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When Phil Spencer took the helm of Microsoft's gaming division in 2014, he and newly appointed CEO Satya Nadella weren't sure if the company should keep investing in the Xbox, which was losing to Sony.
Less than a decade later, Spencer and the Xbox are at the center of the software company's largest acquisition ever. With the close of the $69 billion purchase of video game publisher Activision Blizzard on Friday, Microsoft has made clear that gaming is no longer a question mark and is, in fact, central to the company's future.
Spencer's profile at Microsoft has grown immensely in a short period of time. He told an interviewer from gaming website Shacknews in 2020 that he only got to become head of Microsoft's gaming division because so many other people had left, and he was still there.
He likes to recognize the achievements of others.
David Hufford, who works in communications and analyst relations at Microsoft, recalled asking Spencer to speak at an event in 2021 honoring the 20th anniversary of the original Xbox launch. Hufford told CNBC in an email that Spencer declined because he wanted to focus on Robbie Bach, who ran entertainment and devices until 2010, and Jeff Henshaw, an Xbox co-founder.
Hufford said that Spencer "preferred we spotlight" those people, "who played more visible leadership roles back then." Even Bach, once Microsoft's chief Xbox officer, couldn't talk Spencer into offering on-stage remarks, Hufford wrote.
Microsoft Games Boss Phil Spencer Drove $69 billion Activision Deal
Nadella discussed his thought process for acquisitions while speaking at the Axel Springer Award ceremony in Berlin on Tuesday. Axel Springer is Insider's parent company.
"To me there are a couple of criteria," Nadella said. "First thing is, is this something that Microsoft can add real value to? If you take LinkedIn or GitHub or Activision or Mojang or what have you, they all have to make sense that Microsoft has some unique contribution that we can make both because of our technology, our brand, our go-to-market to the asset. Otherwise, why do it? And then of course at the end of the day, it has to make financial sense as well."
Nadella has spoken before about the importance of gaming to Microsoft's future.
"As a large company, I think it's critical to define the core, but it's important to make smart choices on other businesses in which we can have fundamental impact and success," he wrote in a memo to employees a few months after he became CEO in 2014. "The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming"
Microsoft CEO Satya Nadella Shares What Makes a Good Acquisition
