Phil Spencer describes himself as a “game guy,” having overseen Microsoft’s first-party game studios for nearly five years; at the company’s E3 press conference on Monday, he drew a huge cheer from the crowd by pledging to spend the whole 90 minutes talking only about games.

However, as the newly appointed leader of the whole Xbox division, Spencer is now in the thick of gaming hardware strategy, too.

The six-month old Xbox One is selling pretty well, but not as well as its chief rival, Sony’s PlayStation 4. In a bid to catch up, last month Microsoft cut the Xbox One’s price by $100 and dropped the once-mandatory Kinect peripheral, which it had previously described as an “integral” part of the system.

Making the Kinect optional is doubtless a big loss for developers like Harmonix, which is getting ready to release two games — Fantasia: Music Evolved and a new Dance Central title — that rely on the camera, and industry watchers said the move was tantamount to the end of motion controls. But in a Q&A with Re/code yesterday, Spencer said it’s not as simple as all that.

This interview has been edited for brevity.

Re/code: Last year, there was some backlash to a perceived emphasis on the Xbox One’s media features rather than its games. Is it fair to say that those features are a better fit for a non-gamer audience?

Phil Spencer: What we see in the usage would say that it’s not a different audience. I think it was more the buyers, the gamers, the Xbox fans, wanting to know that the console was going in a direction that was consistent with its heritage. When we talked about Xbox in more of an end-to-end entertainment language, people questioned if we were still focused on why they bought an Xbox, which was to play great games.

And now the price to do that is $399 instead of $499, without the Kinect.

Spencer: $100 is money. You can never treat any amount of money a consumer has as easy money. If what they really want to do is play core, controller games on their Xbox One, there’s a $399 product they can buy that’ll play Sunset Overdrive, Destiny, Halo, GTA, all of that. If, in addition, you like Dance Central, Kinect Sports, Fantasia or Skype, I would say, Day One, buy Xbox with Kinect.

I have an Xbox One with Kinect, and it has voice commands and gesture control. Should we still expect to see new non-gaming features that use Kinect?

Spencer: Absolutely. That is the best experience. What you have is what I think of as the complete Xbox experience. In the long run, it’s one of our differentiators. We’ve invested a lot of money in Kinect. I’m going to continue to invest in it because I think it’s a critical part of our platform.

Does that also extend to the games? I know for music and fitness games it’s required, but what about the games where voice and gestures are more of a bonus feature?

Spencer: Yeah. Absolutely. It doesn’t mean we’re going to plaster the box and say “Kinect! Kinect! Kinect!” It’s more a part of the all-up platform that somebody uses. It’s part of the gaming experience.

You said at GDC that Microsoft’s R&D labs have looked into virtual reality in the past. Should we expect something like that for Xbox?

Spencer: We don’t have anything to announce. I think it’s an interesting technology. I wouldn’t call it mainstream yet, I don’t see it in a bunch of homes or anything. But I’m watching it, we’re all watching it. VR, AR, voice, gesture, touch, all of these things, we always think about how we can make our platform better. VR is more of a display technology. I think it’s interesting to take a look at.

Microsoft has already announced the digital assistant Cortana, named after the AI assistant in the Halo games. Would that be a good fit?

Spencer: I think Cortana would work on Xbox. They started on the phone and it’s had some good response. Right now, you say “Xbox, on” and you can use voice. It’s not seamless in how you make any of those changes. But the idea that I could get information that’s relevant to me about my day and my tasks on my television screen is why we invested in making the Xbox One platform more inclusive of things happening on Windows.

What about Sony’s cheap new TV box, the PlayStation TV? Would that sort of entry-level device make sense for the Xbox family?

Spencer: There’s a lot of interest in this space right now, if you think about Apple TV, Fire TV, Chromecast, PlayStation TV, Roku … I think there is something to a lower-cost device that can get to multiple televisions, but I think that’s a little different today than what an Xbox is. I’m not picking on you or Sony in this, but you’re trying to ask me to define what the category is, and I don’t know that there’s a clear swim lane yet of what this product is and what the value proposition is.

I’d say from a price point as well, you’ve got Chromecast at $35, Miracast devices that are like $50, and you’ve got these other things at $100. I don’t think we’ve really seen all of that land. More interactive experiences on every screen in the home seems like a good thing to me, and if you can get a lower price point that allows me to distribute what I do across all of my televisions, that could be interesting. But a little bit like the VR stuff, I’m not really sure that we’ve seen the killer use yet. But it’s something that we’re definitely paying attention to.

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