't do that concept of messaging and having passion around the message – the only thing we could do was be passionate. But it was too little too late unfortunately.

So you were at Sega for another two years after that…

Yeah, my job was to transition the company from being a hardware company, which it had been for two decades, and off I go to Nintendo and Sony…

Was that a difficult time?

It was not optimistic. We had developers, Yuji Naka, Yu Suzuki, all these people who had never worked on anything other than first-party hardware. And now we're saying you need to go multi-platform, and it was just not comfortable for them whatsoever. You don't just one day say 'well we're just going to go from our Dreamcast dev kits to our PS2 or Xbox.' Microsoft set up a deal for us and we started to work on things like Crazy Taxi and bringing them over to Xbox – we did I think an 11 title deal.

And in the end you fell out with your bosses in Japan, because they were still relying on arcade conversions when the rest of the world was playing GTA. But how did this lead to your arrival at Microsoft?

Robbie Bach called me to wish me a merry Christmas and asked how I was doing. I said I'm not too good, I'm fed up of trying to convince Japan that we need to either go off and hire western developers or really change what we're publishing and developing in Japan, because the western world is really starting to take over, and the Japanese developers were being marginalized. And Robbie said well if you would ever consider coming here, there's a home for you at Microsoft.

So in January (2003) I flew up there and had lunch with Steve Ballmer and you don't say no to Ballmer. We had a great lunch and he convinced me that Microsoft was going to take on Sony; so I get to put on my suit of armour, get on my horse and take on Sony again – but with a little bit more money this time! And I said yes.

Was Ballmer interested in what you'd achieved at Sega or in your attitude as a businessman?

He wanted my attitude, he didn't care what I'd achieved at Sega, he wanted to know how I was going to win for Microsoft, how we were going to take on Sony, how would we compete with – or acquire – Nintendo. Those were the conversations in those days. It was a classic build or buy conversation. Xbox had launched but it was an aggressive black box for shooters, and how do we evolve that, how do we build the next Xbox, how do we get after Sony? Interestingly, we were just completely fixated on Sony – Nintendo didn't even come into the conversation. But Steve was very compelling, particularly when you're one-on-one with him in his office – we talked about what we'd done to compete with Sony, where I felt their weaknesses were. But the bigger picture for Steve was, we need to get into the world of consumer entertainment. There's a role for Microsoft to play, we truly believe in Xbox as being something that can… there was a little bit of a concern with Sony – we wanted to keep them out of the living room, from a software and services perspective. And then I started work at Microsoft on February 1 2003.



And what did Ballmer hope you'd bring to the table?

I had on-the-ground fighting experience in Japan, so when I started, I took over Japan, because we were just a disaster there. And then being British I also had the European group and then it quickly evolved into a global role, running Xbox Worldwide. But in me, you're not getting a 'poring through Excel spreadsheets'- type of guy. You get the face of the business, someone who can be there in a broader role, leadership, speak for the business, give it a little bit of personality - and then you hope that the smart people then bring it all along behind you. And, boy, there are plenty of smart people at Microsoft.

So we built the 360, and those were tremendous times. We were watching the clay models being built, trying to decide what to call it. Doing the mnemonic shhhhh noise when it boots up – I can remember sitting in a room listening to 50 little one second mnemonic noises til we got it right. A whole day working on that. And then, the shape of the 360, we actually built 20 prototypes to confuse the bloggers – we took pictures of them all and then we just spread them around the web, just to confuse everybody.

And then one day in Redmond I said, 'I'm sick of consoles being launched with massively expensive ad campaigns, I'm going to do this differently'. So I called up MTV, because my relationships were still good from the VMAs, and I said, 'can I do a 30 minute show'… I said to my head of PR, we're not going to launch this like any other console, we're going to do it on MTV, we're going to do a 30 minute show – I didn't use the term infomercial but that's what it ended up being.

And then we built a thing called Zero Hour. We went out to Area 51 and took over a hanger and we said, we're going to talk to the community in a very different way - we're going to pick 5000 people – I think we did it online – and they're all going to drive out to the Californian desert where UFOs are usually spotted, and we're going to take over one of the world's biggest hangers - it was phenomenal. And for 24 hours before we launched we let people play with the games, thousands of fans – we did it at a grassroots level rather than the big glitzy affair with Dreamcast – we really re-defined the way a console is launched.

Were you specifically responding to the growth of the blogging culture?

Yes, because we wanted online – we knew we were going to build Xbox Live and we were going to build it even more aggressively than we did on Xbox. I don't think the word blog existed back in 2003, but we knew we had to talk to our community. The brand had to evolve from black and aggressive - it needed to be organic. We went to Japan and worked with a company called Hers to give us that concave shape - when you look at it, it relaxes you. We took all the sharp edges out - otherwise we were going to get the same 25 million people and lose the same two billion dollars again. You need to scale the business.

And then we went and did three of the wackiest TV commercials you've ever seen. One was Standoff, which in fact you never saw because it was banned. Well, it wasn't banned, I couldn't get it through Microsoft – one of the greatest videogame commercials ever. I thought it was brilliant. We filmed it in Buenos Aires in a railway station - we loved this idea of play and we came up with this idea of 'Jump In' as a tagline. We wanted to do ads that had nothing to do with videogames, we didn't want to advertise videogames, we wanted to advertise fun.

But Standoff was a little different, it was a little risky. I showed it one morning to the head of corporate marketing at Microsoft and she said, 'over my dead body will you ever run this spot on TV'. I went ballistic – it's cops and robbers, it's cowboys and Indians, it's what we did as kids! But we never ran it… we didn't need to because it's been seen millions of times on YouTube...

That's how we got the Xbox 360 out – and you're talking multi-billion dollar risks, taking on Sony… and it wasn't just videogames, it was, where does Microsoft go in the home? And what is the tip of the spear? Well, it's Xbox 360 – and Xbox Live was going to be – and it is – the biggest social network ever attached to a television – that was the concept we were always working to.