Phil Spencer has spent 26 years working for Microsoft.
He’s worked across divisions and on products that range from Encarta and Microsoft Works, to Fable and Halo 4.
He has quite the CV and, as a creator at heart, was perhaps the obvious choice to succeed Don Mattrick as the head of a new-look Xbox business.
But for all that experience, he tells MCV that he has never learned as much as he has over the last 12 months. 12 months that has seen his beloved Xbox fall from grace, lose face in front of its fans and give up market leadership to PlayStation.
Talk to Xbox fans and they’ll tell you Microsoft has abandoned them. That since it released Kinect in 2010, the company has been more desperate to win over the mainstream than look after its core fanbase.
And last year’s Xbox One reveal, with all its controversial business models and TV functionality, only seemed to confirm their suspicions.
Now, a humbled Phil Spencer says his mission – and that of the entire business – is to rectify that. And prove to the gamers that Xbox remains a console for them.
Here, he tells MCV all about it.
What has changed at Xbox now and why does it matter?
My position within the Xbox organisation has been running Microsoft studios, which is our first party gamedevelopment and entertainment development arm across all the platforms. And what we have just done is combine the organisation of Microsoft’s studios with our Xbox platform team and our Xbox Live platform team – included in that is Xbox Music, Xbox Video and Xbox Reading – to create one organisation that’s completely focused on Xbox and completely focused on gaming, across Microsoft’s platforms, with one leader, so that we can make decisions more quickly and real focusing on Xbox gaming entertainment across all Microsoft platforms, leading with Xbox One.
So what are you going to do differently?
The focus for us, obviously, is on Xbox One and how we think about the complete ecosystem of everybody who is looking for the platform to succeed. It starts with the gamers, the people wanting to play great games, and ensuring the creative process of building games has a direct communication pipe into the platform and service that we run with Xbox and Xbox Live. So it starts with the gamers and what they want, but it obviously moves pretty quickly to the developer ecosystem. And we think about developers all the way from those two guys in a garage that come in via that ID@Xbox programme, all the way through to our biggest partners like EA, Activision, Ubisoft and Take-Two. And we are making sure that we have got one organisation that’s completely focused on the end-to-end business, creative and platform operation of Xbox One, leading with gaming.
Fans have accused Xbox in the past of not leading with gaming. You’ve talked openly about the challenges Xbox has faced over the last 12 months. So what’s the strategy to convince these fans that you are genuine about building a product for them?
The last 12 months has been a real learning experience for me as a leader in this organisation. I am coming up to 26 years working for this company and I’d say there has never been a time in my history at Microsoft where I have learned so much about really staying core to what the soul of your product is. We believe we are a gaming-led business with Xbox. So focusing on the core gamer is critical to our success. And for me in this position, it is about getting back to that core and making sure the product we are building is resonating with that first customer that lines up at midnight to go buy your game or you console. The person that is on those boards and on the Twitter feeds giving you that active feedback. And we must make sure that we are really listening to what our customers and our fans have to say about the products we have in market. We must be reactive, be humble and also be confident in the product that we have built. For me, the learning experience over the last 12 months has been instrumental in where we are today, and frankly a strong part of me moving into this position is something that I wanted to do. I believe in this Xbox brand and this programme that we have put in place. I believe we are in this business for the right reasons. And I want to make sure that our brand resonates with fans in that way.
"I am coming up to 26 years working for this
company and I’d say there has never been a time
in my history at Microsoft where I have learned
so much about really staying core to
what the soul of your product is."
– Phil Spencer, Xbox
Is the reorganisation a reaction to what occurred last year?
No I don’t think the new organisation is a direct reaction to what we have learned. I think, and the customers will be the final judges of this, we made some changes to the programme last summer after we got feedback from our launch event and E3. And those were reactions to what fans were telling us they wanted from the programme. And that was obviously prior to any organisational change. This organisation change is really about increasingly the focus and cadence that we can have in the Xbox business, which is a vibrant business with strong competitors from all of the place and gamers who are really eager to continue to see the evolution and revolution of the gaming ecosystem that they play on. So for us this is all about capability inside the company and making sure we have a complete focus on Xbox and gaming.
PlayStation has already opened quite a lead on Xbox. Is the battle already lost?
We are early on in this console generation when you think about the multiple years that a console generation runs. We have obviously had the most successful Xbox launch that we have ever had. And our competitor has done incredibly well as well, and congratulations to them. The story I like to think about is six to nine months ago both Sony and us were hearing about the death of consoles and whether consoles were still relevant. And here we are, early months into the launch of this generation, and we have both sold more consoles than we have ever sold at launch. You are seeing an incredibly vibrant console ecosystem, with customers coming in and buying the consoles, we have seen great attach rates with people buying games and the time people are playing on the console is incredibly high. The competitive race still has many years to play out, but I will say I think it is a good time to be a console gaming company, and I feel like the path ahead is incredibly strong for us if we continue to stay focus on the customer that we really need to win with.
You’ve lost Marc Whitten recently, and Chris Lewis has left in Europe. Do you need to recruit new faces to your management team?
People are the core of everything that we do and we are always on the look-out for great people to add to the organisation. Your neck of the woods we obviously brought in Phil Harrison a couple of years ago, which really helped us accelerate our growth in Europe – both on the studio side and with the success of Xbox. In recent years we have brought in Nancy Tellem from PBS to help grow some of our video and TV operations. People like Matt Booty who used to be the CEO of Midway. Kudo Tsunoda. Bonnie Ross running Halo. And on the Xbox side, you have a strong set of platform leaders over there, Ben Kilgore has been on the Xbox business for quite a long time. Mike Angiulo is running the Xbox hardware business, and I’d be remiss if I did not bring up Yusuf Mehdi, who has been my partner in driving marketing and strategy for the Xbox programme, and he will remain in that position. But if you have any good resumes out there I will always be interested in hearing from good people, so let me know.
"I am spending 90 per cent of my time
looking at our launch line-up for E3."
– Phil Spencer, Xbox
There’s been a lack of games coming to the retail in the box market. Is that just the normal lull you see post-launch of a console. Or is this indicative of where the market is going, with most products launching digitally?
Obviously for us, we are just coming off the heels of Titanfall, which was a major launch for us on Xbox One. It saw the highest usage on Xbox Live in the Xbox One generation to-date in that first week. We feel really good about that. And the attach rates for our launch games were really high. And now I am spending 90 per cent of my time looking at our launch line-up for E3 and into the fall, and the line-up of new IP and sequels is really strong. And the content that we have see coming over the spring has continued to keep the run-rate of Xbox doing well, with new exclusives. And when we go into E3, it is going to be a great show, packed with games from beginning to end. And then starting in the fall, you are going to see another great list of new IP and franchises coming that will keep gamers excited. The ebb and flow of when games come out is an art form and it would be nice if one could be penciled in every week. But that’s not what leads to the best product and we stay focused on our games and our partner games to make sure we get the best titles to market at the right time.
How successful was Titanfall?
It’s an Electronic Arts game so you’d have to ask them specifically. I am not privy to their knowledge. I just look at usage of the console, and the week after Titanfall launch we had the highest Xbox Live usage on Xbox One. It means the game continues to perform as gamers keep playing. But EA is the ones to go for for specific data. I will say it is doing well.