In preparation for the July Xbox Series X event, I wanted to share this interview with Phil Spencer at Gamelab Live 2020 about 3 days ago.
This interview is very revealing in how Microsoft approaches the market, and about their confidence going head to head with Sony, and their respect for traditional game console manufacturers like Nintendo and Sony, in contrast with newer players like Google and Amazon who may not know the market's history.
Below the video you'll find a summary of the interview.
Summary with time spans:
0:00 - 3:00
- The industry has gone from device-centric to player-centric, and the current generation will define player's ability to play anything anywhere.
- Microsoft is pushing in a player-driven direction since last generation with X1, going into XsX.
3:00 - 6:30
- Planning 4 years in advance for the XsX, did not expect to land during this pandemic year.
- The effect of COVID19 and the value of XCloud in testing Xbox games that are in development
- The importance of gaming during this period and how it brings people together.
- Proud of the supply-chain management creativity required during the pandemic.
6:30 - 9:15
- Microsoft considers 1st-party games as critical for their strategy.
- MS is pushing for more content with their 15 new 1st party studios under a new leadership team a few years ago.
- Appreciates the feedback loop that comes from the increased game development.
- Phil does not want to imitate the 1st party lineup of Sony, but wants to offer very diverse games that don't match the games by their competitors.
9:15 - 11:40
- Deltas between devices is starting to reduce.
- Games are starting to offer high immersion with life-like graphics, deep stories, near-zero load times, very high framrates and stable framerate.
11:40 - 13:30
- Phil is looking forward to playing Gears Tactics on XsX with improved graphics, and will bump the difficulty.
- Phil is excited to play Flight Simulator which hasn't been followed-up for the past 15 years. The game will take advantage of some cloud computing, and will be a type of game that is unique on xbox.
13:30 - 27:20
- Subscription model vs retail model shows that subscription model allows players to try new games that they would have not have the opportunity to try before, and so that gives more visibility to game creators.
- MS built the subscription model to meet new players (Google, Amazon, Apple), they wanted to be first, and didn't expect the current incumbents (Sony, Nintendo) to innovate in that space.
- Innovator's dilemma, does subscription impact retail. Microsoft decided to be economic anarchists and refused to get constrained with their existing models, but wanted to bet on value for their players.
- The subscription model allows for a different approach to following up games. Instead of having a new iteration of a game, devs are able to grow their engagement with longer roadmaps for a given game, example Destiny 2.
- Playing on PC allows MS to service the player wherever they are, not just through a device (Xbox) to the player.
- Creators are learning how to deal with states across devices, saves across devices, streaming, and MS feels like they are learning a lot and growing their experience with cloud gaming.
- XCloud is not a replacement for PC or console, but is a question of convenience. At home, a player may want to play on PC or console, but on the go, streaming will allow them to continue their game (of course with limited fidelity).
27:20 - 31:30
- Phil made a quote in the past that he has a ton of respect for Sony and Nintendo, but that MS sees Google and Amazon as their real competitors going forward.
- Phil wants to restart that claim now, he wants to respect the companies that built the gaming industry that we have today, the companies that allowed him and his daughters to enjoy experiences on those platforms.
- He does not see value in an approach that seeks to eliminate them, rather he sees that a strong Sony and a strong Nintendo matters in the industry.
- MS shipped games there (on Nintendo Switch) and for companies that are looking for potential cloud partners, MS wants to be considered a prospective partner.
- Phil believes that as the market grows, it is important that as things change, that the history of how the industry became what it is today is respected and the evolution of gaming is done in a thoughtful way.
31:30 - 33:55
- MS built their new strategy on 3 C's: content, community and cloud.
- This led MS to invest in 1st party content. For community, MS wants to connect gamers wherever they go. Regarding cloud, it is a challenge for incumbent companies (Sony, Nintendo) because it is a huge capital investment.
- For gamers, this just means that players want to play great games with their friends, anywhere.
33:55 - 37:00
- Xbox All Access is another way to get gamers plugged in.
- MS sees Xbox All Access as critical for the XsX launch.
- MS wants to offer a variety of options for customers, they want to broaden their market.
- They see the similarities with the mass market being used to buying 1000$ smartphones over a monthly subscription.
- These options all point in a similar direction, with gamepass allowing a broad amount of games to be available for a monthly subscription.
37:00 - 39:30
- PS did a great job with their show, esp. given the pandemic environment.
- MS is glad that they now have clarity over what's going on at Sony in terms of games and performance.
- Phil feels great about MS's position, the games they will show in July, and the hardware capability of the XsX.
- Phil believes people will be pleased, and that Halo will play a big part in the appeal of the conference.
39:30 - 43:00
- MS is proud of their acoustic work on the console and how it empowers developers with strong capabilities.
- MS wants their design to minimize their importance, they want MS to seem invisible, and want the gamers to focus on their games rather on their console.
- MS wants the games to be center-stage, and wants the design-ethos to be about the developers being free to build their visions, about enabling features without artificially holding them back for a future console launch (example: variable refresh rate).
- The design is purpose-built, MS wants to inject into the console as much as possible to allow gamers to continue their experience from a previous console to the new one.
43:00 - end
- Democratization of game development allows developers to bring games with as few distribution hurdles as possible. Today, anybody can be a developer by buying a Unity license and releasing a game on the console.
- Gaming becomes a more lush story-telling mechanism for the world.
- Production value goes up with this democratization, big blockbusters will continue to cost hundreds of millions of dollars, but at the same time, companies can monetize their games over time with the new digital distribution model.