Congratulations to @obsidian, @jesawyer and everyone involved on the launch of Pentiment!
— Klobrille (@klobrille) November 15, 2022
Now available with Xbox Game Pass. pic.twitter.com/8MMZaOTrk9
You called down the thunder, now reap the whirlwind
Dreadfulol created beer pong in Halo Infinite Forge! It’s not available yet because it’s still a work in progress.#HaloInfinite #HaloForge #Forge pic.twitter.com/HdyvcuBrZC
— Rebs Gaming (@Mr_Rebs_) November 15, 2022
You called down the thunder, now reap the whirlwind
What is the difference between being the executive vice president of Gaming and the CEO of Microsoft Gaming?
I would say the day-to-day job is mostly the same. I think it’s really about a recognition inside of Microsoft that we run gaming in a different way than some of the other divisions. We are our own business — we have our own marketing team and our own P&L, for those who care about that.
That’s the show. I care about that a lot. Okay, so you have your own P&L.
Yes, we run it end to end. There are other CEOs. Ryan Roslansky, who runs LinkedIn at Microsoft, is also a CEO. It’s really just a recognition of the way that we structure gaming inside of the company. I would just say it’s an honor to be a part of it and to lead the team.
How did that decision get made? Did you have to sit down and write a memo? Were you like, “All right, I have to convince Satya Nadella, to make me the CEO of Microsoft Gaming”? Was it a committee decision? How did it work?
It was all Satya’s decision. It wasn’t something that I had pushed for. It was a decision that my boss just let me know about one day as we were going through our discussions with the board about the Activision acquisition, our future ambitions in gaming, and where we’re going. I don’t know what his process was behind the scenes to make that happen, but no, it wasn’t a situation where I put a proposition across the table. It was something that was brought down from upon high.
Does this work if you don’t acquire Activision Blizzard? Are you still the CEO of Microsoft Gaming? Do you have to give it back if the deal doesn’t go through?
I don’t think so. I didn’t see that in the paperwork — well, there was no paperwork, to be clear. I think it sticks with me. I do think it’s a recognition of what our ambition is in the gaming space, and I think we’re kind of over that hump a little bit.
I will say, early on in my tenure at Microsoft, most podcasts I went on would ask questions like, “Is Microsoft really serious about being in the gaming business? Are you in it for the long run? What are your motivations?” In a nice way, I think we’re kind of past that. Most of the discussions are about what our ambition is, what we’re trying to do, and what our worldview is on the gaming business. That’s just up to all the work that the teams have done and the progress that we have made. I think it’s a fantastic recognition of what the org has been about over the last six, seven, eight years.
I think that’s a positive case. That does seem to be the shape of it from what I’ve heard from other executives in Microsoft. “This is a real business, not a hobby. It’s not something that we accidented into.” The flip side of that is as you make it more independent, as it becomes Microsoft Gaming with a CEO, it’s also easier to pull out even farther. It’s the first step towards pulling it out of the core of Microsoft. You could spin out, you could do all kinds of things once it’s more independent. Is that a potential future here? Or is it just that you need more independence from LinkedIn and Azure or whatever else?
I wouldn’t say it’s the first step. I never really think about Xbox outside of Microsoft. I don’t think the gaming business has ever been more integrated into what Microsoft all-up is about. We’re the largest consumer business in the company. That wasn’t always true, but with the progress that we’ve made as gaming overall has continued to grow, it’s a consumer category where Microsoft has relevance. We have brands, we have customers, which is the most important thing, and we have teams, which are critically important as well.
A lot of our big tech competitors have made forays into gaming, and they might have their own consumer businesses where Microsoft doesn’t have a lot of success or even capability, but gaming is a space where Microsoft has decades of experience. I really see this as recognition from the company that gaming is a place we’re going to continue to invest, make progress, and have a perspective on where this industry is going that’s shaped by our discussions with unique partners and creators. We’re in it for the long run. My title isn’t honestly something I think about much. I still kind of consider myself a software development engineer, which is where I was when I started.
This brings me to the $68 billion gorilla in the room, which is the Activision acquisition. Regulators around the world are looking at it. The reason I think this is a segue to it is because you’re saying, “We’re selling all the Xboxes we can make. There’s more demand for Xboxes than ever before in our history.” As regulators look at the deal, Microsoft is arguing to European regulators, “Hey, we need this to even compete.” The quote is, “Xbox is the last place in console, where it’s seventh place in PC,” — this is a quote from Microsoft — “and nowhere in mobile game distribution globally. So we have to be able to buy Activision to even be competitive.”
At the same time, you’re on this show saying, “There’s more demand for Xbox than ever. We have this amazing suite of products that can meet people at all of their price points and economic conditions.” How do I reconcile those two things?
Well, on console, I think you could admit that both can be true. We can be in third place and have more demand than we’ve ever had. That’s completely possible, because I think the other console manufacturers are also seeing more demand than they’ve ever had. I don’t think anybody needs that quote from us to understand how irrelevant we are at mobile. Right? Anybody who picks up their phone and decides to play a game would see that on their own. For PC as well — our trials and tribulations over the last five, six years in PC gaming are well-documented, and we continue to work at it. I love the work that the Xbox app team and our PC studio have been doing, but it takes time. I think one is just an accurate snapshot of where we are.
In terms of the Activision opportunity — I keep saying this over and over, and it is true — it definitely starts with a view that people want to play games on every device that they have. In a funny way, the smallest screen that we play on is actually the biggest screen when you think about the install base in a phone.
That’s just a place where if we don’t gain relevancy as a gaming brand, over time the business will become untenable. We’re not alone in seeing this; this is true for any of us. If you’re not able to find customers on phones, or on any screen that somebody wants to play on, then you really are going to get segmented to a niche part of gaming where running a global business will become very challenging.
I’m looking at the Activision Blizzard numbers. They are structured pretty independently. There’s Activision, there’s Blizzard, and then there’s King, which is the division that makes Candy Crush. I just saw their earnings. King makes more than Activision and Blizzard. Candy Crush makes more than Activision and Blizzard.
You’re buying the Candy Crush company. People think about it as Call of Duty or whatever, but you’re buying Candy Crush.
Absolutely. In addition, the number that’s not in the Candy Crush/King number is Call of Duty: Mobile and Diablo mobile, which are big franchises that exist in that Activision and Blizzard bucket that are also major players on phones. Yes, the idea that Activision is all about Call of Duty on console is a construct that might get created by our console competitor and maybe some players out there.
You mean Sony, by the way. You don’t mean Nintendo. You mean Sony.
I haven’t heard Nintendo sending in any complaints about the deal. If you look at the totality of what Activision/Blizzard/King does, where their customers come from, and where they make money, the stats that you put out are not new. This has been many, many years.
It’s the same reason that Take-Two looks at Zynga and says, “Okay, we have to build out our mobile capability.” I would say Activision/Blizzard/King did a better job of doing that earlier, and definitely better than we did. They are now in a position where they have great PC franchises, great console franchises, and great mobile franchises.
The real differentiation that they add for us is their mobile capability.
It sounds like the Activision side of this deal is saying, “Just do whatever the regulators want and close this deal so we can get paid out and go away.” The regulators are saying, “We want to impose all these conditions on you.” Most notably, Sony is making a lot of noise about Call of Duty and how long it will stay on the PlayStation. Are you prepared to make the concessions that regulators might want to close the deal?
I have not sat down with a regulator where they have proposed any regulations. I think what people are purporting to report in the press about what’s happening is maybe more rumor and hearsay. I have said, specific to Call of Duty on PlayStation and Switch — because I would love to see them on both, and I don’t want to make this about just one of our console competitors — that it’s something that we want to do. It’s in our models when we think about how this plays out over time. The financials of Activision is that Call of Duty would stay on PlayStation. We are definitely open to discussions with either Sony or regulators about making sure that that continues to happen in a way that they want to see.
I will say, for things like Minecraft — which is my kind of go-to example, because I think we’ve run Minecraft the way that we would run Call of Duty if we were to close this deal — we don’t have a multi-year deal with Sony or Nintendo to put it on those platforms. There seems to be some notion that you have to have some long-term structure in order to continue to support those other platforms. We support Minecraft on those platforms because of how people should analyze this deal, which is about customers.
When I think about where we are in Activision/Blizzard/King and the regulatory work, I think we should be analyzing whether we are going to harm players. Is there a world where players have less choice in the market, or is there some kind of blocking that we do? We are committed to continuing to ship Call of Duty on PlayStation. People are worried about that. We are committed to putting these games in Game Pass, which gives people more options in how they want to go play these games. Nobody has presented to me a case that shows how Game Pass is bad for customers.
From the value of a customer, I have a ton of confidence in how a regulator, or anybody else, looks at this deal and says, “Okay, I have a point of view on how this deal impacts the real important constituents, which are the players.” I don’t think the regulatory view on this deal should be about how we compete with one of our competitors. Almost by definition, there is give and take in market share and other things when we’re competing with other companies. In terms of players, I look at whether we can bring benefit to the players in the gaming market through this deal. I think we can.
We’re committing, and I’ll do it publicly. We are going to ship games on PlayStation if that is where the focus is. We’re the third-place player in console, and I don’t think anybody can argue that we’re not. We have been third since we started, just in terms of global install base — and that’s like 20-plus years.
I understand a view on how this might impact competitors and I welcome the conversations that any of the regulators are having with other gaming companies. I think it’s a valuable process, and I think we should end up in phase two in whatever that means in all of this. It’s a big deal, and it’s an important category. I understand the discussions that we’re having, and I think they are valuable and useful in terms of the public discourse around video games and acquisitions. No harm there at all. In fact, I enjoy the conversations.
In terms of the impact that we have on competition, I want to be more competitive in gaming, not less competitive. At some level that will mean you have an impact on the other players that are ahead of you in the race. I think that’s almost the definition of competition.
Well, they can’t hold you to that. I mean, they can’t take you to court because you said it. I mean, saying that to me in my show, it’d be great if they filed a lawsuit based on Decoder. That’s a huge win for me, but you have to write it down for them.
No, you don’t. That’s what I’m saying. I support Minecraft. I support the players on PlayStation who want to play our games like Minecraft. We don’t expand Minecraft Dungeons and Minecraft Legends out of any contract we have with Sony, but the contract we have with our customers. That is what’s important.
I understand in the optics of this deal that we might want to make — and I’m totally open to doing this — a contractual commitment to Sony for some number of years that says, “Okay, we’re going to continue to ship Call of Duty on PlayStation.” I’m totally open to that. No issue at all. This idea that we’re going to write a contract that says “forever” doesn’t make sense to any lawyer. There is obviously a business relationship between the royalty exchanges and other things. You’re not going to give up any ability to do what you need to do and the flexibility with the business in the future.
When I’m saying things like, “As long as there is a PlayStation,” there was no implied threat at all. I hope there’s a PlayStation forever. I do. I think PlayStation and Nintendo are great for the gaming industry. Hopefully I have been consistent in saying that. All I mean is that at some point you have to have the ability to run your business, and not just the console business. It’s not about pulling the rug out from underneath the PlayStation 7’s legs at some point, like, “Haha, you just didn’t write the contract long enough!”
There’s no contract that could be written that says “forever.” Our model is we want to be where players are, especially with franchises the size of Minecraft and Call of Duty. I think our Minecraft history is coming up on eight, nine years and it shows in practice how we will support our customers. That’s what I want to do with Call of Duty.
This idea that we would write a contract that says the word “forever” in it is a little bit silly, but to make a longer-term commitment that Sony and regulators would be comfortable with, I have no issue with at all. I do think there’s going to be a time horizon, just like anybody writing a contract would suggest there should be and will be, but it has nothing to do with any kind of “strategery” there. We think Call of Duty will be on PlayStation as long as players want to play Call of Duty on PlayStation. That’s not a competitive threat against PlayStation. That’s just a kind of pragmatic way of looking at it.
The last time you were on in 2020, we did talk a lot about game streaming and all the places you could put a viable game streaming app. One of them was obviously competitor consoles. That’s a pretty interesting way to do it. You said within a year that, “We’ll have a streaming stick, we’ll just do it and you can plug it into TVs.”
You didn’t do it. Recently you said you were, “years away” from this idea. What happened there?
Keystone. It was more expensive than we wanted it to be when we actually built it out with the hardware that we had inside. We decided to focus that team’s effort on delivering the smart TV streaming app. It was really just a direction, “Okay, we’re going to focus our effort on our partnership with Samsung and where that app might continue to show up in different places over time.” With Keystone, we’re still focused on it and watching when we can get the right cost.
When you have Series S at $299 — and during the holidays you might see some price promotions — and you obviously have Series X higher, I think in order for a streaming-only box to make sense, the price delta to S has to be pretty significant. I want to be able to include a controller in it when we go do that. It was really just about whether we could build the right product at the right price, or if we couldn’t, how could we focus the team’s effort? We decided to go do the TV app with Samsung, and we’re really happy with the results there.
What’s the right price?
I don’t want to announce pricing specifically, but I think you have to be somewhere around $129, $99 for that to make sense in my view. We just weren’t there with a controller. I love the effort. The reason it’s on my shelf is because the team rolled up their sleeves and in nine months they built that thing. A bunch of us took it home and it worked. It worked really, really well.
When you are building new products, it’s always about, do you have the right design? Do you have the right user interface? Do you have the right customer proposition? That customer proposition includes the price, and I think all of us knew that we were a little out of position on price.
Was the price too high because of the processor or the controller inside? You keep mentioning Samsung TVs. They are not processing powerhouses. Everyone who’s ever used a smart TV knows these things are underpowered out the gate and they feel even more underpowered over time.
This is why we will get there. It’s different when you have your own power source. Not to go into the hardware design, but if this thing is standalone, it’s not living on the power source and the integrated circuits that are already in the TV. You have to do everything bespoke. We made some decisions to make it easy. When it is turned on, it looks like an Xbox with the user interface and everything works. Some of the silicon choices we were making at the time of designing just didn’t let us hit the price point that we wanted.
I love when teams go off; it was kind of like our back-compat team back in the day. I applaud when teams go off and take a crazy mission of, “We’re going to build a streaming console and all try it at home, and the experience will be really good.” I love when teams take risks and deliver. I think it’s fantastic.
It seems like the whole tech industry is in a period of retrenchment. We have seen that some companies are starting to do layoffs and that some companies are starting to do hiring freezes. You are headed into a holiday quarter. Even in the games industry, Google said, “You know what? We can’t just keep throwing money at Stadia. We have to walk away from this.” You are saying, “All right, maybe we have to take a pause on this streaming stuff until we hit our price points.” Your last earnings, the Game Pass numbers, were not where you thought they were going to be. It just seems like we are in a big period of retrenchment, waiting for things to break and calm down. How do you see leading Microsoft Games through this period, where it seems like a bunch of things we thought were going to change actually didn’t change as much as we thought they were, and it’s time to focus?
It’s a really thoughtful question and something I think about a lot in my position. I want to run an organization and a product that has a commitment to our customers. We want to have a long-term vision that succeeds from a business perspective, because that means that their experience on Xbox will continue. Same thing for the teams that are working on Xbox and their investment and their own time and energy in the things that we build. I take running a successful business as a very serious part of the job. We’re doing that today. We run a profitable business in Xbox. I love the different ventures that we have doing xCloud, Game Pass, PC app, and mobile.
I think all of that is important to build a long-term business strategy that leads to business success that means customers can bet that Xbox will be here today, it’ll be here tomorrow, and it’ll be here into the future. And that the teams that are working here can understand that they work in a stable place that is a long-term commitment from Microsoft.
I think there is nothing more fundamental to my job than building out a stable business strategy, a people strategy with the people that work on the team, and ensuring that the business strategy leads to financial success, so that we can continue to invest in this category.
So. CoD is Minecraft. There is no contract to release any Minecraft title on PlayStation, there is no contract for Minecraft. The deal is more about ABK's mobile efforts, King makes more than Activision & Blizzard and that doesn't even include CoD Mobile & Diablo Mobile. Signing a contract that says "Forever" is stupid and nobody does that. Streaming stick was cancelled because they couldn't get the price down far enough, Phil wants it around $99-$129 including controller.
| Ryuu96 said: So. CoD is Minecraft. There is no contract to release any Minecraft title on PlayStation, there is no contract for Minecraft. The deal is more about ABK's mobile efforts, King makes more than Activision & Blizzard and that doesn't even include CoD Mobile & Diablo Mobile. Signing a contract that says "Forever" is stupid and nobody does that. Streaming stick was cancelled because they couldn't get the price down far enough, Phil wants it around $99-$129 including controller. |
Do not worry, Sony is not going to ask for forever but 25 years or something like that probably would not be out of the question. Basically long enough to not matter. Also the promise of one man well it means nothing. Phil could get fired, get caught in the sex scandal with Sarah Bond, quite and form his own company who names it. A new head of Xbox would not be beholden to whatever Phil made commitments to.
The funny part is, would Sony accept at this time a contract with MS or are they willing to ignore anything from MS until the CMA makes a decision. It could be that the CMA accept the situation like Brazil and Sony gets no guaranteed agreement from MS or any conditions from the CMA which would be funny in itself.
Actually the balls in Sony court to get things in writing now or risk actually getting nothing. Maybe they are holding out hope that the CMA will just reject the deal which in that case they win. Should be fun to see how this all shakes out.
| gtotheunit91 said: |
Forge Saving Halo.
GG To 343i Forge Team & Skybox Labs.
Skybox Labs really proving their worth to Xbox. Now Certain Affinity with BR. This excitement needs to last until Season 3 and if it does then I think Infinite will be in a good place coming into 2023 and throughout all of 2023.
Machiavellian said:
Do not worry, Sony is not going to ask for forever but 25 years or something like that probably would not be out of the question. Basically long enough to not matter. Also the promise of one man well it means nothing. Phil could get fired, get caught in the sex scandal with Sarah Bond, quite and form his own company who names it. A new head of Xbox would not be beholden to whatever Phil made commitments to. The funny part is, would Sony accept at this time a contract with MS or are they willing to ignore anything from MS until the CMA makes a decision. It could be that the CMA accept the situation like Brazil and Sony gets no guaranteed agreement from MS or any conditions from the CMA which would be funny in itself. Actually the balls in Sony court to get things in writing now or risk actually getting nothing. Maybe they are holding out hope that the CMA will just reject the deal which in that case they win. Should be fun to see how this all shakes out. |
Sony, Imo, won't accept anything, full stop, they won't even accept forever.
Sony straight up said in their complaint to CMA that it doesn't matter if CoD remains multiplatform because Microsoft can do incentives to make people switch to Xbox such as exclusive content, Game Pass would extend to that point too, I think what Sony ultimately wants is for either this deal to collapse or to block CoD on Game Pass and if regulators block CoD on Game Pass, then Microsoft is going to court.
Doesn't really matter if Sony doesn't accept the terms though or it shouldn't matter to any regulator doing their job correctly, it's if regulators think they're good enough. Also, any commitment that Phil makes is a commitment that Microsoft is making too, he isn't making these decisions alone, I don't think it would matter all too much if Phil ever left if Microsoft wants CoD to remain multiplatform.
Ryuu96 said:
Sony, Imo, won't accept anything, full stop, they won't even accept forever. Sony straight up said in their complaint to CMA that it doesn't matter if CoD remains multiplatform because Microsoft can do incentives to make people switch to Xbox such as exclusive content, Game Pass would extend to that point too, I think what Sony ultimately wants is for either this deal to collapse or to block CoD on Game Pass and if regulators block CoD on Game Pass, then Microsoft is going to court. Doesn't really matter if Sony doesn't accept the terms though or it shouldn't matter to any regulator doing their job correctly, it's if regulators think they're good enough. Also, any commitment that Phil makes is a commitment that Microsoft is making too, he isn't making these decisions alone, I don't think it would matter all too much if Phil ever left if Microsoft wants CoD to remain multiplatform. |
I would believe that MS would also accept COD not on GP but such an agreement would be very limited in years. I personally believe that COD is not important to MS the way Sony or the CMA believe and that MS real purpose is their push to get their content on as many of those billion mobile devices as possible. I have said this before, I do not believe MS is in the console war anymore. They have conceded to Sony and Nintendo on that front and are looking and working towards a much bigger prize. When MS get their mobile store up and running, they would just put full COD there as a streaming game or something along those lines. If COD is the sacrifice to get this deal done, I believe Phil is more than happen to do that deal.
Coming soon to @XboxGamePass and @XboxGamePassPC: Gungrave G.O.R.E, Warhammer 40,000: Darktide, Dune: Spice Wars, and more! https://t.co/uB707hmF2W
— Xbox Wire (@XboxWire) November 15, 2022
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