Hey I'm Derek, it's me, Derek! The Xbox 360 Kinect. It was... a lot of things. - A whole new era of entertainment! - The hottest holiday gift of the season! - Why am I running like a fool? - That's the genius of our Xbox technology! - Because this is the future of gaming! - I- I can't even express how happy I am right now! - Bye bye, Wii! [laughs] - But mostly, ultimately, it was a failure. ... actually no it wasn't, it was an enormous, game-changing success! Did you forget about that? I forgot about that! But it's true! I mean, Ellen played the Kinect! Oprah gave Kinects away on her show! The story of the Kinect is a story as big as the Xbox itself, one that starts all the way back from the fallout from the Red Ring of Death, to the Xbox brand crashing and burning with the Xbox One. This is Stop Skeletons From Fighting, and before we get to all of that, this episode is brought to you in part by Twitch! They sent me a box of stuff, I'm gonna talk about dogs, click the link below and stick around to the end of the video to learn more. So. The Kinect. The two best years for the Xbox 360 were 2010 and 2011, basically because of the Kinect. I mean, is Halo 3 the best-selling Xbox 360 game? No, it's Kinect Adventures! So, what happened? How did the Kinect go from being one of THE most successful consumer electronic devices ever, to being completely abandoned? And speaking of abandoned, I'm gonna- I'm not gonna hold this the whole video, hold on, lemme put this... shoom Alright... Our story begins in mid-2007. The Sopranos ended, the first iPhone was released, and Microsoft finally admitted responsibility for the Red Ring of Death. You probably remember this whole debacle: Corners were cut, the Xbox 360 was rushed to market, and the fix ended up costing Microsoft at least a billion, but it did help get it out the door in front of the competition. Microsoft extending its warranty marked the dawn of a new era for the Xbox as well: 17 days after announcing the Red Ring of Death warranty extension, Peter Moore, Microsoft's Vice-President of Interactive Entertainment, the face of the Xbox brand, and owner of at least two totally real tattoos, stepped down from his post. He was replaced by former EA executive Don Mattrick. Now Don Mattrick... he's got a different flavor, he's got- he's... he's, um... ... he's different than Peter Moore. Peter Moore is more macho, and really catered to the 360's young adult, mostly male core gamer audience. He was integral in implementing Xbox's plan to crush Sony's PS3, which it had, under his tenure! Don Mattrick, on the other hand, had a broader vision: You see, the Xbox 360 had a new, unanticipated challenger: Nintendo's Wii! Mattrick wanted to open up the Xbox to the same casual market that was buying Wiis in droves. - Can we deliver to our fiercely loyal fans, and at the same time, continue to transform the industry by delivering to everyone? The answer's yes. DEREK: At first this manifested in some casual-adjacent changes in Xbox's strategy, like dropping the Arcade model to $200, lower than the Wii, adding Avatars to the Xbox's UI, and striking an executive deal with Netflix. These were all smart, aggressive changes! But Don Mattrick had something much bigger up his sleeve: - But here's the problem: For far too many people, the controller is a barrier separating video game players from everyone else. DEREK: That's right, he wants to get rid of the controller! Now where'd he get a crazy idea like that? - He's a visionary director, a humanitarian, and yes, also a gamer. Please welcome Steven Spielberg! DEREK: Okay, let's see what legendary... gamer Steven Spielberg has to say. I mean, he makes good movies, I'm just sayin'. - Don and I have always agreed that the only way to bring interactive entertainment... to everybody is to make the technology invisible. DEREK: Well... [sigh] yea- hm. Yeah! I mean, Steven Spielberg's anti-controller stance may have contradicted the Xbox brand's entire identity, but it made a lot of sense, this 8th generation was shaping up to be SUPER long, and Microsoft needed a dramatic mid-cycle refresh to up their momentum. I mean, Wiis were selling gangbusters and are still bought for places like hospitals and nursing homes, even today! The motion control was easy for a wide range of people, people whose only prior interaction with a controller was to turn up the volume when their stories came on. But Mattrick wanted to go a step beyond and take buttons and doodads out of the equation entirely. This central idea is the seed that would become the Kinect. But it was gonna be an enormous undertaking, something that had never been done before, much less done in gaming. Mattrick designated this task to Brazilian visionary Alex Kipman, who named the top secret project after his hometown, Natal. Kinect's start as Project Natal was, in a lot of ways, only possible with a company like Microsoft's resources behind it. Kipman leveraged technology Microsoft had already developed, like speech recognition and machine learning algorithms, but even more useful was the leverage gained from Microsoft's bottomless coffers, which allowed them to acquire 3D and depth-sensing camera start-ups and hire on skeleton-tracking pioneers. The finishing bow on top was Kudo Tsunoda, who came on to prototype and develop games for this entirely new kind of interface. It was a bold and ambitious new direction for Xbox, and by the end of 2008, Xbox would have a machine cheaper than the Wii, Avatars, an exclusive deal with Netflix, and an approved prototype for their controller-less controller. - It's not about reinventing the wheel. It's about no wheel at all. So... Don, congratulations... DEREK: By early 2009, Microsoft was ready to officially bring its game development studios onto Project Natal. This included Rare Studios. Now, to get you up to speed on Rare: After a celebrated and very profitable run on the Super Nintendo and Nintendo 64, Microsoft bought Rare in 2002 for a record-setting $375 million. ... and let's just say their games since then hadn't recouped Microsoft's investment, and Banjo-Kazooie: Nuts & Bolts' holiday 2008 launch left a lot to be desired. This, combined with a decline in Microsoft's PC business during the global recession, meant that Rare was restructured with less creative freedom. The new mandate: Make Avatars and a Wii Sports clone. Rare got to work on the Natal prototype, but development was frustrating. The hardware was in flux, with specs constantly upgrading and downgrading, initially Rare even had to test the prototype in a room covered in tinfoil to reflect more light into the sensor. But honestly, that was a relatively minor challenge of developing for the Natal. The far bigger stress came from the Natal's core concept: Using the body as a controller. For example, just think of this phrase: "Raise your hand." Even something as simple as that can be interpreted in a ton of different ways, and hey, also, not all bodies have the same shape range of motion, you really do have to dumb the system down to compensate for all the potential variation! I get caught up on this point personally because Producer Grace's grandfather had a degenerative muscle disease called muscular dystrophy, and he physically couldn't lift his hands above his shoulder. Now, he could Wii bowl like no-one's business, but could he move his body like the Kinect needed him to? No! No way! And this was the broad audience that they were trying to appeal to! Rare also had to deal with the increased pressure to please Microsoft. According to ex-Rare designer Gavin Price: Apparently other Microsoft studios didn't initially get the memo that the Natal needed to appeal to a casual market... ... or at least Peter Molyneux of Lionhead Studios didn't. In the midst of his studio's development of Fable III, he took the Natal dev kit and made an ambitious, emotional game/demo about a boy who deals with his parents' constant fighting by talking to his imaginary friend, the player. You know! A premise that appeals to both core and casual gamers (?) It was a weird sell in the late 2000's, especially before indie titles like Gone Home proved that a more emotional, gameplay-light game was commercially viable, but Microsoft seemed willing to take a chance on it, at least at first. - Microsoft hadn't yet decided who Kinect was for! If you think of Kinect as a party device, where does... ... where the hell does... does Milo fit in? - Microsoft also brought third party developers into the fold, including from Japan. Which is interesting, because Microsoft has never been able to find a foothold in Japan. And the prevailing explanation was that the Japanese just couldn't get down with your standard Tom Clancy's Gears of Halo Duty games that sold by the metric ton in the US. Could this casual focus finally bring the Land of the Rising Sun into the fold? Tch! Nope! Not to get too far ahead of ourselves, the console market in Japan had been declining since the early aughts, due to the popularity of mobile gaming. There's a reason Japanese developers at the time were doing so many gritty Western-style reboots of their legacy franchises. But also, surprisingly, Japanese developers actually had the most creative and interesting core titles for the Natal, like Rise of Nightmares and Steel Battalion. Yeah, I know, just keep those in your back pocket for now. MATTRICK: Now, with Natal, everyone can join in, using the best controller ever invented: You. DEREK: The E3 2009 showcase of Project Natal was nothing short of breathtaking. Genuinely, I think it's one of the all-time greatest E3 presentations, I mean, we had Steven Spielberg, skateboard scanning, Clueless closets pit crew racing mechanics, artificially intelligent Project Milo... MILO: You've got to put these goggles on.
CLAIRE: Goggles? MOLYNEUX: Claire has been thrown a pair of goggles, notice what she did, this wasn't acted! She felt the need to reach down for those goggles! DEREK: Phew... amazing! Too bad none of it was real, or as good as it was portrayed. I mean sure, things like the Ricochet demo made it into Kinect Adventures, but the Project Milo demo, a.k.a. the one demo that passed for a core gamer title, was completely pre-rendered and acted, it was intended to be a real game, but Molyneux has never been one to shy away from juicing excitement with a little bit of... over-enthusiasm. - I'll be honest with you and say that most of it is just a trick. But it's a trick that actually works. DEREK: The reaction was explosive, totally overshadowing Sony's reveal of their upcoming Move technology, and how could it not?! Microsoft was promising the Minority Report, the Star Trek holodeck, an artificially intelligent sim... ... while Sony was just promising Wiimotes with glowing ping pong balls. Microsoft was creating the future. A future for everyone! Well, I mean... kinda. And to be honest, that E3 set consumer expectations really high... ... too high, in a way that wasn't helpful for developers like Rare: Microsoft tried resetting expectations, but not by lowering them: Natal was next showcased a few months later at 2009's Tokyo Game Show, and sunglasses-at-night Tsunoda emphasised that Natal wasn't just for casual gamers, it would even push gaming into never-before-seen levels! - No matter how many buttons or how many analog sticks you put on a controller, you're never gonna get full-body simultaneous character control in-game like this. There's no other control system that can give gamers that! So it's simple and approachable, it's extra fidelity for the core. DEREK: He also showed off prototypes for Space Invaders Extreme, Beautiful Katamari and Burnout Paradise working with Project Natal. I'm still sad that these and other prototypes would never see the light of day, because soon other factors would conspire to make Xbox's promise of great core games on the Natal... completely impossible. 2009 wrapped with Xbox on shaky footing. Wii continued to sell gangbusters, and Uncharted 2, combined with a cheaper PS3 slim model, helped finally propel the PS3 just past the Xbox 360 in December sales. The market winds were shifting, while the global financial crisis had largely not creeped into gaming yet, the cracks were beginning to show. Even though it was still breaking records, Wii sales were down 21%, dragging overall sales in the console market down with it. Beatles: Rock Band, the white whale of the decade's rhythm game craze, a title that should have broken the games industry, instead only sold modestly well. December 2009 also saw a little game released on the iPhone that would change everything: Angry Birds. Yep, while Microsoft's Natal and Sony's move were rushing headlong into the casual market, Apple had opened its App Store, and the explosion of available games, literally tens of thousands, were quickly finding their footing. In January 2010, news leaked that Microsoft was going to drop Project Natal's internal processor. Turns out that wasn't exactly true, but the retail version would end up having a severely downgraded processor. This mean that Natal's brain, the part that could process skeletal mapping and body tracking, would be offloaded onto the Xbox 360's CPU. Out of all the constant hardware changes and downgrades that Natal had gone through, including a scaled-down camera and microphones, this one stung the most. This meant that developers would need to sacrifice processing power in order to work with Natal, a decision that made it impossible to patch old games to work with it, but also specifically knee-capped ambitious games attempting to use precise skeletal tracking, like Steel Battalion: Heavy Armor, or even Project Milo. - It started as this device... - ... which kind of could do everything itself.
- Yeah. - It didn't take up any processor power, the field of view was... - ... was, y'know, could encompass the whole room...
- Right. - It ended up being... none of those things! DEREK: Without the better processor to assist with more precise skeletal tracking, this basically meant that the precision required for a core gaming experience just wasn't possible without major compromises, and even dumbed-down casual titles like Kinect Adventures and Kinect Sports! The question you might be asking yourself is "Why?" Why would Microsoft sabotage the future it was selling by removing the internal processor? And the reason was twofold: One: It would make it easier to give the Kinect software updates, theoretically making the Kinect better with time, and two, and this is the bigger reason in my opinion: It would lower the cost of manufacturing. According to Dennis Durkin, Microsoft's Interactive Entertainment Division CEO: Ah, Dennis Durkin, wonder what that guy's up to in 2019? Now, the gaming business is infamous for selling game systems at a loss in order to outsell the competition. Microsoft sold the original Xbox at a loss, and their attempt to correct this for the Xbox 360 was one of the main causes for the Red Ring of Death, a.k.a. the impetus for this whole Don Mattrick "You Are The Controller" journey. But never again. It's clear they saw a lot of potential in Project Natal, and they weren't about to leave any money on the table. Keep costs low, and prices high! And creating an add-on that was marketed not just as the future of gaming, but the future of technology, might just be the ticket! Would it be enough though? In June 2010, Microsoft started E3 off with a bang by announcing the official name of the Kinect with a Circue du Soleil performance that aired on Spike TV. ... woof, what a incredibly 2010 sentence that was. Microsoft showed their disconnect from their core audience by kicking off their E3 presentation's Kinect showcase by showing them how... ... uh... you could use it to listen to Justin Bieber? A.k.a. possibly the most hated person of the Xbox 360's young adult male gamer crowd? While some of the actual game trailers were, naturally, over-enthusiastic, we started to see actual games for the Kinect, complete with some of the problems that would plague the system. The games they showed off were... don't get me wrong, pretty cute... - Bye Skittles, I love you! DEREK: ... but they clearly were novelties designed to appeal to the Wii crowd. I mean, thanks to its compromised hardware, the Kinect was now unsuitable for core gaming, so it made sense, from a distance, that Microsoft was finally fully (mostly) marketing it as a casual device. But it didn't really make sense from the perspective of Xbox's most loyal fanbase, who only had the vague promise of a future Star Wars game to tide them over. Sony was quick to point out the Kinect's shortcomings by highlighting their own grab for the casual market, the PlayStation Move. - PlayStation Move's not only crazy precise, it's also got what we in the future call "buttons". - The Move was a contrast to the Kinect in a lot of ways, it was a genuinely cool device, but it looked too much like the Wii, and Sony just wasn't investing as much in the Move as Microsoft was in the Kinect, though it did beat the Kinect to market by two months, with four launch titles and compatibility patched into four older games, including some core games like Heavy Rain and Resident Evil 5, now with more waggle! Kinect, on the other hand, launched in November 2010 with 15 games and a $500 million advertising campaign. There was one game noticeably missing though. - If you think of Kinect as a party device, where does... ... where the hell does... does Milo fit in? DEREK: Project Milo was officially, messily announced as cancelled a couple o' months before the Kinect's launch, basically as Fable III limped onto retail shelves after only 18 months of development. Though Kinect top brass Alex Kipman claimed that it was... actually never intended to be a retail product?! Wait, really?! Never intended, really! All this time, y'sure?! You sure about that? But I guess I- I guess, to be fair... the writing was on the wall: Fine, well then what would take the place of Project Milo for the core gamers? According to Kipman, that game... was Kinectimals. - Bye Skittles, I love you! - Phew, really? I mean okay, I'm not made of stone... ... I like kitties too, we all like kitties, they're cute, they're fun, but that's not... that's not- [sigh] [audience laughs] He also had an interesting response when asked about one of the biggest problems with the Kinect: Lag and precision. Trand-- How do you transcend precision! Ho- That doesn't make any se--! I love this guy. Crazy people like him need to be doing crazy stuff like this, unfortunately this is maybe the biggest cop-out I've ever heard. Kipman's talking precision because one of the Kinect's biggest problems is lag. I mean, you can't make the body the controller if the Kinect can barely figure out what's even goin' on, and this brings me back to Microsoft's decision in early 2010 to remove the internal processor: Now, we can't totally blame all the lag issues on this decision, but it certainly didn't help! Here's former Rare developer Gavin Price: According to Eurogamer, Microsoft planned for lag for the Kinect to be about 300 ms at its worst, and 100 ms at its best. However, that's just from the moment where the Kinect recognizes what your body gyrations actually mean. It does not, however, take into account actual body lag, i.e. how long it takes to think "I'm gonna move my arm" and then to actually move your arm. All this, by the way, takes longer than to just push a button. Pushin' it. To put it in perspective, the average 30 fps game in 2009 had about 133 ms of lag, with core titles like Call of Duty: Modern Warfare, Forza Motorsport and Street Fighter IV averaging as low as 67 ms of lag. Lag gets annoying for most people at about 200 ms. - When it works, it's like magic. And when it doesn't work, you're like "Why are you so stupid?" DEREK: The most responsive title at the Kinect's launch was Kinect Sports, and it had about 150 ms of lag according to Rare, so even the Kinect's most technically tight game was dangerously close to that annoyance threshold. And on top of that, there's the annoyance of having to rearrange your entire living room any time you wanted to play the dang thing! MATTRICK: And this year, our tenth year, is the biggest year in Xbox history. DEREK: Did any of this ultimately matter? Not at first, it didn't. November 2010 came, and the Kinect was an insane success. For a whopping standalone bundle price of 150 bucks a pop, the Kinect became one of the fastest-selling consumer electronic devices of all time, selling 8 million units in 60 days. Let me put that in context for you: The standalone Kinect bundle with Kinect Adventures retailed for $150, even though the Kinect itself only cost an estimated $56 to manufacture. The bundle with a 4-gig Xbox 360 was $300. The Kinect was definitely priced to get newcomers onto the Xbox 360, and I am still shocked at the overall price of this thing! The Move's bundle, for example, only cost $100. But hey, y'know, there's a reason why I run a YouTube channel and not a multi-billion dollar company? And obviously the marketing and R&D inflated costs a bit... ... I still think 150 bucks was boldly high, and... [sigh] ... sometimes all you have is your reputation, and obviously this price point did not effect sales. The success of the Kinect actually juiced up overall 360 sales by 42%, giving the system its biggest sales year yet, and even kept Microsoft profitable despite its flagging Windows business. That's right! The Kinect not only gave Xbox a massive year, it softened the blow from Windows underperforming! Kinect Adventures would go on to become THE best-selling Xbox 360 title. Kinect-a-mania was upon us. - Oh my god, my- y'know, my console can see me! - Right.
- That's the promise! But the actual delivery of that promise fell so far short. DEREK: Despite the high rate of sales, the Kinect only garnered lackluster reviews, and never really resulted in official software that made good on the promise of the Kinect. Once we finally started getting core gaming titles with Kinect compatibility, most just used it as a glorified microphone, which is what the purple "Better with Kinect" logo came to signify. Again, I think we can blame a lot of that on the extra processing power that Kinect required from the 360, which created a... bit of a circular chicken-egg situation? There were no core game titles for the Kinect because of the fidelity... wasn't there, meaning that core gamers largely didn't buy it, meaning that core gamer developers had no incentive to work with the Kinect, meaning that there was nothing for core gamers on it, and so on and so on. And you know what was really the nail in the coffin? That Star Wars game Microsoft kept teasing. You know there's problems when they led with "Kinect" instead of "Star Wars" in the title. Kinect Star Wars came out 17 months after the debut of the Kinect, and was instantly a joke. Those promos we got from the Kinect reveal were a lot different from the glorified minigame collection we actually got. The future of gaming, everyone. Alright, I am being a little harsh, but the Kinect really was a revolutionary idea that came at a really bad time! I mean, facts were that the console games industry was rapidly deteriorating. While the Xbox 360 was dominating with the Kinect... - That means putting away the Xbox! DEREK: ... the console market overall had been in decline since 2009. Microsoft had become a god of a shrinking universe. Games cost more to make than ever before, but the global recession meant less people were buying games, so raising prices wasn't an option. Full-price games had standardized to $60 a pop at the start of the generation, so the only solution was to sell an insane number of units to break even. Even just voice recognition was a significant investment for developers, especially for multi-platform games. Mass Effect 3's Kinect functionality took a full nine months to implement, and for what? According to EA, it was so that they could hopefully draw in more casual players... ... to the third act of a complicated trilogy, on only one platform. Hmph. Man. On top of that, gamers were flaking off in droves to PC's, tablets, and of course, smart phones. Because here's the irony of the Kinect: Steven Spielberg... - ... make the technology invisible. - ... and Don Mattrick.... - ... the controller is a barrier. - ... were right! But that barrier wouldn't be broken by this... It'd be broken by this. While Microsoft was busy building the expensive future of casual console gaming for everyone, Apple changed the world with the iPhone and its App Store, a place where you were the controller for its multitude of insanely popular, free-to-play games. I mean, by 2011, just a year after its launch, Microsoft had sold 18 million Kinects. Apple had sold 72 million iPhones in 2011 alone, and by December 2011, Angry Birds, the iPhone's most popular game, notched its half-billionth download. That's five hundred million, and that does not just happen in a vaccuum! The recession was making people, especially the casual market, shy away from major gaming purchases in favor of short bursts of entertainment. But even beyond all of that, the way we spend our time was fundamentally changing. I know I personally spend a stupid amount of my time on social media, when I should instead be chipping away at my gaming backlog. Or going outside, I dunno! Hi... hi, hi girlfriend, hello dog! Hello, things that are not games! I'm just tryin' to say, the times, they were a-changin', and they were changin' real fast. While the Kinect never hit with gamers, it still made insane innovation possible in a wide range of applications, like medicine, science, or even ghost hunting. I'm here talking as the decade closes, and when people think of the Kinect, they think: "Pffrt, wow, what a huge failure that was!" But when you go back to that time, when you go back to that 2010 launch, it was actually wildly successful... at least at first. The Kinect was full of so much possibility that Microsoft decided that it was full speed ahead. The day of reckoning was yet to come, but it was coming. See ya next time for the fall of the Kinect, and the Xbox One. This video brought to you in part by Twitch, a.k.a. the world's leading live streaming platform, where you can watch your favorite games, and also other stuff! There's this streamer, K9 Command, who trains dogs live on stream! You get to watch dogs become better dogs? It's great! Twitch also sent us all of this swag... ... grrah! ... this gigantic thang? I tell ya who's gonna appreciate a lot more, a certain Hot Dog Gamer. I can't even finish the unboxing because we have, uh, cutie down here. He's gonna love all the nice pillows, and blankets, thank you so much Twitch! Dog... dog approved, right there! We spoil him, and shocking no-one, my favorite non-gaming thing is probably my dog, I literally watched K9 Command train my friend's dog, and it's wonderful because, y'know, she built this awesome community of dogs and dog lovers, and everyone's out there just workin' hard and tryin' their best! A whole wide world of dogstreaming, and more, awaits for you at Twitch.tv, click on the link below to learn more! Thank you so much for watching, thank you to our Patreon supporters, this has been a long time comin', we've been working on this video kinda on-and-off ever since the Red Ring of Death video a couple o' years ago, and I wanna say, we're sittin' here, it is December 2019, and... this year we have made over 30 videos, I think this is our 33rd video this year, there are only 52 weeks in a year, we have made 33 videos this year, I think that's a record for us, and... we're gonna keep going! We're gonna take a short little break in January, it's been a very long and very crazy year... ... but all our watchers, all our fans, all our supporters on Patreon, ... we're still standing, we're still here, and 2020 is still lookin' like a year full o' possibility, and we couldn't do any of this without all of your support, so have a great holiday, have a great new year, and we'll see you again real soon!
They did so much shit wrong with the Kinect. I really liked it at first. At first, you could completely control apps like Netflix without any controller or remote. It was super convenient. Slowly over time, it got worse and worse. They also didn’t try hard enough to make a good Kinect game. I think a Diablo like game would be pretty cool on Kinect.
Frankly this is probably one of Derek's best videos in ages. Your mileage may vary on most of his videogame history tracking but I was not surprised when he said at the end that this video took them forever to make, it's very well researched. Almost feels like a Bunnyhop video, just done by somebody that doesn't necessarily have the journalistic training to draw more complex conclusions.
Considering it's a video about the Kinect's marketting, though, I think Derek pretty much nails it.