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Microsoft proposes "five year" digital strategy for all Xbox games

New Lift Studio will make games exclusively for the cloud

Disc-based gaming is far from dead, but the industry's future lies with digital distribution, Microsoft's corporate vice president Phil Harrison declared yesterday during the unveiling of the firm's new Lift London studio, which will make games exclusively for the cloud.

In a presentation, Harrison described Lift as a key component of the expansion of Microsoft's online service and downloads business. "I wanted to create from scratch a 21st century studio," he said. "Not a studio that would make retail products. A studio that would make games for the cloud. Putting together the most incredible talent ever seen in a start-up."

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He was careful, however, to reassure high street retailers that the move wouldn't come at their expense. "The shift is from packaged goods to connected products. We will continue to support retail with our products, for sure. But we are going to keep creating features that are enhanced and improved by the network. Moving from being the maker of packaged products to the operator of connected services."

Discs still have plenty of value as gateway drugs, Harrison explained, introducing the consumer to a wider ecosystem. "Purchasing a product from retail on a disc is a great starting point, and 90 per cent of your content is on that disc," he went on. "By and large what you get on that disc is the extent of the product.

"What I would encourage you to think is that the disc is the start of a five-year relationship with the gamer, we will try to refine and extend the product over many years. It is not mutually exclusive. We don't have to stop doing disc products to be cloud-centric."

Former Rare exec Lee Schuneman has been brought on as Lift London head. He echoed Harrison's view that digital is Microsoft's future, hinting that the development models underpinning high street game sales are becoming unsustainable. "Phil's view, one I support, is that the traditional game release model - which has a massive up-front design, development and marketing cost and a relatively short 16 week window after the game comes out for returns - is changing.

"Of course, we're still going to see the blockbuster games, the Halo's, the Call of Duty's. They're not going to disappear anytime soon. But for the larger networked majority of gamers we plan to use a much more nimble, streamlined development cycle."

Lift's mission is to produce games for all Microsoft platforms, not just Xbox, though it sounds like "Xbox" will serve as the umbrella brand for most Microsoft gaming initiatives. "The studio's mission is to be bold and brave and to lift the reach of the Xbox service beyond the console," Schuneman went on. "If you look at the size of the tablet market today, it's measured in the hundreds of millions, and that's the area where we aspire to be."

This entails thinking beyond the usual console rivalries. "We're no longer just competing with traditional console companies, but out competitive landscape includes the likes of Google, the likes of Amazon, it includes obviously the likes of Apple."

Lift London is currently "incubating" the independent Dlala Studios, developer of Windows 8 title Janksy. According to Harrison and Schuneman, mentoring creatives in this way is another important founding objective.

Thanks to MCV, Polygon and Digital Trends for the quotes.

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