The first-party apparatus of every console is an integral part of its success; looking at the hype and sales generated by games like Halo: ODST, Wii Fit, or Uncharted 2 is testament to that. Earlier this year, Microsoft named Phil Spencer corporate VP and head of worldwide studios.

Having recently served as the GM of worldwide studios and worked in England with Rare and Lionhead, among others, he moves into the role as the platform is about to undergo its most drastic upgrade since launch: the Natal peripheral, which Microsoft is promising will fundamentally change the way games are played for all 360 gamers.

Here, Spencer speaks about the overall first party strategy for the company, its specific Natal strategy, and its experiments with free-to-play, microtransaction-based titles (Joyride) and ad-supported games (1 vs 100).

How has your transition been?

Phil Spencer: Actually, the transition happened last fall when I came back. I was in London for a couple years, working with Lionhead and Rare and similar content work in Europe. I came back as the GM of Worldwide Studios, and I've been recently promoted, which is what the announcement is -- I've been promoted to the new title.

But yeah, the new head of Worldwide Studios [role] started when I came back from London last October. And it's been a good time for us. Think about when I came back, Natal was something that we were in the middle of incubating; trying to make sure that it was going to be something that really both resonated with our creators as well as the customer in the end. We started to put our head down towards E3 and see if that would be the right time to unveil, and there's been tremendous success with that. It's been great to see.

When does Natal come out,  and what titles are going to work with it?

PS: Our announcement at TGS [was] that, after just three months, we've got 75% of the publishers on the planet talking about their support for Natal, which is great. Obviously we have an ego in first party, and we think our first party content leads the way; but great support from third party is going to be important to Natal's success. For the top five Japanese publishers, among other Japanese publishers, as well as the great worldwide publishing support we're seeing, is a great sign for both us and the consumer.

From a first-party perspective, how does it impact you?

PS: Well, because you're Gamasutra, I'll go down more of how I think it really impacts the creative process. There's this mapping that we almost instinctively do now when we play or create games between what we want to happen on-screen and what people will do with the controller to make that happen that, honestly, is completely unnatural. There's nothing else you do in your life that has all of these buttons and triggers -- alright, maybe you fly a 747 or something -- but for the common person, your life is much more direct.

In the creative process now, when you think about the kind of games that are going to get created, it's really about that direct interaction with what's going on on-screen. You can talk to something on-screen, and it knows where you are in the room; and it will turn, if it's humanoid, look at you, and respond. That's not a game genre; that's not E-rated only. This is something that's going to be pervasive across all our games. It's really going to be entertainment for everybody.

So it's about a fundamental new way of interactivity, rather than about enhancing or changing current games, in your view.

PS: Yeah. I was listening to Kojima-san at the creators' panel, and he talked a little about the Metal Gear Solid fan and not wanting to abandon the fan base that he has. I think you'll see some franchises look at facial recognition, voice recognition, and full skeletal mapping and kind of decide what's the right experience for how they're trying to entertain people.

The word I would use to describe a traditional controller is abstract.

PS: Yeah, absolutely.

And I think there are a lot of people who enjoy abstract experiences.

PS: You say enjoy; you mean enjoy or tolerate?

Enjoy! I think there's something enjoyable about something abstract. Not every interaction that we have is direct, as humans.

PS: Well, okay. Interaction with the controller isn't direct. There's nothing about hitting A that has any real-world consequence; you don't run around hitting A or yelling "A!"

This has been one of the parts of the creative process that's been -- I'll say -- a kind of revolution. At first, when people are handed the technology, they think about what the abstraction -- to use your term; I might use a more negative term -- how that should map into physical space: literally something as ridiculous as somebody going like this [Spencer makes an X with his arms] for X, like, is that the way we should hit the X button?

And maybe it works for tens of millions -- hundreds of millions -- of people on the globe; there's nothing wrong with that. I play games every day. But we also know that, in order to grow the size of the gaming community, that abstraction is a barrier to some people. If we can remove that and actually think about -- maybe it comes across as a marketing term, but it actually works in the creative process -- the only experience you need is life experience. If you were going to respond to something on-screen, what would you do in real life? Then think about that as part of Natal. It's been a really useful way of thinking about how to build those experiences.

Part of me is skeptical that that's achievable, actually.

PS: Good! Yeah, the skepticism is something that I actually want. I see technologies that are out in the market today, or things that people are talking about -- different kinds of abstractions. For me as somebody who says, "Well, has this really changed the interaction between me and what's going on on-screen?" you'd say "no". It's lowered some barriers, and great for that.

But the skepticism as we push... People should have been skeptical about first-person shooters on consoles. After GoldenEye, it was a long time before somebody came out with something like Halo. Live -- are console players going to want to play with each other? Let's be skeptical. Avatars -- let's be skeptical of whether Xbox customers want to create avatars. I think skepticism is a healthy hurdle for us in the creative process.