LAS VEGAS—As president of Microsoft's Entertainment & Devices Division, Robbie Bach drives the company's Connected Entertainment vision, offering consumers new and compelling, branded entertainment experiences across music, gaming, video and mobile communications. Bach spoke with eWEEK Senior Editor Darryl K. Taft at the company's Mix show here.

I cover developers, so the first thing I wanted to talk about was XNA, and what kind of success you have seen with that, with XNA and XNA Studio Express.

We've kind of seen two things. One—I'm going to get the precise number wrong—but hundreds of thousands of people have downloaded the kit. So, we've seen a lot of uptake on the development tools themselves.

The other place where we're seeing a ton of momentum is with universities, where they are using it in their curriculum to help teach people the fundamentals of game design, and probably in some cases also teaching the fundamentals of great design, period, and how you think from a programming perspective.

And to us ultimately what that's leading to is a lot of what I'll call simple, user-generated games. And the next phase for us is understanding how to take that to the next level: How do we expose that to the audience? How do we expose that to other gamers? How do we help people create an ecosystem around those cool games?

Certainly the prototyping tool is quite interesting, but there are a lot of these games that aren't prototypes—I mean they're games, and they're fun to play.

So, we're making progress on that front. I think there's very good engagement. I think we're seeing a lot of success there.

Any strategy going forward around that or any plans?

Well, there's kind of two interesting things to think about. One is how does it integrate, affect, or interact with our Arcade service on Xbox Live. It's an interesting question. Arcade is basically simple, straightforward games, graphical excellence—they're nice-looking, but … you only want the dress-up Pac-Man so much. So, they're nice game experiences, but how does it integrate there?

And then the second thing we have to do is we have to figure out how it works in the Xbox ecosystem. And what I mean by that is on Xbox every game is certified. We look to make sure games follow the conventions on the product, to make sure they're technically safe, that they're secure, so we go through a certification process.

Well, in the world in which you're using user-generated content, how do you do that? What's the model for that? And the other part of that is how do we deal with the question of people using intellectual property from other people? I mean, these are all things that we face in the video world, and we have to figure out how to do that in the context of Xbox.

Click here to read more about XNA Game Studio Express.

And ours is a little bit more complicated because video doesn't need to be certified, and you're on the PC, so it's in an open environment. In the Xbox case we're in a managed environment where we do do certification, so you've got to kind of think through that.

You know, in the ideal world somebody would create an XNA game and ultimately became a sales leader on the Xbox Live Arcade. That's our kind of nirvana.

When do you think Xbox will be able to contribute a billion dollars to Microsoft's bottom line, and how?

Yeah, that's a good question. So, there's a couple different ways to think about the question. One, we tend to think of the Xbox P&L as a life-cycle P&L. It's the only way to actually think about it. Because I could make a billion dollars in one year, and you can legitimately say, well, you didn't contribute a billion dollars to the company because you lost 200 million in the first year.

So, we think of our P&L as a life-cycle P&L. And in the early phases you lose some money, you try to keep that as low as you can, and then in the later phases you try to harvest as much as you can.

Next Page: Making money on the Xbox.