Robbie Bach: MIX ’07

ROBBIE BACH: Welcome everybody, excited to be here, excited to talk to you about what we’re doing going forward to build on what Ray Ozzie talked with you about yesterday morning. Yesterday, Ray talked about the how that we’re going to build these applications and services, and really change the way people get experiences with new technology. I want to talk today a little bit more about the why. I want to talk about why we’re going to build them, how we’re going to build businesses around them, and what new opportunities there are to reach customers and actually distribute the great things that we can create.

Now, I noted yesterday that there was a lot of applause for the remote-debugging demo. I promise you there will be no remote debugging taking place this afternoon, this will be much more of a marketing and business discussion to really reach out and explain how we take those things that have now been fully debugged, and deliver them to our customers, and get people excited about doing them.

I think the interesting thing to note is that the same technology that is transforming the way development is done is transforming the world of marketing. And so how we reach people in this digital age is changing, and I want to talk about that in some depth today, and I’m going to do it in the context of the work we do in the Entertainment & Devices Division, as well as with help from partners who are in other businesses who have other ways of reaching out to their customers.

So let me talk about what we do in Entertainment & Devices. We’re basically in four businesses. We’re in the communications business, you should think of that as Windows Mobile. We’re in the gaming business, this is our Xbox business, and the work we do with Games for Windows. We’re in the video business, largest deliverer of IPTV services, our Media Center products which we’re actually going to talk about a fair amount today. And we’re obviously in the music space with our new product, Zune, and the work we do with Plays for Sure.

Now, all of these products are brought together by an idea we call “Connected Entertainment,” and connected entertainment is a simple premise that people are going to want to be able to get their entertainment experiences whenever, and wherever they want, on whatever device. So, whether they’re in the living room, the family room, the kids’ bedroom, in a car, at work, they have a set of entertainment experiences they want, whether it’s video, gaming, music, communications services, these are things that they want to tie together. And our job in building out our services and products in this area is to make sure we can deliver that connected entertainment experience.

Now, there are three aspects to that connected entertainment experience that are important. And they’re important for what we do in our business, but they’re also important in the context of what we’re doing in marketing. So I want to go through those with a little bit of detail.

First of all, in this new world connected entertainment really is about creating personal experiences. If you think about what people do to customize cars, if you think about what people do, this will seem like a goofy example, but to tattoo their body, what are they doing? They’re creating a personal experience. What do they do when they customize their Xbox? What do they do when they customize their desktop on a PC? They are creating a personal experience. Why do they pick different colors for an iPod or for a Zune? They want to create a personal experience. And so we have to figure out how in all the things we do in marketing we make that personal.

The second thing we have to do is, we have to make these experiences interactive. If  I’ll use my son as an example, he’s a junior in high school, and watching him do homework is kind of like watching the conductor of an orchestra, because on the left-hand side he has some chat sessions going on. On the right-hand side he’s got his music playing. He probably has a video from YouTube up on the desktop. He’s talking to somebody on the phone about the homework, and he’s actually doing the homework, and he’s doing it all at the same time. Now, when I watch him go down to the TV room, it’s exactly the same experience. He’s flipping back and forth between different channels, he’s playing Xbox, he’s talking with his friends on Xbox Live. It is a fully interactive experience.

Why is “American Idol” so exciting? Part of it is because Simon can be sometimes a jerk, and that’s interesting to watch. And part of it is because the judges don’t get to decide who wins. People get to vote. It’s an interactive entertainment experience. So we have to be very clear and careful about making that happen.

The third point about connected entertainment that’s critical is that it has to be a social experience. Again, I go back to my son, when I turned 16 and I got my driver’s license, the first thing I wanted to do was I wanted to go on a date, because now I could do it without my parents. Dates for kids who are 16 now aren’t a guy and a girl going out, they are a group of 20 going out. When they have the big dance at school, I asked my son, what are you doing for the big dance, he says, well, 20 people are coming over to our house to get pictures taken, and then we’re going together in a bus to a restaurant, and then we’re going in the bus to the party, and then we’re going to the after party together, and then we’re sleeping over at two different houses after that. It’s a social experience, and everything they do is about that social interaction. That’s why Xbox Live has six million members today, because people are looking for places not just to play games, but for places to socialize. So, in all that we do in connected entertainment, we are trying to reach out and make things personal, interactive, and social.

Now, I’m going to come full circle and talk about some marketing points that I brought up earlier, because in marketing the basic principles are pretty straightforward. The first thing you want to do is attract customers, the second thing you want to do is then engage them and get them involved in your products, and get them to experience it. The third thing you want to do is you want to do is you want to excite them, and you want them to buy the product.

Now I will tell you, there’s a direct correlation between attract, engage, and excite, and what I just said about making things personal, things being interactive, and things being social, because, in fact, the way you attract people in this new market, and in particular when we’re talking about a demographic 16 to 34 years old, is you make the product or service you’re providing personal, and you do that through the way you market.

How do you get them to engage? You make the marketing experience interactive. And how do you excite them about it? The number one way they get excited is from their social community. They get excited about things because other people recommend it to them. So our challenge today in this digital world is figuring out how we make this what we call experiential marketing, work and the construct of attracting, engaging, and exciting our customers. So what I’m going to do is I’m going to take you through some examples of how we go through each of these phases in reaching out to customers, using software and services and these new vehicles to reach people, and bring to life the things that Ray talked about yesterday so that customers can actually get it, buy it, experience it, and be excited about it.

So let’s start first with attracting, and again, the big thing here is about making it personal. The generation of consumers we have today is among the most skeptical in the world, certainly in our history, and what they want is they want a personal experience. They don’t think of it as mass media, they think of it as their media. They don’t think of it as Microsoft Xbox, they think of it as “My Xbox.” And we really have to figure out how to make all of these things personal.

Where I want to start is with a program we did on Xbox 360 with Burger King, to really talk about how we can attract those customers, and get them engaged in what we are doing. And you’re going to see some really interesting ways to get a customer of this type attracted to a product like Burger King. And we’re going to roll a videotape to actually show that to you.

[Video segment]

Now, if you had asked me a year ago, gosh, you’re going to do a promotion with the Burger King guy on Xbox Live Arcade, and it’s going to generate headlines in the business press about how it lifted Burger King sales, I would have been truly surprised. In fact, financial analysts on Wall Street started to give Burger King a higher multiple in their stock price because of the success of this promotion. And it had a demonstrable impact on their financial results. And that’s a way of just attracting customers in an interesting, engaging way, and using a medium which they were accustomed to and excited about.

Now, just to take that one step further, I want to talk a little bit about the work we’ve been doing with Massive Entertainment. Now, Massive Entertainment is a company we acquired about a year ago, and what Massive does is they do advertising inside of games. So this is their ability, again, to attract customers by putting the ad where the customers are, which is playing the videogames. The cool thing about this is we’re able to do it in a way in which it’s a part of the game. So the gamers actually appreciate the fact that the ads are there.

So if you look on the left, that’s a game called Need For Speed Carbon from Electronic Arts, a great racing game, and that Dairy Queen ad the net time you come around will be a different ad. It might be from Dairy Queen, might be from somebody else, but it will change, real-time, as you play through the game. Likewise, if you look at the Major League Baseball 2K7 game, from Take Two Interactive, the Subway sign in the back, just like in the real ballpark when you’re on TV, is rotating in the background, and you will get new ads over time.

For our demographic, again, that 18-to-34-year-old that you’re trying to reach, this is the best kind of advertising, because it’s in context. It makes the game more realistic, and makes the experience better, and yet the impressions to attract people to the product are still there. Again, the way we’re using software and services to actually reach out and market to our customers. To give you an idea, we have about 60 advertisers today, we’ll have about 100 game titles with this technology built in by year end, and we see this as continuing to expand our ability to reach people.

The final example I want to talk about in the attract space is to talk about work we’ve been doing with Xbox 360 and Media Center and Nissan. And again, this is an example of product placement. We’re teaming with car companies to do this, and what people want to do inside our new game, which will be coming out shortly, Forza 2, is people want to be able to personalize and customize their car. They want to be able to interact with it, and experience the car in the Xbox 360 experience, again, a way for us to attract customers for Nissan, get them excited, and bring them into the marketing loop.

Now, on the Media Center side, Nissan has done some very interesting work around advertising, and new ad prototypes in Media Center. Their goal is to use the fact that there’s over 30 million Media Centers in the world, and by the way, there’s 10-11 million Xboxes that can connect to those Media Centers, and use that as a way to reach people while they’re experiencing entertainment.

So to give you an example of that, I want to welcome Steve Kerho from Nissan on the state to talk about how we’re going to work through this.

Steve. (Applause.)

STEVE KERHO: Hi, Robbie.

ROBBIE BACH: Good to see you.

STEVE KERHO: Thank you.

ROBBIE BACH: So let’s talk a little bit  I know you guys have been tackling entertainment in this new digital age. Give me some examples of how you think about this Media Center opportunity, what was going through your mind as you started down this path?

STEVE KERHO: We think it’s a great opportunity, because TV is still the most important advertising screen in the household. In order to attract consumers to our brand we need to be on this screen. Media Center gives us this kind of access, and our collaboration in this proof of concept is an extension of the advertising alliance that we launched with Microsoft at the end of this last year.

ROBBIE BACH: So now, when you think about that, you obviously had some goals going into this. What were you thinking about in terms of what you were trying to accomplish specifically with the advertising?

STEVE KERHO: Sure. The elements that make this demo relevant to our objective are the fact that we can overlay interactive elements with our linear TV advertising to increase viewer engagement.

ROBBIE BACH: So this is the interactivity that I talked about a little bit earlier, so that people are actually involved in the advertising.

STEVE KERHO: Right. Bringing a certain element of the Web to the television.

ROBBIE BACH: Sure.

STEVE KERHO: Another important aspect that we’re really excited about from this program is the ability to deliver different ads to different viewers based on what’s important to them.

ROBBIE BACH: So in that kind of world you end up with a two-way interaction.

STEVE KERHO: Not everybody gets to see the same ad. This is something that we’ve been waiting for in television for a very, very long time. It should significantly improve the viewing experience for us as the advertiser, and also for the viewer. If I’m in the market for a mattress, I don’t mind seeing a mattress ad. If I’m not, it’s just noise, and the advertiser has wasted their money.

ROBBIE BACH: All right. So why don’t you take us through it, give us an opportunity to see some of the things that you’ve put together on Media Center?

STEVE KERHO: Sure. Let’s have a look at a demo. We’re going to show an ad experience for the Nissan Sentra. So let’s start by launching On Demand Media Center Service provided by the National Geographic Channel.

ROBBIE BACH: And you did this in a way in partnership with National Geographic, so this was part of a collaboration between you and 

STEVE KERHO: A collaboration, a partnership, looking at their demos, looking at our demos, figuring out how it would align, and able to add interactivity on top of it all, so we can increase engagement, we could have better targeting, it could be a two-way dialogue. But within National Geographic’s service, let’s say, we would select an episode from their Amazing Planet series. And as you’ll see when the program nears an ad break, we can lead viewers into our advertising message by dynamically overlaying a creative element.

ROBBIE BACH: So we’re now in the show itself.

STEVE KERHO: We’re now in the show. And in the case of a targeted ad, there overlay could be as simple as a logo, like we’ve done for this demo, or you could imagine teasers like, up next, Nissan Sentra Unleashed, or a relevant message that gives viewers a reason to actually watch the ad, what a concept that is.

Here we are in the ad, and we’ve worked hard to find the right balance between preserving screen real estate for video, and giving the interactive elements some visual pop.

ROBBIE BACH: So the person has switched from the show to actually go view these 

STEVE KERHO: Actually, they’re viewing the content in there. And we’ve designed the ads to enable rich interaction, so viewers can click on specific features that give them a very personalized experience based on their interest.

ROBBIE BACH: In a way, this goes back to what I was talking about on Xbox 360, where you’re giving people a chance to experience the car in their own way.

STEVE KERHO: In their own way. And, again, what’s really different about this is that different viewers will see different ads that are relevant to them. It’s targeted. It’s got high levels of engagement, and it’s two-way. Video is an idea asset for TV, as we all know. So, of course, we want to give viewers an opportunity to engage further by watching other video material about the product. The National Geographic program is paused so viewers can stay in this ad and explore as much as they like for as long as they like. Throughout the ad, the viewer can make choices about the information, and the content that’s the most relevant to them, and with a single click of the remote, the viewer can have a brochure sent to their e-mail inbox without having to visit a Web site, and without having to visit a dealership.

ROBBIE BACH: Again to our point of interactivity and engagement that you create with them.

STEVE KERHO: We think this adds a whole lot of  the two-way communication adds a lot of value, not only for the viewer, but for us as advertisers.

ROBBIE BACH: Sure.

STEVE KERHO: Viewers can return to the National Geographic program after they’re done exploring.

ROBBIE BACH: So now that we’ve seen this, how do you think this is helping you attract new customers, where do you think it’s taking you from here?

STEVE KERHO: Well, as we all know, time shifting significantly changes viewer behavior, eroding the value of the traditional 30-second spot, both for advertisers and for the networks. However, this technology allows us to provide a more engaging, more relevant experience for the viewer, and we think this is going to help combat that trend. Ultimately, we need to be where our viewers are, and being on television is a bit part of that and Media Center really helps us get there.

ROBBIE BACH: Now, as we go through this today, one of the things people could reasonably ask is, so what’s the outcome? How do you know whether this has been successful or not? This is a prototype, a test program in a way, how do you know that you’ll want to go down this path?

STEVE KERHO: What’s the value, and how do we measure it?

ROBBIE BACH: Sure.

STEVE KERHO: Well, at Nissan we’re a very metrics, very ROI-centric company, and we have a variety of measures that we use to determine the efficiency and the effectiveness of every campaign at every phase of the purchase funnel. And from going through all this data, one of the things we’ve learned is, the media that has the highest ROI is the media that allows us to choose the right message to the right consumer at the right time. And what’s so exciting is, this is the functionality that’s at the very heart of the Media Center, which is why we’re so excited about it as an advertising platform.

ROBBIE BACH: Sure. I really appreciate you being up here. It’s a great demo.

STEVE KERHO: Thank you very much

ROBBIE BACH: Thanks very much. (Applause.)

So those are three examples of ways in which you can use this new technology, again, taking what Ray talked about yesterday in the house, and bringing that to the marketing environment, and how we reach out to customers. I want to talk a little bit about engaging customers. Now, to be fair, both the Nissan ad, and the work we did with Burger King, had examples of both the attract part of the phase, and the engagement part of the phase. But I want to talk about some other interactive branded experiences that really brought this more to the fore. So let me look at one, let me show you one that comes from what you might have thought of as a more static medium, the newspaper. So the newspaper has this interesting challenge, which is their readers want to experience the information in a different format than just physical paper.

And so somebody like The New York Times, who has a circulation of 1.1 million, has now 1.5 million who look at their content online. And the question for them is, how do I create a great premium experience, and how do I monetize that in a new way, so how do I really get engaged. And they’re using this, as well as some of these other papers that you see in the background, are using this product called Times Reader, which enables people to deliver that exciting premium experience. You get online and offline viewing, you can download it, you get interactivity, you get video, you get entire things that transform the experience so that it’s not the static thing we talk about, but it’s an interactive experience, and that you can engage in a new and different way.

And the challenge now for these publications is to figure out, OK, what’s the monetization model we use so that our monetization from what used to be circulation gets replaced by advertising and other forms of monetization that we do online, and that whole industry is in transformation, and this is the type of technology that’s going to enable them to transform themselves in the future.

A second example moves back towards the PC itself. If you think about it, it’s some of the most valuable real estate in the home, certainly from a screen perspective, because people are there in front of it. They’re doing e-mail, they’re up on the screen, they’re working in different things. They do it at work. They do it at home. So the question is, what can we do to create new experiences there, and how can we engage with them from a marketing perspective?

So, those of you who have seen [Windows] Vista, or are running [Windows] Vista, you know the idea of gadgets, gadgets become a way for people to have interactive branded experiences. So whether you’re Yahoo, Time Magazine, Google, The Weather Channel, you see this as a chance to engage your customers. It’s on the screen, they can click at it, there’s interactive experiences that can come from that, and now your brand is front and center with them.

So there’s really a ton of possibilities here. I want to spend some time, though, focusing on one in particular with Disney. Now, Disney as a company is very passionate about their brand, and they think very deeply about how they create great end-to-end brand experiences. I think they’re amongst the best in the world at doing this. And in their Hong Kong Disneyland operation, they were facing some interesting opportunities with their customers, because the demographics were slightly different. Broadband isn’t quite as popular there. And so they had to figure out, how can they engage with those customers in a new way.

To show us how they’re doing that, I want to bring out Edward Kummer from Disney to give us some thoughts, and a tour of what Disney is doing in this space.

Edward. (Applause.)

EDWARD KUMMER: Hey, Robbie.

ROBBIE BACH: Hey, good to see you.

EDWARD KUMMER: Good to be here.

ROBBIE BACH: How are you doing? So, again, I just want to walk us through the things you’re working on. You had a set of opportunities in Hong Kong where you really said, hey, there’s a better way for us to engage with our customers. How did you guys think about that?

EDWARD KUMMER: Right. What we did is  I’m going to talk about a project that Hong Kong Disneyland did. There’s been an economic boom in Mainland China, and there’s a whole new group of consumers with disposable income. And with that has come many more personal computers in the home in China, and Hong Kong Disneyland had a unique opportunity to communicate with this new group of customers. And it’s different there, because they haven’t grown up with the Disney experience like we have here in the United States. They didn’t have television, they didn’t have the movies, in the same way that we have, and they also haven’t had 50 years of Disneyland. So now we’re trying to communicate to them this whole experience that’s much more ingrained in our culture, and we needed to communicate to them with long format, and really rich media to do that. Whereas, within mainland China, I think you mentioned that they don’t have as much broadband in their home as we do here, and most of the broadband they get is either in internet cafes or in the workplace. So that was the challenge that Hong Kong Disneyland faced.

ROBBIE BACH: So you’re really trying to figure out how do we use technology to reach out to those customers, in part because you have a different experience they didn’t know about, and in part because there were technical challenges in actually reaching them. So what did you do? Obviously, you used some technology to help engage with them, what did you guys decide to do?

EDWARD KUMMER: What we did was, we worked with Microsoft and large OEMs selling computers in China. We took advantage o the Windows Vista gadget technology. The great things about the gadget is you can see it’s always visible on the screen, so it’s always enticing, the customers are guests, we’d like for them to click on it and learn more. There’s RSS feeds on there that allow you to see news about the park, the latest things that are happening. As you click to learn more, you can also click through back to the Hong Kong Disneyland Web site and get even more information about the park. Probably most importantly, it allows us to deliver long format content, really rich media, gigabytes of information in terms of audio, and visual, and pictures that really communicate that immersive experience that are our theme parks.

ROBBIE BACH: And they’re learning the culture of Disney through the process of doing that?

EDWARD KUMMER: Right, exactly.

ROBBIE BACH: They’re learning about the characters, they’re learning about what Disney means, and a world in which they didn’t know about in the past.

EDWARD KUMMER: Exactly. It helped us overcome the broadband issue, but also the infrastructure issues that happen in China.

ROBBIE BACH: They can actually see full motion video, and really see what the park is like.

EDWARD KUMMER: Exactly. As they navigate through it, they get to engage in different aspects of it, and learn what Adventureland is, and Tomorrowland. And it’s always running on the desktop, so it’s constantly being updated. Ray Ozzie talked about software plus services, and that’s exactly what the gadget is. As the park evolves and changes, and new things happen, we can always download new content on to it, and they can be constantly updated as to what’s happening. Of course, we do it in multiple languages, in English, in traditional Chinese, and simplified Chinese, so we’re making sure that we’re communicating with the right audience.

People can also build out virtual itineraries, they can plan what they want to do at the park at home, and then bring that to the park when they get there. And we’ll continue to expand it with new interactive experiences, so it can continue to grow and evolve.

ROBBIE BACH: It’s really cool, because this is effectively having a Disney application on the PC.

EDWARD KUMMER: Right, exactly.

ROBBIE BACH: And, in fact, it’s delivered in a way that it’s still promotional. It’s still achieves your marketing objective, but from the consumer’s perspective, the guests, as you would say, it’s like having an application that they’re working with.

EDWARD KUMMER: Right.

ROBBIE BACH: Now how do you think about the success of this project? How do you think about, again, measuring whether you want to do this deeply, maybe you want to do it in Japan, maybe you want to be doing this in the U.S., how do you think about expanding on that?

EDWARD KUMMER: Well, for Hong Kong, we can measure it in multiple ways. One, we can look at the RSS feeds, and see how many people are getting that information, see who downloads any add-ons we put out there for it, as well as people who click through back to the Hong Kong Disneyland Web site. But the real ultimate measure for us is people coming to our theme parks, and truly experiencing it. This is representation of that. And so we built that  and in our theme parks one of the big activities is pin collecting and trading. So in the gadget, if you look down in the lower left, there’s a little purple box, and there’s a pin in there, so as you navigate around and engage in the content, you collect pins. You kind of discover them throughout the gadget.

ROBBIE BACH: So you’re on a little bit of a treasure hunt.

EDWARD KUMMER: Exactly. And then once you’ve discovered all eight of them, you have the ability to print out a coupon, and you can print that coupon, take it to the park, and redeem it. So that gives us the arc from the gadget all the way into the theme park, and that’s how we truly measure 

ROBBIE BACH: And so then you can literally say, you can look at redemption rates on coupons and say, hey, wow, when we did this, we got this kind of redemption, you can see a direct connection between the activities.

EDWARD KUMMER: Exactly.

ROBBIE BACH: That is very, very cool. Great example of engaging with customers.

EDWARD KUMMER: Thanks for having me, appreciate it.

ROBBIE BACH: Thank you. (Applause.)

So now I want to talk a little bit about the work we’re doing to excite people, and really reach out to them, and I’m going to do this in the context of a game from Microsoft called Gears of War. Now Gears of War was a new franchise for us, one that we were trying to build out and reach out to people. And we did an ad for Gears of War that I actually thought was quite unique, and quite exciting, and a very good ad for what we wanted to accomplish. But the question we raised in this excitement phase is, how do we interact closely, how do we get the community engaged?

So the first thing I want to do is actually show you the spot, it features music from Tears for Fears and Mad World, and then we’ll talk about how ultimately the community ended up engaging with it. So let’s roll that video.

[Video segment]

Now that ad as a standalone ad won bunches of awards. (Applause.) Thanks. It really is a very cool ad, and by itself was a breakout in the gaming industry for how you advertise a game, particularly one in the genre which is sort of the horror and shooting combination that’s in Gears of War. But the interesting part for us that was more exciting is, the community adopted the spot. The gaming community said, wow, that’s a cool ad, what can we do with it? We posted the ad on Xbox Live, which is something we regularly do. So people went up to our video download service, downloaded it, and suddenly we started to see mashups. People started posting it in other places. People started personalizing, interacting, and creating a social experience, all those things that I talked about earlier, out of the advertisement.

Now I want to show you a short clip from one that I particularly liked. I’m kind of an old guy, and I remember “Saturday Night Fever.” I’m sure not very many people in this audience actually remember that movie. But there’s a scene at the beginning where John Travolta is walking down the street to the song “Staying Alive,” and people took that and did a mashup between that and Gears of War. Let’s just quickly show that short clip.

[Video segment]

If you go through that song, it actually plays pretty well, instead of John Travolta, you have Marcus Fenix running down the street being chased by an alien, but it’s sort of the same concept. John was in New York probably being chased. So, you see Team Xbox here on the visual. These things started to appear on all these different Web sites, started with YouTube, but it spread across the gaming community. We found over 700 different mashups were done based on that advertisement. It was viewed  they were viewed over five million times. Think of the free advertising from this, the game, I will say the game is a great game, but it has sold over four million copies. It’s the best selling game on Xbox 360 today. And certainly part of it was that social excitement we were able to generate in the communities.

Now the best part of this story, in my opinion, the best part of this story is, I would love to say that the marketing team had this carefully orchestrated plan to do this, and that they seeded the community, and got somebody to do one mashup so that other people would get the idea, and do all this. No, we’re actually not that good. In fact, we had no plan to do any of this at all. So the plan was to do what we always do, we post the ad, let people look at it, it’s advertising on Xbox Live, and away you go. The community took over and did the marketing for us. That to me is the excitement you get from using the software and service technology that Ray talked about yesterday, and bringing it to life in the work that we’re doing in marketing, and reaching out to sell to our customers.

So that’s a great example from Gears of War. Let me talk more broadly about the work we’re doing on Xbox Live. This is probably our best example of building community, and using that to excite customers. Xbox Live, for those of you who don’t know, is the online gaming service that goes with Xbox. And originally the idea here was for people to play other games against other people. It was a subscription service, it’s $49 a year, we have well over 3 million people paying the subscription, about 6 million people who come to the site, a very popular place. But why do 6 million people come there, especially if some of them aren’t playing online games? The reason they come there is for the community, for the reach out they get from other people there, meeting their friends there, playing Xbox Live arcade games like, frankly, the Burger King games that you saw earlier, downloading movies, downloading videos. We actually have a whole movie and video service that’s very popular there, the ability to see those advertisements first. We have created a social community there. And that community markets to itself, and they really do self-serve each other.

I’ll give you an example. You think, well, download videos, what would be something that would be hard to get people to pay for? Now, it turns out Southpark, very popular show, lots of different ways you can get it, and you say, well, how are you going to get people to pay to download Southpark? Well, the guys who do “Southpark,” Comedy Central, don’t do the show in HD, so you can’t get it in high definition anywhere. So we said, well, let’s try it in high definition. Now, if you know Southpark it’s a little goofy to think of all those 2-D characters running around in high definition. In fact, it’s one of the leading downloads we have on Xbox Live Video.

Why does that happen? It happens  I’m sure the HD versions of Southpark are beautiful, I’m sure that’s true, but that’s also sort of irrelevant. It happens because of the community that gets built around that. And we’re letting that community do the work. And they like doing it, and they get better references, they get trusted referrals, and that’s the kind of excitement and activity you want to build.

Now, I’ve given you some examples that I think are pretty exciting in the video space. We’ve seen things on the PC, we’ve seen things from video games, we’ve seen things from the TV, but one of the places where you might think, gosh, how do I excite people in the world of radio. You think of maybe the oldest form of electronic medium in some ways, and how do we get those people excited. So what I want to do is I want to bring out Jason DaPonte from BBC Radio and he’s going to talk about how they face this challenge in the BBC context.

Jason, good to have you, come on out. (Applause.)

JASON DaPONTE: Thanks.

ROBBIE BACH: You heard me talk about Gears of War, you saw the cool example with National Geographic. You’re in a little bit of a different situation, a little bit of a different space.

JASON DaPONTE: We are.

ROBBIE BACH: You’re a government-sponsored radio program. How do you think about this, what are the types of things you’re trying to accomplish and work on in this are right now?

JASON DaPONTE: Like you said, we’re a publicly funded broadcaster, so we’re very, very different from most of the other major media organizations in the world, in that we don’t get any advertising revenue, all of our revenue comes from a fee that’s paid by people in the UK who have a television.

ROBBIE BACH: Right.

JASON DaPONTE: That’s it. And the only way that we can keep them paying that fee is for them to keep appreciating us, and attributing credit to us. So it’s incredibly important that we constantly build up that type of relationship with our audience members. Now, one of the audiences that we have a really hard time with is teenagers and young people.

ROBBIE BACH: It’s that 18-to-34 demographic that I was talking about before?

JASON DaPONTE: It’s the Xbox guys.

ROBBIE BACH: Yes, it is. Exactly.

JASON DaPONTE: And so people love us when they’re young, people love us when they’re old, but in-between it’s a little bit tricky. So one of the things we’re trying to do, and what I’m going to show today is how we can bring Radio One, which is our youth radio service, together with the Web, which is some place where these guys are native, and other parts of the Internet experience, to try and build up a much stronger type of relationship and get more credit from them.

ROBBIE BACH: Sure. Now, talk to us about what you did to actually make that happen from a Windows application perspective, or technology perspective. I know you actually went in and used the technology to bring that out.

JASON DaPONTE: We did. What we did here is we’ve been prototyping with Silverlight and some of the APIs that MSN are opening up to try and get to more of the places where the teenagers are natives, get the content out in front of them in places where they want to be, around their Internet experience. So this is all part of our BBC 2.0 initiative, which is trying to reinvent the way the BBC operates on the Web over the next three years. And the way we’re trying to do that is through following some principles that we’ve got. It’s about being part of the Web, not just being a big content island on it. We want to interoperate with as many technologies and services and platforms as possible. We want to build a more personalized experience, and you’ll see some of that here when I show you how this application works. We need to deliver on our promise of high quality content and editorials, and deliver a distinctive portfolio of services and content for all of our audience members, as universally as possible.

ROBBIE BACH: Yes, you have kind of a unique challenge from a brand perspective, because BBC is probably the most storied, and in some ways best known entertainment brand in the world. Yet, again, for that 18-to-34–year-old demographic tough to get.

JASON DaPONTE: They’re very tough to get, they’re very tough to get, and that’s why we’re using technology to get in there.

ROBBIE BACH: Cool. Why don’t you show us what you’ve got.

JASON DaPONTE: Sure, so what we’ve done is we’ve built up this application around a character called Jack, who lives in a world where there’s a lot of Radio One around him, but he’s not appreciating it, he’s not realizing it, he’s not attributing credit back to the BBC for that. So he might go to clubs where the Radio One DJs are, he might go to gigs that we’ve sponsored. He might hear it in his friend’s car, but he’s just not having that connection. So what’s happened in this demonstration is Jack has been at the Leeds Festival, which was a huge rock music festival in the North of England. And on stage one of the Radio One personalities has done a call to action to say, send in your Messenger screen name by a text and we’ll give you a special present when you get home.

So Jack gets home, and he goes to log into Messenger, because he’s dying to talk to his friends about what he’s just seen at the festival, and when he logs in he gets a thing that says, you have a new badge from Radio One. So he clicks to open that up, and this badge is a little mark of pride that he can attach to his online identity. It’s a bit like an achievement in the gaming system, the Xbox. So this is something that’s really cool for him to have, we hope, and it’s something that exclusive to him. The content isn’t, but the badge in his identity is. So when he clicks on that he can explore that. And it’s got multimedia content in it. So it’s got articles, it’s got photographs that he can explore, it’s got videos so he can peek into those if he wants to, and then it’s also got audio content.

So if he goes into the video he can start to explore that. He sees this is My Chemical Romance, he doesn’t particularly want to see them, but it goes down into his play list in case he wants it. Then he can go up and queue up some audio content, to listen to when that’s done, and then maybe he goes in and actually what he wants to watch first is this clip of the Kaiser Chiefs, who are his all time favorite band. He absolutely loves them.

So he clicks on that and brings that up, and he starts to watch, and he really wants to relive the experience, so he puts it into full screen, and he can watch them coming on stage as contextual content is coming in from Flickr, which shows our whole part of the Web kind of philosophy that we want to bring content in and out from other places, and then he gets an exclusive Radio One interview that we did backstage that you couldn’t get at the festival, where he can see the band being interviewed in a picture-in-picture experience, while the sound is faded out in the background.

ROBBIE BACH: So you’re actually showing all the things I’ve talked about for the last 45 minutes. You’re showing interactivity, showing social community, and all those types of things.

JASON DaPONTE: Yes, we’re trying to use as much of it as possible. Absolutely. So he closes that back down into his play list, where he’s getting that personal experience that we’re trying to help him build up. Then as we’re starting to get to know more about him we can start to bring him some recommendations using different intelligence in the technology. So here it’s recommending that he watch one of our rock shows, which is hosted by Zane Lowe, because the Kaiser Chiefs were interviewed there.

So he can pop that on and listen to it if he wants in his media queue. And he can have that as something he just sits and watches, or he can bounce it down into his play list, so that he can do other things online while he’s listening to the radio, and he can also set a reminder if he wants to, so that the next time that program is on he gets a messenger alert to remind him to go and watch that  sorry, listen to that. And he can listen on digital radio, linear radio, online, however. We don’t care as long as he’s getting that content.

So everything in this environment is drag and drop, which really makes it easy for him to explore and do different things, and continue his journey. So he takes the picture and he drops it into the search engine, which isn’t a search like you’re used to. It’s a visual search, and it’s driven by clicking on things, which then brings back more related multimedia assets.

ROBBIE BACH: So he’s sort of navigating a Web, if you will, of connections between Kaiser Chiefs, and maybe somebody else the band was in, and some other direction that that goes in.

JASON DaPONTE: Exactly, it’s making all sorts of connections for him across all types of media, in a very kind of fun, entertaining and visual way. So because he liked this badge, he wants to make his own, and that’s one of the great things that this allows people to do. He can aggregate and re-aggregate the content however he wants so that he can then share it with other people, his friends, other members of the public who maybe he doesn’t know. He can do any of this stuff.

So he brings a whole bunch of clips into the badge studio and it pops that open, and he can give it a name, he can attach keywords that let him pull in RSS content from around the BBC, and around the Web, put a description on it if he wants, and then he has the opportunity to create it as a private badge, which is just a personal little collection of media content, or a public badge, and that’s what he’s going to do, because he wants to share this with all the people he knows, and he can say, I’m a Kaiser Chiefs fan, and this is my favorite bits of them.

ROBBIE BACH: This goes back to exactly what I was talking about before, about the social community on Xbox Live. This is you, in an interesting way, you enabling your listeners to create their own social community, which then attributes back to the BBC brand.

JASON DaPONTE: Completely, completely. And we know that this is an environment that people, teenagers who are into gaming, are used to and comfortable with. So this is a great opportunity for us to present the BBC in a way that they’re comfortable with, and that feels right for them, we hope.

So he can watch this badge now, to make sure he’s got it just the way he wants it, by dragging it into the media queue and double checking what’s in there. And then one of the really cool things he can do is actually share it via Messenger. So he goes into Messenger and starts talking to his friend Jill, and Jill is someone he was at the festival with, and he wants to relive that whole kind of concert experience with her. So he goes in and he starts chatting, and then he can open up an activity Windows where they actually share the badge. And this is fantastic for us, because we know that people try to do this with the radio player that we have now. They kind of start the radio program, go 3, 2, 1, press the button, and they’re chatting in different windows, and it doesn’t quite come together. So this is, again, us trying to adapt our content and applications to the places where the audiences are behaving the way they already are.

ROBBIE BACH: What it enables you to do is create the virtual living room.

JASON DaPONTE: Exactly.

ROBBIE BACH: Instead of having to invite Jill over, and in today’s world Jill might be in a different city, she might be at a different university, they can now have that virtual couch experience just right on the PC.

JASON DaPONTE: Absolutely. So it takes away that solo experience to a certain extent, and it’s  we know teenagers are in messenger, and we know that they’re there all the time. So, again, it’s us pushing our content out to where they are and finding new ways of delivering it.

ROBBIE BACH: So now how does this get you to a deeper engagement with your audience? How does this accrue back to the BBC, and how does that benefit you?

JASON DaPONTE: Hopefully what we’re doing is bringing the BBC to where they are, instead of saying, you have to come to us, which is very parochial. It’s not  and what we’re trying to do is constantly build up that brand experience. So you’ll see, we’ve got Radio One all over the place here, which is one thing, but at the same time we’re kind of associating Radio One with things they’re familiar with, and experiences they’re familiar with, which with teenagers you’ve got to make them think it’s cool, and so these are the things that they think are cool, hopefully.

ROBBIE BACH: So a last question for the audience, they saw Ray’s presentation yesterday where he was sort of showing the fundamentals of how, how did you guys build this, what tools did you guys use to do this?

JASON DaPONTE: Well, we used Silverlight for a lot of it, and we used a lot of the APIs that are opening up, and this is part of the kind of constant innovation that we’re trying to do where we use and prototype with as many different technologies, especially the kind of Web 2.0 technologies, as possible. So this is a great opportunity for us to do that.

ROBBIE BACH: Of course, Silverlight will enable you to take this across multiple platforms, multiple browsers, all that kind of stuff.

JASON DaPONTE: Exactly, absolutely. And that’s one of he things that we’re trying to show here, is how you can move in and out of different applications with different users all having a great experience.

ROBBIE BACH: That is an awesome experience. Congratulations, great work.

JASON DaPONTE: Thanks a lot. Thanks for having me. (Cheers and applause.)

ROBBIE BACH: Good stuff. So now you’ve seen the tour, if you will, of what we do to attract, what we do to engage, and what we do to excite. I grew up as a marketing person inside Microsoft, I’ve been there almost 19 years, and from a marketing perspective this is entirely a new world. It’s energizing. It creates amazing new opportunities. And it really does merge the work you heard about yesterday from Ray and his team, and the work that you saw from our partners, and some of the work that Microsoft has done, in a very unique way.

In effect, the tools and services and applications are becoming part of the medium, and that is becoming part of the way the marketing happens. We are engaging people in a personal way, we’re getting them to be interactive, and we’re getting them to be social. If you think about the examples we saw in Nissan, the examples you saw at Disney, the example you saw of the BBC, that was radio, what you just saw was radio brought into the 21st century, in an incredibly exciting way.

To me I think for all of you it creates amazing opportunities. This is the world in which, based on what we showed yesterday, you can expand your market, reach out to new customers, and really engage with people in a new way. This experiential marketing is a way to extend your brand and I think it leads to a very exciting future.

Thank you very much. (Applause.)