Bungie jumped, Bizarre was bought, and Bioware went to EA. If you believe the pundits, the past month has been tumultuous and troublesome for Microsoft Game Studiosâ?? as its development partners go elsewhere. But MGS general manager Phil Spencer would beg to differâ?¦

Game On – Part 1

Let’s start with the the Bungie divestment – what are your thoughts on what has happened?

Being a game publisher means you have to properly manage that relationship with the creative talent. That is the strength that we must nurture – so when you build a partnership with a studio you have to acknowledge what will help make it strong as it can be, and as collaborative as it can be. Sometimes those relationships require an acquisition; sometimes there’s cards on the table, like IP ownership or sequel rights.

In terms of Bungie, our relationship with them now has never been stronger. Our relationship over the future of Halo, and at the same time making new Halo games, is probably at the most collaborative point it’s ever been at – and that’s what it’s all about. People can sit back and say ‘no, you have to have this kind of relationship with a developer in order to get what you need’, but that’s not really a long-term strategy. The right way to do things is just make sure the publisher and developer trust one another.

Do you think they’ll be stronger and working harder now that they are out of the comfier confines of being an in-house team?

I’ve got complete confidence in Bungie’s ability to run itself as an independent entity – as it did before we acquired them. I don’t know if they’ll be stronger as a studio in the long-term – I’m not convinced of that. And I don’t know if the strains of running a business on their own will hurt or help them. I do think that, however, the ‘live or die’ mentality that comes from being on your own, the kind of entrepreneurial spirit that kicks in, will really help the team re-motivate themselves. Bungie has made Halo games for quite a while – look at a studio like Rare, or some others out in the industry that has the chance to work on multiple projects, Bungie needs to get to that point. So where they are now should help them expand as they control their destiny.

What does the Bungie move say about Microsoft’s attitude towards acquisitions – are you moving away from them?

There’s really no formula we’re running at Redmond saying how many in-house or independents we want to have. It’s on a case-by-case basis and looking at the kinds of games or relationships we want to have. If a studio came to us today with an idea we’d talk to them about what they want to get out of the idea, what we as a publisher want out of it, and then build the business relationship between the two to make sure we both get what we want. I remember about five years ago I was sat in Las Vegas with Epic about a game called ‘Warfare’ – which turned into Gears of War – and talking about our relationship, and working out that relationship from the beginning to make sure that the end result was something we’d both be happy with. So that’s one example which has been fruitful but doesn’t mean we have to own them. Of course there are partners like Rare or Lionhead, a more recent acquisition, were you end up at a different result but still have the same great relationship.

And what was Microsoft’s reaction to Bizarre’s acquisition?

I love Bizarre Creations, I think they’re a great studio, and we’ve known them for a long while – they’ve helped us launch two platforms. I look at them as pioneers on Live with PGR2 and I will miss working with the team, but this opportunity came along for them. For where Martyn [Chudley] wanted to focus right now, and where he wanted to take the studio, it was right for them. We did talk to them before they made the final call on it, and in the end we had to look at what they wanted versus what we might have done with them. But it was best that they followed their hearts, and I wish them well. And it’s a small industry in some ways – who knows what will happen in four or five years or who we might be working with then – so it was best for us to make sure our relationship supported them.

I will miss working with them, but we are committed to PGR, and we will find other ways to get PGR done.

So are you looking for another team to get that game done?

We don’t have any clear set answer for how PGR5 might come to market yet, but we’re looking at a lot of different alternatives right now. Obviously [Forza creators and internal MGS studio] Turn 10 is a strong team, and they’re really focused on Forza and it’s doing well so I wouldn’t want to distract them, but it is an option. And of course there are some great independent racing studios we are going to talk to as well. We have a real place for PGR in our portfolio, and we know what it means relative to Forza, and some of the third party alternatives are not comparable.

PGR does really well as a European property as well – it does really well as a global franchise too, but the sensibilities that come from a studio in Europe really shows in the sales success it has had.

In terms of another acquisiton, the BioWare/EA deal has been perceived as a blow to MGS as well, especially as you’re publishing Mass Effect, and have presumably lost the potential sequel to that game…

Don’t assume that – we’re having discussions with BioWare. The first Mass Effect is still to come out, and I don’t want to get away ahead of that – the game has been built completely by that developer’s rules; it’s BioWare telling a story the way they want to tell it. So firstly I want to see how gamers respond to that. As for our future in that franchise – we feel very good about it, it’s still something that plays an important part in our portfolio, BioWare are a great partner, and I’m looking forward to discussing what we can do with them.

But with the Bioware, Bizarre and Bungie news, many have speculated that it’s a sign of weakness on MGS’ part. One news site said the foundation of Microsoft Game Studios seems to be “built on quicksand”.

I will say – and I mean it respectfully – that I find it all a little humorous. I don’t think people sometimes completely understand the relationship between a publisher and a developer. But I know what our relationships with our partners are, and I know the collaboration. I think speculation is fine – it’s good to have smart people talking about what’s going on. But I think this time next year, when we’re sat here talking about a great Banjo game or a great Fable game, or other upcoming games, it will all be a distant memory. I understand the speculation – but quicksand in our foundations? No way.

So there are no problems, as people have assumed?

Not at all. In fact, I don’t think there’s been a time at MGS when I’ve been able to go back 12 months and look forward to see how great our portfolio has done.

You talk about one or two future games there. Over the past 12 months MGS has been prolific – Halo 3 Crackdown, Forza 2, Blue Dragon, Shadowrun and others – the speculation about your relationships with developers has also commented the lack of noise around 2008’s titles…

Well there are games announced that are due next year – Fable 2, Banjo, Halo Wars. Those are some big games coming up. There are other games that will come.

One of the things we don’t want to do now is getting ahead of ourselves and showing games too early. I don’t think we do a service to our games community when we show games which we’re not completely sure of what games they are going to be. I have a real sense of responsibility to those consumers that have bought our platform, and want to be comfortable that when we show a game we have belief in that game and think it is representative of what it might be when that game comes out. I’ve seen games too early – or even things shown that aren’t the game, to try and build excitement about that game, but for us I’m not about doing that. For instance: we preferred to show Halo through the Halo Beta and actually show people ‘Here’s where we are’ and let that progress through the summer – that means we’re playing fair with our audience.

Certainly there has been a tendency in the past with some titles to release press assets that aren’t exactly accurate – do you think that ends up hurting the hype?

It certainly makes people ask questions. When we’re asked what’s coming up in the next two to three years, well, there’s tons we’re working on and we’re going to show them – not ‘when they’re ready’, or play some egotistical trick – but show them when they are ready to be shown.

One the experiences I’ve really learnt from the past few years was showing Too Human at E3. I’m proud to say that the game has really turned itself around – but we showed it too early back at that E3 – both Denis [Dyack, head of Too Human creator Silicon Knights] and I will put our hands up and admit that. Now we’ve since had a press event at the studio and had a great response to the game, and we’ve learnt to show a game when it’s ready.

It’s been six months since Microsoft Game Studios officially opened in Europe – what’s progress been like?

We’ve built a team here now. Key for us is finding great European talent to help us both understand the development community here better, and more importantly understand the gamers in the European community. Our portfolio now, and the games coming over the 12 months, is very well targeted towards different groups – but I think we can do better at that. So helping us have a base of publishing here, filled with people who are from here will help us achieve that. And clearly for us the basis of our success is building good relationships with creative talent – that’s our number one focus overall.

So have you found games ideas in Europe that you’re publishing or are you still looking?

Well, we’re always looking for good ideas. One of the strengths we’ve had in the life of 360 to date has been the strength of new IP we’ve brought to the portfolio – things like Crackdown, or something like Too Human or Gears of War. Finding those games has been very much about talking to the talent behind it and asking them what they want to make and discussing how we, as a publisher, can work on those games. We’ve definitely going to have other similar such fresh ideas come from European developers.

Do you now think you’re competing better for European talent compared to those publishers – and format holders – which have been more active in Europe?

Well, there are a number of publishers with headquarters here who have been able to just hop on a plane to Vienna or Spain and have a quick conversation about a game. Being based here has made that easier, so we’re certainly closer to talent now.

Part two of this interview, in which Spencer discusses why he’s letting Rare make a DS game (and what it will teach Microsoft Game Studios), plus his thoughts on the Silicon Knights vs Epic court case, and growing the software market, can be read here.

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