Xbox One Interview: Phil Spencer on Microsoft's First-Party Focus

It's always the questions you never had time to ask that tend to hang in the mind when walking away after a big interview. And if I could have had just another five minutes to talk with Phil Spencer, the head of Xbox, the questions I'd love to have asked would've been more about his personality than the business he manages.

For a games executive, Spencer is uncommonly non-corporate. He speaks highly of Sony and Nintendo, often without provocation. And though at first that might strike you as some variant of reverse-psychology, he does it so often and in such a relaxed manner, you eventually conclude he's just being straight with you.

In his interview with GameSpot, Spencer had plenty of opportunity for straight talk, taking on questions about Xbox's first-party strategy, as well as the rise of Sony's third-party deals, along with some unfinished business regarding backwards compatibility.

GAMESPOT: Of the exclusive triple-A games you showed at Microsoft's Gamescom press conference, about a quarter were new IP. Do you feel that's a healthy ratio?

SPENCER: It's funny, until you told me that I hadn't run the Excel math on it [laughs]. The thing with new franchises is that they're difficult. This is going to sound funny, but you want to fail, because when you fail, it means you're pushing the boundaries of what's expected. So, you kind of need to know what the boundaries are of what's possible.

When you're starting new games, in terms of new ideas and mechanics, your fail-rate is much higher. That's why the ratio of new IP [versus old] is not going to be much higher.

But I'm so proud we opened the show with Quantum Break and Scalebound, and I know it's not a new IP, but I'm so glad we closed the show with Halo Wars 2.

Another trend I noticed was, among your exclusive games showcase, many of the triple-A titles were variants of the same third-person action template. Quantum Break, Scalebound, Rise of the Tomb Raider, Gears 4. Do you feel Microsoft's line-up needs to be more diverse, looking ahead?

I love the question, and I actually think it's an industry issue. But I would say, the nice thing about third-person is that the genre is fairly well known. Many people can play it. You see your character, and you see their personality. So as a canvass for storytelling, third-person is right up there.

Are you saying, then, that it's about diversity of story, and that the third-person action genre is a good template for that?

Well I was going to say, if games are about their story, they tend to gravitate towards that third-person perspective. But I do love games that try to push on mechanics. A game I played a few years ago now, but one that really stuck with me, was Brothers: A Tale of Two Sons. It was a really interesting dual-stick mechanic, that did something different, and when I find that, I love it.

Yes, you do find a lot of third-party action games from us, and I do think we should be pushing harder on diversity of genre and control.

Phil Spencer

So to your question about pushing for more diversity in terms of genre and mechanics, I think it's a great thing for this industry to push. So yes, you do find a lot of third-party action games from us, and I do think we should be pushing harder on diversity of genre and control.

Microsoft appears to be doubling-down on its first-party titles while Sony is securing a lot of third-party deals. How difficult is it to be successful, in terms of market share, when Sony is gobbling up so many third-party deals now? How difficult does that make your job?

So, they don't "gobble" the deals up. They buy them. You know, I read the same things you do, and I know some people think it's somehow less expensive to sign third-party exclusives if you have a bigger market-share. I can tell you, it has nothing to do with market share.

When you go in to do a deal, with a third party, that third party has its own view of the global market and the value of it. And they should, they should think about their assets and how valuable they are, just like anyone would when they are selling their goods.

I ran first party before I took on the job as head of Xbox. And when I was picked to do this job, I think people would have expected that my focus would be on first party. My view is, there are some bellwether companies out there in terms of first-party games, like Nintendo, which has incredibly strong IP, and a breadth of characters and games to play, which allows them to do a great job in lighting up peoples' interests.

I'll try to go back to the question and rephrase. Sony is getting a lot of exclusive deals with third party studios...

Well, it's buying them.

Yes, fair point, it's buying them, and it's buying a lot of them, and Microsoft isn't. I wonder if that makes your job much harder, I wonder if that's a case of two different strategies, and I wonder why it's happening in the first place.

So we're making a conscious decision to focus on our first-party games. It doesn't make it harder or easier, it's just a decision. I do think that building up first-party exclusives is creatively more difficult than signing a deal, just by the nature of what it is. But I'll point out too that Sony has some great first-party franchises. I'm a big fan of Uncharted, I thought that looked great at E3. I really admire the team at Naughty Dog, the team at Polyphony.

For us, right now Xbox is in a stretch where all its first-party teams are doing an incredible job. I'm proud of that as the head of Xbox, and as the head of first-party. To be able to open a show with Quantum Break, to be able to close it with Halo Wars, and to have Dave Jones and Hideki Kamiya on stage in between, makes me incredibly proud. Oh I should mention Forza too...

You have such an infectious enthusiasm. It's like you feel the need to thank everyone who went on stage.

[Laughs] Yeah, well, I do love games and what these people do. My Gamertag is out there, and I'm sure people who look me up on Xbox Live will know that I'm playing a lot of Destiny. That's not a first-party game, and it's one that Sony has a deal with, but I'll play games I love. As an industry, I think a lot of teams are doing great work.

I'll switch gears to backwards compatibility. I wanted to talk about third-party support for that.

Yeah we showed that on stage.

I noticed a couple of big publishers weren't on the list.

A couple?

Yeah Activision and Konami. Oh, and Take-Two. Do you anticipate support from these publishers, and others that weren't on the list?

We're having great conversations with all the publishers about backward compatibility. It's really been a good time for something like backwards compatibility to come around, because so many of the publishers have built more service-based games where they're able to find a business opportunity in the longevity of games.

Longevity can be through paid DLC or smaller transactions in some cases on PC and tablet. But engagement in franchises has become a critical measure for any publisher. So when you think about it, there's this opportunity to take franchise and get people re-engaged in it.

One of the things that's really exciting for me, and we announced this with Gears of War, Just Cause, and Rainbow Six, is that when franchises are releasing an Xbox One version, [publishers] have an opportunity to give them the Xbox 360 version at the same time.

I'll be honest, I didn't really have that in mind when we started thinking about backwards compatibility, but the studios have got the games, they realise they're not really selling them anymore, and can use them to introduce people who maybe didn't play the earlier entries in the franchises while growing engagement in the property itself. That's very valuable for a publisher.

Would you describe the New Xbox Experience for Xbox One as a complete dashboard overhaul?

Yes. We’re really proud of it, my main focus when meeting with the team has been on speed. I really want our dash to be quick, capable of starting parties quickly, and I want to have the ability to see what my friends are doing quickly. The team has taken that challenge and refined the UI around speed.

But also, watching what people are doing in today’s dash, how it has changed since launch, and examining the analytics you find things that you didn’t think people were going to get stuck on. So we used that data to refine what we’re putting out this fall.

Can you provide any insight into what that data revealed and what it made you want to change?

Parties is a big one. People want to sit in parties even if they’re not playing games together. It’s why we added it as one of the first things in Windows 10; we wanted people to be able to stay connected even if they’re on PC.

I find this when I’m on Xbox, people invite me to parties even if they’re playing something different from me, and we just hang out. There might be a time where we both hit the natural stopping point and we get into a game together, but we find it’s more of a social hangout than a thing that’s just for when someone says, "Hey, let’s go play a game together."

So when we brought that to Windows 10 and we found people were sitting on their PCs and staying in a party with people on Xbox. They’re always staying connected to their friends.

"I know some people think it's somehow less expensive to sign third-party exclusives if you have a [more popular console]. I can tell you, it has nothing to do with market share."

Phil Spencer

You’ve been head of Xbox for nearly 18 months. What do you think has been the biggest change you’ve made?

I won’t take credit for this, there’s a lot of people that deserve credit for it, but I’m really proud of the way that the team is bringing fans directly into what we’re doing.

We’re not alone in this, I think Sony’s done a good job with this, but we had fans in the hall here, as we’re doing our press conference, which we’ve never done at Gamescom. The feedback sites that we have allow people to tell us exactly what they think about the platform, whether it’s lame or great. That connection with who our customer is, along with press who are incredibly important to getting the word out and asking difficult questions from someone who knows the industry, is something I’ve seen grow. I think that’s great. The team has done really nice work on that and the fans have responded.

And finally, in that 18 months, what has been your hardest decision?

That's tricky. So, I did a Q&A with the fans in the hall after the media briefing and one of the Italian guys asked me about setting the language of his console to something that wasn’t Italian, and he wanted to decouple the console. You wish you could do everything that people want on the platform, you wish you had the bandwidth to make everything perfect, so to stand there and have someone ask you a question like that, you’re sitting there and you know, "Yes, this is something we should do, I’m going to add it to the list of things to do, like background music."

You probably felt my passion go up when you said say, "Sony’s gobbling up deals." That's because certain realities--whether it’s bandwidth of the development team, your own capability, or just the business dynamics you have--influence all the decisions.

You have to lead the product and give customers a reason to buy an Xbox. You want to have great franchises and be as transparent as you can be. It seems that there are many times when fans hit you with something like, "I’d really like you to go do this," or, "Why did you make that decision?" that makes you really want to please the fans. There's a lot of requests and energy from them and we do our best.