SPECIAL REPORT: Firm confirms portable gaming plan â?? but strategy and timing not confirmed yet

Microsoft wants Zune HD to be â??a major playerâ?? in handheld games

Details might be a bit sketchy, but Microsoft has today confessed that, yes, it wants in on the handheld gaming market.

After years sitting on the sidelines – despite much speculation – and watching as first Nintendo, then Sony and lastly its bitter rival Apple all marked their territories in portable games, the format-holder has told Develop that its new Zune media player will also play substantial games content.

It just won’t admit to when that strategy will come into play just yet.

Today, Microsoft confirmed the introduction later this year of the Zune HD, the latest in its line of media players. The device is billed as ‘the first portable media player with built-in HD Radio receiver, HD video output capabilities, OLED touch screen, wi-fi and an internet browser’.

For now, the device is a US-only product due for release in the autumn. Zune HD’s existence was confirmed as part of a new strategy that will see the Zune Marketplace’s video content available via the home console Xbox 360 Marketplace to users in Europe and North America.

Chris Stephenson, GM of consumer marketing for the TV, Video and Music Business at Microsoft told Develop: “We are launching and today confirming a fourth device. It’s a hyper competitive product in the top end of the media player market."

The Zune devices first debuted in 2006 and have been through four serious iterations, with a modest 3m media players sold. (Original non-HD models pictured.) But the devices have only been available in the US – something that will still be true of the Zune HD, for the time being at least.

“We don’t have any announcements about hardware for Europe at this point. But there’s a big market here in the US – especially as we have seen around the iPod Touch – for those high-end devices. As people get more interested in being able to take their entertainment on the go we think that video is a key part of that, plus it fits with our strategy around ‘three screens and the cloud’ [as detailed at CES].

“So upgrading that device means we can execute on our strategy much more significantly when you have a much greater video component on the device. People think that Zune is all about MP3 but it’s not – it’s about other content including video too. It’s a device with huge potential.”

Does that potential include games?

Stephenson confirmed that games are on the agenda for the device in future, but timing is not yet confirmed.

“Gaming is a big opportunity for us. We’re not announcing the specifics around our gaming plans for Zune HD right now, but it is definitely an area that we have done some work in – we had some smaller XNA games on Zune previously.

“There is clearly a great opportunity for us to be a major player in that market.”

Stephenson added that within Microsoft there is plenty of collaboration between the Zune team and Xbox team given their companion places in the company’s services and entertainment division and the devices’ shared heritage (Microsoft exec J Allard played a key role in designing both).

He added: “Clearly we have great partnerships around XNA business over at Xbox and we lean on those internal partnerships a lot to make sure we are leveraging the community that Microsoft already has a relationship with.

Whatever happens, it’s clear that the Zune team is hoping to tap into the gaming userbase cultivated by 360 and also the broader market growth the games industry is experiencing.

“We’ve not trying to create a separate Zune games community – we’re leveraging the one we already have.

“When you think about Microsoft there’s a huge number of users there – from Windows on PC through to mobile and Xbox. Xbox is the place where we have a the real impact opportunity.”

In an official announcement about the new Zune video service on Xbox Live and the Zune HD release, Microsoft said ‘at the Electronic Entertainment Expo next week, attendees will see first-hand how Zune integrates into Xbox LIVE creating a game-changing entertainment experience’.

Which begs the question: perhaps Microsoft is planning to reveal a bit more about a possible handheld games strategy at E3? One thing’s for sure, if the industry wasn’t already eagerly awaiting the Microsoft press conference at the Los Angeles show, it is now…

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