With the release of a new Games for Windows Live interface, the announcement of a DLC-focused Marketplace, and the mention of plans to bring full PC digital distribution to the service, Microsoft has finally given us a reason to take a hard look at their PC philosophy.

Conveniently, I recently had the chance to sit down and throw a number of questions at Games for Windows general manager Chris Early and marketing manager Michael Wolf.

How is this new Marketplace going to work? What kind of cut is Microsoft getting on sales? What does it mean when a game is a Games for Windows Live exclusive? What does this mean for Windows 7? Find out the answers to these questions and more below.

Shack: So the Marketplace consists of this desktop application, and you can grab demos, videos and downloadable content. I assume you can keep it running in the background, in your tray?

Chris Early: Right, you could keep it running all the time, or you could not keep it running. When the game goes to convert you to purchasing some additional content it will fire this up, and this is where you do your transaction.

So you will buy a piece of add-on content, this will manage the download of it--because you know, on Windows, we don't really know how big that piece of DLC is. I've talked to some publishers who are already thinking hundreds of megabytes for a piece of DLC. So it's not just the kind of thing where you want to say, "I'll buy now," and just instantly download without any kind of management process. So not knowing that in advance, we kind of have to manage whatever that situation might be.

Shack: And the application itself--is it fairly lightweight? What kind of system resources does it consume?

Chris Early: This? Not very much at all. It's not a real-time, live connection, so it's not taking up a lot of bandwidth. Now if you're downloading it's going to obviously consume some bandwidth, but that's why it's a smart manager--it doesn't do that while you're playing a game.

Shack: How long have you guys been working on the interface revision and Marketplace?

Chris Early: This is a major effort for Live overall. As you probably know from the Xbox side, Marketplace is evolving not only from the standpoint of DLC, but videos and all kinds of other things.

When I first started working for Microsoft about three years ago, I helped bring about Xbox Live Arcade, which is an extension of Marketplace. So Marketplace as the underlying service continues to evolve, and what we're doing on the GFW Live side of it is now exposing more of that to Windows publishers so they can start to take advantage of that.

And we focused on the areas first that were practically non-existent on the PC. The whole concept of being able to buy extensions to your game easily doesn't exist on the PC today. It's back to that--set up a relationship with a credit card vendor, then look at fraud prevention, etc. And it's just a pain. What publisher wants to go into that business? Very few of them.

Shack: The PC gaming crowd can be a tough nut to crack. They can be a demanding bunch, myself included. How have you dealt with that? Do you feel like you're in a place where you understand what we want?

Chris Early: A couple things. One, it's good to be one. I've been a PC gamer for years, and maybe one of the more vocal ones. [laughs] Maybe not as much now. But it's good to have that understanding from that side. It's good to have a little bit of a thick skin too. But part of it is that it's good to listen.

I know that when we launched Games for Windows Live, you could play PC to PC free, but if you wanted to play with Xbox [users] you had to pay $50 to do that. Now was that smart in retrospect, when we listen? No. So we corrected it. Now would it have been better if we had been smart enough to think of that in advance? Yes. But fortunately we had plenty of helpful players who helped "guide" us there. [laughs]

Michael Wolf: [laughs] That was a very political way of putting that. We received some "gentle prodding" from the community.

Chris Early: [laughs] So the key thing I think is, and you probably know this, is to pay attention, right? When you don't pay attention, that's when it really smacks you upside the head.

Now, I'm an impatient guy, and so are most PC gamers, so I'd prefer that we were a lot further along in some of the things that are on our backlog of what to do than we are. But we're not. But after a year and a half of launch, I think we're in really great shape.

When I compare where we are a year and a half, from where Gamespy was a year and a half after launch, or where Mplayer was, the services that I was intimately familiar with--we're in really great shape. And part of that is because we get to build on what Live has as a service infrastructure. We have kind of a hidden advantage there.

Shack: So you'll be serving all of this content up through Live? Every 100 megabyte patch comes through Microsoft's servers?

Chris Early: Right, so just like on Xbox Live, this is part of the Live service. The updates are all handled by Live, so that you are on the most current version of the game as long as you're connected online. Which again comes back to helping the publisher, because they reduce their support costs, because now you're not having to deal with all the different versions.

This helped us get to that place where we went to the publishers and they said yes, in a big way. They said yes with their AAA titles, with those franchises that--and I have to say I'm kind of pleased, because that means they're willing to risk their franchises on these services, and we're delivering for them.

Shack: A number of weeks ago, the Grand Theft Auto IV PC port was announced as a Games for Windows Live exclusive, and I could never get anyone to tell me what exactly that meant. Does it preclude it from being sold on Steam? What are the terms of a GFW exclusivity deal?

Chris Early: No. Okay, so, from the standpoint of showing up on digital download services, that's nothing that we want to restrict at all.

If you want to buy the game, I don't really care where you want to buy it, as long as you buy it. Don't pirate it. Please. [laughs] Buy that game at Wal-mart, Best-Buy, buy it from Steam, Direct 2 Drive, wherever--Games for Windows Live supports that.

Now what it means by exclusive is that the only game services that are built into it, the only way you play it multiplayer, the only community functions that are supported there are the Games for Windows Live community.

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Shack: So it's really the multiplayer component that is covered under the exclusivity.

Chris Early: Right. It's that integration of the community. So while you're playing GTA 4, even if you aren't playing multiplayer, you're still connected to your Live network of friends. You can do a game invite for something, you can communicate, do voice chat, messages, and so on. And you're still part of that gaming community.

Whereas if you were to go off and play Spore or something like that, you're totally not available. And even though I want to play with Wolfe, and he's playing Spore, I have no way to get to him. I'd have to call him up and say, "Hey are you busy," and go back to that old-fashioned way. [laughs] And who wants to do that?

Shack: So we're only talking about game functionality here?

Chris Early: You may see that from the standpoint of DLC. I know for Fallout they talked about adding content for a couple of the versions, but not all of the versions.

Shack: In the case of Fallout 3, that DLC will only be available through the GFW Marketplace?

Chris Early: Right.

Shack: So if you bought the game on Steam, you would have to have this program in order to get the DLC.

Chris Early: Well, you'd have this program even if you bought it on Steam. No matter where you get it, whether you get it from Steam or from Best Buy, Games for Windows Live is the community function that is built into the game.

Shack: Piracy is obviously the big issue with PC gaming these days. Valve has started to provide free anti-piracy software in its Steamworks suite. Do you have any interest in providing a piracy solution to publishers?

Chris Early: Well so, a couple things. First off, piracy is a concern. It is something that we're concerned about as Microsoft as a whole, in addition to just from the game service [side], and it's something that we actively work toward minimizing on a regular basis.

We don't distribute full games through this. Our job at the moment is to support whatever anti-piracy mechanism that the publisher wants to use, whether that's SecuROM, ActiveMARK, or Steam system, or anybody's system. And on top of that, I think there are things that we even do today that help along those lines.

The more we build the social structure around Live, the more it makes you want to be a member of this community, the better off we do for piracy, because it's difficult to play a pirated game on Live. You need that five-by-five token to connect to Live. And if you want to maintain a Gamerscore and a set of friends, you kind of have to have a legitimate copy of the game to do that. So that's where I think a lot of the power is going to come from in the long run, because if you really are that member of a gaming community, this is going to help reduce piracy.

When we get to the place where we do distribute games digitally, will we have a digital rights management system? Maybe. Or maybe we'll just continue to support the industry leaders in that. Because it is a hard thing to do. You talk to any of those companies, and that is their whole company, is doing digital rights management. So I think even if we do come out on our own, we're still going to support the industry standards as well.

Shack: You were saying, "When we get to the place where we sell games eventually"?

Chris Early: Did I say that? [huge laughter]

Shack: Because I ask you guys every time we do one of these interviews..

Chris Early: Clearly it's on our road map.

Shack: It's on your road map. So that's what you're looking at as a next step?

Chris Early: Right.

Shack: So this is your DLC effort, and rolling out the infrastructure, and then that will come next.

Chris Early: Right. And if I were to make that choice again today, would I go the same way? I absolutely would. Because this is something that you can't do today on a PC, right? You can buy digitally through a bunch of places. Would it eventually be good that you can buy digitally through here too? Sure. But I would be more concerned right now with providing something that doesn't exist somewhere else.

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Shack: I'm going to play Devil's Advocate. One of the things some people are going to say is that despite your enthusiasm, this is all really just a ploy to grab some quick cash on the DLC side of things. How would you respond to that?

Chris Early: If it was really all about the money, why would I do a 100 point piece of DLC instead of a 59 or 60 dollar game as a direct digital download? We will make far more revenue when we enable direct digital download than we do by enabling premium downloadable content, from a sheer dollars perspective.

First off, to get DLC to work, that means you've got to buy the game somewhere first, so we've already restricted the market. And then we're only selling to that piece of the market, and then not all of them are going to buy. So if it really was all about the money, I made the wrong choice.

So it's not all about the money. I think it's all about engaging a player and extending that gaming experience in a way that you couldn't do before. I know when I read a good book, I want that book to be longer. I want to read a few more chapters. I want that sequel to be there as soon as I finish a book because I like that book, I want to be engaged.

Michael Wolf: I think part of it too goes back to what Microsoft has been doing, and continues to invest in Windows gaming with the Games for Windows brand, which we don't get any licensing or any sort of monetary pay for games that carry that brand. We don't see any of that revenue.

We are trying to grow the Windows gaming ecosystem. We are trying to provide more ways for publishers to be more successful, and for consumers to have an easier way of consuming that content. And so doing things like this are going to make the publishers more likely to invest more in their PC gaming areas because they're going to be able to have better experiences of selling to their customers, which will let them do more content for the consumers, they get more games, and it sort of just continues to go from there.

Shack: So it's a circular thing.

Chris Early: It's a beneficial cycle, as opposed to us really trying to make the most out of it. And when we look at it, the revenue splits are mostly the publisher anyway. They're the ones who are making the big money when it comes to any of the DLC that gets sold here.

Shack: Can you share what your royalty take is on DLC sales?

Chris Early: Yeah, it's the same as Xbox Live Arcade. [laughs] See how I managed to answer that without answering it?

Shack: [laughs] Well done. Down the line, do you have any plans to integrate the Marketplace into Windows 7?

Chris Early: You know, that's a great question. I would love to do that at some level, but we have to kind of be really careful. Because as the operating system platform owners as Microsoft, we have to be careful with what we put in there in terms of an overall distribution.

If we were going to create this as an open game service, that we weren't going to manage, that anybody could get to, kind of like Games Explorer is, then we could include it. But if it's a Microsoft-managed service that we're going to look at from a profitable standpoint, and try to manage this games service, and make money doing it, and enhance the PC ecosystem, we can't use the Windows operating system as a vehicle for distributing it. That's the line we have to be careful with.

Shack: Any plans to carry over elements of the New Xbox Experience update, such as the party system?

Michael Wolf: That would be a good idea. [laughs]

Chris Early: And it's a good thing that we already have the technology built into the Live service. [laughs]

I mean, from an evolution standpoint, we consistently look at the features that we're developing on the Live service infrastructure and how can we bring them to light on both platforms. Now, in all fairness, avatars would be great to bring out. But as we're bringing them out on the Xbox--and we're working on that right now to bring them out in just a couple weeks--I don't know that we'd necessarily be doing it in parallel.

We're going to bring it onto one place, and take those best features and bring em out in the next place, and so on. So we'll look to continue to do that right kind of development. And also, I don't think you always see every feature on each platform. So like, in a couple weeks you'll be able to watch Netflix on your Xbox. And you can already do that on your PC--so do we need to add that feature? Probably not. So you will see feature differentiations between the platforms. You will see us cater to a mouse and keyboard. You'll see Xbox Live cater to the controller.

Shack: The Valve guys are also looking into providing automatic driver updates, as well as suggesting optimal hardware upgrades on a per-game basis. Are you considering adding similar functionality to GFW Live down the road?

Chris Early: Well there's a couple things already that Microsoft offers that does that. First off is the Windows Experience, the numeric rating. And also on GamesforWindows.com, there's a system adviser which lets you look at a game and it will analyze your system and talk about what pieces that will give you the biggest bang for upgrading.

Shack: So would you ever incorporate that directly into Games for Windows? What about driver updates?

Chris Early: So I've thought, over the last dozen years or so, about how far do you go in keeping people up to date, automatically or notifying them and things like that. So what you'll see in Windows 7 is a number of notification-type features that come out from the platform level. We made the decision not to solve that from our proprietary service, but to solve it for all Windows gamers from the operating system level. So you'll be able to see a number of ways that things can get updated that don't involve GFW Live at all.

If I put my little hat on that says Games for Windows Live Guy, would I rather that have been just for us? Sure. But I made the choice, and since both teams work for me, I was like, "No, this is a better Windows gaming thing rather than just Games for Windows Live."

Shack: I assume you guys are pretty optimistic about the digital download market in general.

Chris Early: Well, first off, we're not analysts, but looking at the analysts, I am very heartened by the numbers I see. When IDC says this year, $3.5 billion in online revenue from the PC, and in 2012 it's $15 billion, that's great growth. And I would happily stand by that style of dying industry any day. [laughs] I'll ride that sucker right down.

And that's the point: I don't think it is dying. And looking at things that we're doing, like enabling the DLC, and enabling publishers to take advantage of that, I think we're helping that segment of the market grow as well.

Shack: Thanks guys.