Microsoft entered E3 2014 on the defensive after watching the Xbox One fall behind Sony’s PlayStation 4 over the past six months. However, the company has shown quite a bit of flexibility this past year as it worked to adapt to customer feedback in order to prepare for and eventually launch the console. We caught up with Mike Nichols, Corporate Vice President, Xbox and Studios at Microsoft, to find out how the firm plans to regain its edge in the console wars.

The following interview has been condensed.

TNW: So six months in, how’s the Xbox One doing?

MN: I think it’s a great time to be in games. The generation overall is off to the fastest start in the history of any new generation at this point, and the same thing with Xbox One. Xbox One at this point relative to Xbox 360 post-launch is being purchased 76 percent faster even than Xbox 360.

We’re off to a strong start. Pretty darn happy about that. The feedback we’ve gotten from early adopters has been great. On average, Xbox One owners are using it for five hours a day. That’s one of the metrics we use: Are people loving it? What are they engaging with?

We made a whole bunch of other improvements to the Xbox Live service and have launched new features every month since we launched. The culture we’ve tried to build has been just to listen. We’ve made a lot of changes.

Overall, we’re feeling great. The lineup we’ve got this holiday is one we’re very excited by. One of the most important things customers are going to evaluate when they’re thinking, “Hey, I haven’t bought a next-gen console yet, they’re going to think about what the exclusives are.”

Ultimately, in a way when you look at the exclusives that are going to be on the systems, when you look at the launch titles [Ryse, Dead Rising 3, Forza], the ones we’ve had since then [Titanfall], and the ones that are coming [Halo: The Master Chief Collection, Sunset Overdrive, Ori and the Blind Forest],  they give a really great reason to evaluate Xbox One for this holiday.

sunsetoverdrive2 730x396 Xbox VP Mike Nichols on the state of Xbox One and what Microsoft needs to do to beat Sony

Microsoft has made a number of changes to Xbox One based on customer feedback. What’s the approach that Xbox has taken to adjust to what customers are saying?

[Listening to feedback] is core to the culture for Xbox. Based on the product, we say, “Hey, we’re going to take some new swings, really try to innovate, and at the same time balance that with how things are landing.” It’s a combination of vision and really staying super customer-focused on what we’re hearing.

Leading up to the launch of Xbox One, there were a number of changes that we made to the program based on feedback even before we launched. Since then, we’ve launched new features every month. That was a cultural thing we built in to say, “Hey, we want to ship new features every month, we want to operate more like a service.”

In this particular generation, [Xbox is] a service that continues to get better and better. We built that into our development processes, the way the system is architected. That’s something culturally we believe in.

In the case of the price point, that was something we were hearing from customers in particular, Xbox 360 customers who hadn’t upgraded yet. They were saying it sounded great, but “Sorry, can’t necessarily afford $499.”

What we decided to do there was be responsive, change our plan. Let’s give everybody the option of whether or not they want to buy Xbox One with Kinect.

Last year, Microsoft pitched the Xbox One as an “all-in-one entertainment system,” but this year the focus is on “games, games, games.” Is this a shift in how the team approaches the console?

The original vision was, “Hey, we want to be the best place to play games. We also want to put games at the center of all your entertainment.”You can be enjoying all these different things and games are only one command away. That was our original vision and we articulated it as “all-in-one.”

That vision still exists. The focus at the show here was games: exclusives, ID @ Xbox, new games from Ubisoft and Activison. That vision still exists, our focus is on the games and the service around it. That combination is what we’re primarily focused on.

The show happened to be about games, but that promise to customers of putting games at the center of your entertainment and really being the best place to play, that for sure continues.

What does Xbox need to do to become the leader of this generation of gaming?

We’re off to a great start. I think that this next phase that we’re headed into is really about the second holiday. In that, our approach is basically to say “Hey, we’ve got what we think of as the best collection of blockbuster games, as well as exclusive titles only available on Xbox One.” So it starts with that, the games.

Number two, continue improvements to Xbox Live. The service around the games is so critical to the gameplay. How good is multiplayer? How good is the matchmaking, that I’m set up with other players that are good competition to me? What’s the story with the quality of the subscription [e.g., discounts through Deals with Gold]? We’re also adding dedicated servers for them to ensure really high quality multiplayer

That service [Xbox Live] is something we pioneered with video games a decade ago. The games are getting enhanced by that unique service.

Third is really offering gamers the best value. Not just on the price to purchase the console, but also the fact that there’s going to be new features each and every month for you based on your feedback.

For instance, we put up that new feedback site on Xbox.com. We already get all this great feedback on Twitter, Facebook, email. We come to shows and hear things from customers. We’re putting that site in place so you can submit ideas. I read the feedback. Phil Spencer’s R&D team is committed to reviewing what’s going on with that site.

We have the best games this holiday, the best service in Xbox Live, all of this value, including new features as we respond to customer feedback. All those things collectively are what we’re doing to make Xbox One the best place to play.