Earlier today I spoke with Xbox boss Phil Spencer to discuss the company’s future in video games.
Of course, there is the small matter of Microsoft’s ongoing battle to get the games industry’s biggest-ever buyout deal done, and its push to gain a foothold in the mobile games market. Eurogamer posted our conversation with Spencer on those topics this afternoon.
Now, here’s the rest of that conversation – a wide-ranging chat about the future of Xbox hardware, the possibility of mid-gen refreshes or other new bits and pieces, the potential for Xbox to ditch Series S as the current console generation continues, and the commitment Microsoft has to gaming in general.
You’ve said previously that Microsoft can’t “out-console” Nintendo or Sony and you’re looking to other things that really drive value on the Xbox platform like Game Pass. But is there a ceiling to Game Pass, to growing that market? We’ve recently seen Sony stop sharing PlayStation Plus numbers, which was interesting. How do you keep Game Pass growing?
Phil Spencer: Our focus is on: how do we find more players? Our tactics to get there [are that] we think our games should be available in more places. All of our games are available on console, plus or minus maybe a couple of PC exclusives. But those games we ship on PC, we also put on cloud. So any web-enabled platform can play those games. It is about making games available to as many people as possible. One other barrier to people is the price point of retail games. Certain people love spending $70 pricing on video games. The other end of the spectrum would be free-to-play games… which for certain genres have been additive to the games industry. Not everybody believes that, but I think if you look at the growth of the games industry… For us, subscription is just another way for somebody to build a library of games they can play. It isn’t an alternative to retail or some combatant of retail, it’s just another way [for] more content in more places with more diverse business models or price points for players or families to build their library. That’s part of it.
“We do very little that’s going to force you to buy our console in order to play the games that we built.”
When I was talking about console, and Sony specifically, it was that we’re gonna do our thing. We love our Xbox consoles, we love our players there and the creators who are building on that platform. But you see – in almost everything we do – we do very little that’s going to force you to buy our console in order to play the games that we built. And that’s our approach – to build around the player first. And that approach isn’t necessarily going to tear down other company’s platform success, or console success. And that’s okay with us. And we don’t look at us growing meaning somebody else has to get smaller. I think what I want our growth to be part of is the industry’s growth – if we can be part of the game industry growing, and then we get our fair share of that industry growth? And I think about almost every decision we make, does this make the industry grow? Will this help the industry grow? And that’s a pretty big filter on the things that we do.
Which I guess takes us back to Microsoft’s big emphasis on mobile. That would be a big deal in growing the industry if you were partnered or acquired a big presence there.
Spencer: Yeah, and I think one of the things mobile players, in my opinion, are missing today. They have an abundance of free-to-play games and there’s so many mobile games that launch. But if a mobile device is the only device you can own as a consumer, how are you going to be able to play the amazing games that are on the Gamescom showfloor today? I don’t think the device that you own should be a barrier to the games you get to go play. I want to make sure – for the health of those retail games – that they are available on the fastest-growing gaming platform, which happens to be the mobile phone. It’s really the only one of the three that’s growing. Console is relatively flat in terms of number of players, PC is relatively flat in terms of the number of players. Mobile has been really all of the growth in this industry over the last 10 years.
I think we miss something if amazing story-based games like a God of War or Starfield or Spider-Man or whatever aren’t available in [those] places. But other companies are going to make their decisions on places where people can go play. We can put our games on PC and console. The models we use – to get on on mobile phones today, the platform holders don’t let us put games there.
How do you put something like Starfield or Spider-Man on mobile?
Spencer: You stream it. We could do it. We just have an announcement today with GeForce, where more of our games are available in GeForce Now, we obviously have xCloud, there’s Boosteroid, there’s Ubitus. You decouple where the game runs from where it’s played, and it lets you play on a Mac or a Chromebook or a phone or smart TV. Is it where I’m going to play every time? No. The best gameplay experience is going to be on an amazing console plugged into your TV or an amazing gaming PC. But sometimes I’m okay when I’m away from that experience to be able to play on the device I have access to. And I, as a player, should be able to make a decision on where I want to play my games.
Xbox’s hardware focus feels pretty defined. There isn’t some of the experimentation you’re seeing with Sony on things that may be more niche, like VR or handheld devices…
Spencer: Can I pick up on that?
Feel free to disagree!
Spencer: I don’t know a lot about – what is it, Project Q?
Yeah.
Spencer: Like, I haven’t been briefed on it. I know a lot about the Steam Deck. And things like the Asus ROG Ally, I don’t think those are going to be niche devices – those are going to reach scale. They’ve sold millions of Steam Decks and they get used. We have a lot of games in Steam, so I can kind of see and in fact, I think we just saw in the Steam charts that Linux is now ahead of Mac OS as a runtime platform, and I have to believe the Steam Deck had a ton to do with that. I know for me, my ROG Ally is my Xbox on the go. Because almost every game supports cross-save so I can sit down and I can pick up my progress there. My friends are there if I’m playing a multiplayer game. And then when I go home, and I pick up from my console, it’s very continuous. So I’m picking a little bit on the niche experience. I think if it was something totally dedicated to being extension of the console. But these are standalone platforms unto themselves.
I think you have answered my question! I think Project Q is part of the PlayStation ecosystem and for Xbox, there isn’t a specific Xbox handheld thing – you just have the ability to play Xbox games, and PC games on those other devices, like you mentioned.
Spencer: Yeah. And I’ll pick the ROG Ally because it’s one I’m playing on right now a lot. Every time I sit down I and I’m playing with it – I’m playing a lot of Brotato right now – but it’s like, why doesn’t this feel… why isn’t this an Xbox? What is it about it, for the player experience? Forget about what colour the plastic is or whose name is on the back of it. What is it about that experience that is different when I’m on the go from what I have with my console? I think the differences are smaller and smaller for us. Because Game Pass is there so my library of games are there. The controls are basically the same ABXY, twin stick, triggers. My saved games are there. So yeah, I don’t need people to buy a piece of hardware from us specifically to go play. It’s an amazing Xbox experience, even though we didn’t build the device. And I think that’s totally fine.
There are always questions around whether Microsoft may eventually run out of interest in gaming. Are you able to commit to doing a Gen 10 console at this point?
Spencer: We are continuing to innovate in hardware. And I wonder if our strict definition of generations is going to hold. And if I even say last-gen, Gen 8, with PS4 Pro and Xbox One X – what are those, Gen 8.5? So it’ll be interesting. This isn’t like a foreshadowing of a plan. But it’ll be interesting to see if we think about generations in the same way. Take PC as an example. We don’t really talk about the latest AMD and Nvidia GPUs as part of a generation. We see it as more continuous than step function. And there’s some advantages to step function, I get it. There’s also a ton of advantages to being more continuous in terms of compatibility, game preservation, and an openness of those platforms. So I’m curious how that plays out.
“When you ask about Gen 10 I can say yes, but…”
I think what people want from us… We have a hardware team. We love our hardware team. We’re investing in hardware. We’re investing in future hardware. So you’re gonna continue to see hardware coming from Xbox. We think that’s important, and we love the console experience. We’re not running away from that. I just – when you ask about Gen 10 I can say yes, but also at a higher level commentary, I’m wondering if this notion of step function is just going to hold in the console or is it going to be more continuous.
Do you see the next Xbox hardware feeling to the average consumer like more of a mid-gen refresh, then? Or are you still trying to say no, we’re at Series X still for a long time, so when we do go put the effort in to release a new box it feels like… and I don’t want to say Gen 10…
Spencer: You can say Gen 10.
… it feels like Gen 10.
Spencer: I definitely think that when we do hardware, it should have a reason to exist that is demonstrably different than what came before. I think that’s important. Gen 10 – now you get more of my religion on this – I think what happens for us as an industry – and other people with other platform affinities are going to argue with me about this – but sometimes you feel really great about the price performance of the console early in the generation. And then later in the generation, we look at what’s happening on a PC. And we say, ‘how come our consoles can’t do that?’ And the reason is, because when you plan for a console, you start two or three years before you launch it, and you kind of lock-in to a hardware spec. And then that’s the spec you’re gonna have for five, six, seven years. And because the pricing of consoles have gone up, it’s closer to PC than it’s probably ever been in terms of price and performance.
“As soon as you start doing mid-gen refreshes, you’ve got a bunch of issues in front of developers.”
I think what we get ourselves into is this world of like, ‘Should we do a mid-gen refresh? Because we think every game should be 4K 60fps. And we’re not seeing that right now so, clearly, we need to mid-gen refresh.’ As soon as you start doing mid-gen refreshes, you’ve got a bunch of issues in front of developers, on what platform they target. And it starts to feel a lot more like PC – which is clearly a good ecosystem that’s healthy, but then I’m like, ‘Okay, well, what’s the difference then between console and PC, if we’re in this mode of every two years, a new GPU comes out, or CPU?’ And there’s a bunch of things. I mean, we are the Windows company. We know what it means to run a platform that’s more continuous and, I will say, open. I actually love that for console gaming. I love having Discord on our platform, which is something 10 years ago, Xbox would have been like, ‘no way!’
‘It needs to be Teams.’
Spencer: [Laughs] Exactly, exactly. But I love that, on Windows, no one ever thinks on Windows whether Discord should be available, or YouTube or the Epic Game Store, right? All of that stuff is. So when I think about console, I love those notions. Now, there’s things about console, I really like. I push the button and it turns on within two or three seconds, it’s very appliance-like in how it works. I think all of those are incredibly valuable. And I don’t want to lose those things. But if we get into a console world where, every two years, we now have three or four closed ecosystems that are upgrading their hardware every two years, I’m gonna wonder – how is that helping creators or players? To me it feels like we are creating a ton of complexity for creators and players in something that used to be very simple. And maybe there’s another model for us.
Is there still an opportunity to keep specs the same, but take advantage of the fact that component costs do come down over that seven year lifespan? To just make it a cheaper thing to manufacture?
Spencer: The prices aren’t coming down. We see it now, and that’s why we did Xbox Series S. I know there’s a bunch of questions like, ‘what is it doing?’ We wanted to make sure we had a sub-$300 console because we want to grow, and we think an entry level price point for many new families or players coming into the market is going to be important. And then people say, ‘Well, now you’ve created complexity, because you have two specs in the market.’ But then we get into this world of ‘I want to mid-gen refresh, so we should create more complexity by creating more devices.
“You’re not going to be able to start with a console that’s $500 thinking it’s gonna get to 200 bucks.”
For us, thinking about where our hardware is going and reaching more customers, price point is important. But you’re not going to be able to start with a console that’s $500 thinking it’s gonna get to 200 bucks. That won’t happen. Because the core components that you use – you’re used to Moore’s Law shooting up and to the right – but your components… you can’t buy them anymore as a hardware maker because nobody’s making that kind of RAM or other components. It’s not the way it used to be where you could take a spec and then ride it out over 10 years and ride the price points down. It’s why you see console pricing relatively flat.
You mentioned Series S, is there a future where you do have to leave it behind for some titles? Baldur’s Gate 3 is a big one this year and obviously we’re still waiting for the Xbox version of that, and where split-screen appears to be the issue. And it was mentioned recently that Forza Motorsport won’t ship with splitscreen…
Spencer: Those two things aren’t really related. Forza Motorsport was never going to have splitscreen. That’s just a decision the team made based on usage. We see how many people play in splitscreen and just decided to put our dev effort where people are actually playing.
On S, specifically, we designed the box with similarities to X, and clear places where we’re targeting a different performance. And we’re taking feedback from devs including Larian, I met with them today to talk about it and I’m confident we’re going to find a good solution and we’re going to learn.
“I don’t see a world where we drop [Xbox Series] S.”
I don’t see a world where we drop S. In terms of parity, I don’t think you’ve heard from us or Larian, that this was about parity. I think that’s more that the community is talking about it. There are features that ship on X today that do not ship on S, even from our own games, like ray-tracing that works on X, it’s not on S in certain games. So for an S customer, they spent roughly half what the X customer bought, they understand that it’s not going to run the same way.
I want to make sure games are available on both, that’s our job as a platform holder and we’re committed to that with our partners. And I think we’re gonna get there with Larian. So I’m not overly worried about that, but we’ve learned some stuff through it. Having an entry level price point for console, sub-$300, is a good thing for the industry. I think it’s important, the Switch has been able to do that, in terms of kind of the traditional plug-into-my-television consoles. I think it’s important. So we’re committed.
On the closure of the Xbox 360 store – obviously, technology has changed a lot since that store launched. Do you have to be careful around communicating those changes because game preservation is such an important issue?
Spencer: Game reservation is critical to us at Team Xbox. One of the things we do is ship all of our games on PC, because I actually think PC is the best ecosystem for game preservation because it’s not tied to one piece of hardware. So at the metal level, if we think about video games as pieces of software, the more that software isn’t dependent on a physical device, the more preserved it can be in the long run. On the 360, I love our back compat and the work that we’ve done. And maybe it’s a little bit of grandiose to say, but I think it’s world class, what the team has done around back compat, even on Gen 9. Not only does it run, but the best place to go play those games is through the back compat layer on a Series S or X. I love it, I think it’s awesome.
“I have that list and I’ve got it stapled on my forehead.”
The work on the 360 storefront was really just about the hardware and the lifespan of the hardware. We know how many people are playing 360 games on the 360. It’s a pretty small community. The community of buyers is very, very small. So as the back end – which is tied to that hardware, roughly – starts to kind of bring down just from a sustainability [point], and almost all the players have moved on, we’re like, ‘okay, we can focus our effort on where the players are and where they can buy’. So you can still go buy all the back compat games, all the multiplayer stuff all works. I think that’s pretty cool.
There’s a list of, what 220 games that are not back compat, and I have that list and I’ve got it stapled on my forehead, and like, how can we make sure [you can play them still?] How many of those are on PC? That’s one thing, because it doesn’t necessarily mean you need to be able to play it on the existing hardware that you bought 15 years ago, but preservation is front and centre when all these decisions are made. I will say for us that preservation that’s linked to only one piece of hardware is a challenge. Because there can be hardware love as well – people who love and want this device to do this forever – but mechanical things will break over time. But that’s why we gave people with this decision a year. Let’s say ‘hey, if you want to go buy things in the 360 store, we’re going to give you a year headstart, and you can go get those things’. And just know that the list of the 220 games is something that we see, and we would love to find solutions for those games to continue to play.
