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Microsoft's next move for Xbox

Microsoft has a plan to revolutionize the $10.5 billion dollar video game industry. And, it’s up to you to get it done. -- By CNBC's Darren Rovell
/ Source: CNBC

Microsoft’s Halo franchise has sold more than thirteen million copies, generating more than $600 million in sales. And thanks to new Microsoft software available this holiday season, the developer of the next Halo could be the kid next door.

Do-it-yourself — it's the simple idea behind big name brands like Home Depot and Lowe’s. It's also the same business model driving two of the hottest Web sites on the Internet: MySpace and YouTube. Now Microsoft is hoping to bring that idea to video game design, announcing XNA Game Studio — a program that will allow wannabe game-makers to create their own titles and share them with a network of other developers and gamers on the company’s X-Box 360. While studios typically spend millions to create games, the do-it-yourself software will be available to the masses for just a $99 one-year subscription.

“For the first time we’ve really made it equivalent to what you can do with music. Imagine if it was half a million dollars to play for a three chord guitar song, we’d have no [independent] music, we wouldn’t have anything near the bands we have today”, said Chris Satchel, GM of Microsoft’s Game Developer Group.

( is a Microsoft-NBC Universal joint venutre.)

For those who always wanted to crack into the business, this software could mean their big break.

“People really want to make games for these platforms, but they’re just always daunted by the high costs involved. If you just give the tools out to a bunch of creative people and see what happens, it’s amazing what you get in this industry,” said Jason Ocampo, editor of Gamespot magazine.

If there’s money to be made for Microsoft, it’s not likely from this software. Some gaming industry insiders are estimating that game design programs will never be embraced by the masses. But, there is an end goal.

“They’re not really going to make a lot of money off this $99 platform, but what they really want is this word of mouth, this sense of being cool. The sense that this is the platform to be developed for. Because in this upcoming race with Sony, they feel like they need any edge they can get,” said Ocampo.

Microsoft has shipped five million Xbox 360 consoles worldwide since it hit shelves last year, while Sony gets ready for the debut of Playstation 3 in November.  Microsoft’s new software comes at a time when video game publishers are striving to contain costs by building their own intellectual property instead of paying exorbant-licensing fees. Microsoft officials are confident that this will encourage a healthier business model where more games are generated from scratch, and at a lower cost.

“We’re going to revitalize the industry with innovation, revitalize it with people and new ideas and that’s going to really broaden that market and help balance the portfolio of licensed [intellectual property] and brand new [intellectual property] that is coming into the industry. This is an explosion of creativity and innovation that we’ve been waiting for some time now,” said Satchel.

Microsoft officials are saying that a more expensive version of the game design software called XNA Game Studio Pro will be available next year at a higher cost. Officials also stated that they are not planning to bind every developer who uses the program to publish the game through its own studios.