LOS ANGELES — Less than three months after being promoted to lead Microsoft’s Xbox business, Phil Spencer was on stage at the huge E3 game conference telling the world where the platform is heading.
Spencer is a University of Washington graduate who rose up through the ranks, starting at the dawn of interactive entertainment at Microsoft on CD-ROM products such as Encarta.
Before he was promoted by Chief Executive Satya Nadell on March 31 in a reorganization, Spencer was the head of Microsoft’s internal game studios producing franchises such as “Halo” and the “Forza” racing games.
So naturally Spencer used his E3 appearance to talk about games — games, games and more games. And not much else.
“I was the head of first-party studios. For better or for worse, they decided to make me the head of Xbox,” he explained in an interview afterward. “You take the game guy and you make him the head of Xbox, you’re going to get a program that’s led games first.”
Spencer’s presentation also reflected the humbler Microsoft that has emerged under its new leadership, emphasizing the importance of serving customers and responding to their feedback rather than forcing technology choices upon them.
Spencer acknowledged Microsoft’s flagship console, the Xbox One, is trailing Sony’s PlayStation 4. He believes building and showcasing a lineup of great games are what it will take to get ahead, the position Microsoft enjoyed with its Xbox 360 during the last generation of console hardware.
“In terms of what I was going to do in my first E3 … I wanted people to see the great content coming out this year,” he said. “If people are going to invest their hard-earned money in an Xbox One this year, I want to let them know what they’re going to be able to play in 2014. That was the first hour of our show.”
Here’s the rest of our conversation, in an edited format:
Q: You didn’t talk about TV or video services at all. Does that reflect what Phil Spencer is interested in, or metrics — responding to what people are interested in?
A: We have to win the gaming customer first. There’s no question in my mind about that. I wanted to spend this show letting gamers know that Xbox One is the best place for them to play, this generation.
I think TV and entertainment is critical to our long-term success. We see use of the HDMI and television on Xbox One’s incredible high. All of that is important. But I know if I don’t win the gaming customer I never get to any of that functionality, because you have to win gaming first before you can add all of that other functionality for people.
Q: You didn’t talk about Kinect at all.
A: I didn’t say controller, either. I think what we highlighted were the games and what was special about our art form and the space are the games that people love. A lot of the games that we showed use Kinect in one way or another … but I wanted it to be about creativity on screen, not the different system components that people use – ‘OK, this one uses the A button’ or something. I’m not trying to be flippant. If you go to our booth, you will see Kinect games playable on the floor.
From a show standpoint, just to be very honest with you, Kinect games don’t show always as well on stage because you end up watching this person move around and see something on screen. My creative take on it is putting the game play on stage of Kinect doesn’t always work from an entertainment standpoint the way I’d like it to work.
Q: Your presentation was relatively humble and talked a lot about responding to customer concerns.
A: It’s weird to talk about myself, but I think it’s me. Different leaders will lead in different ways. I’ve never been, I don’t think, the kind of guy that’s going to go up there and beat my chest about ‘I’m the smartest guy in the world’ or ‘I’ve got it all figured out.’
I think conversations between myself and our team and the community and what they’re doing — I think they’re critical to our success. It makes me better and I think it makes our team better.
In fact, just today we launched the feedback tool on Xbox.com where people can go up and give us direct feedback around what features of the platform they want to see us to continue to push, what we need to fix, what we should add.
Q: How do you think you’re doing now? You didn’t talk about numbers of consoles sold today.
A: Sony’s ahead of us. They had a great launch. I want to win. I took this job to win. I want Xbox customers who bought our console to think they bought the console that will have the right games to play and long-term support.
That’s why I’m here. My friends at Sony, they’ve done a nice job since launch but they’re the competition, as is Nintendo. It’s not personal, it’s business, but I want Xbox to be the best place to play, and I want people to buy an Xbox.
Q: How many months will it take for you to outsell the PS4?
A: I don’t know. I think we’re putting a product at the right price point out there with the best games lineup. That’s what the customers looking for.
This is going to be a big holiday for us; the next holiday’s going to be a big holiday for us. It’s a long-term commitment from me and the team.
Q: How concerned are you about the status of Xbox as a Microsoft business unit, with the evaluation of the company that’s going on and the recent comment by Bill Gates that perhaps Xbox could be spun off? Do you have to win internally as well as externally now?
A: No, I talked to Satya before I took this job. He and I had a good conversation about Xbox, Microsoft consumer brands, how important Xbox is as a consumer brand for the company.
I feel like we’re having a good show. Our competition will have a good show tonight. We are making long-term decisions about investing in this platform and the company’s completely behind what we’re doing.
Q: Before Satya became chief executive he talked about how Microsoft learned from Xbox — how building Xbox Live helped it create Azure. Are you now consciously doing research and development for the broader company?
A: We’ve never really had to focus on it that way. It is true that games have been a hotbed of technology investment for a long time — not just for us, for many people. A lot of the emerging technologies you see in the industry started somewhere in games whether it’s high-end physics, whether it’s visual fidelity of something that looks lifelike, VR [virtual reality] you hear a lot about now. Our use of the cloud and Xbox Live is a major investment for the company. The work that we did around “Titanfall” and Xbox One and Xbox Live have been really instrumental in us learning more about cloud compute and Azure and how that grows.
There are many parts of our long-term roadmap with Xbox that will be linked with what Microsoft is doing.
Q: How many more big new franchises will you create? Not just Microsoft, but companies like EA are pretty sequel-heavy. Do you need to build more big, new franchises to beat Sony?
A: I think investing in the big triple A exclusives is critical to us, yeah, and we’ll remain focused on that. I think we have a good lineup right now…. Those big console exclusives are the thing that drives platform choice.
Q: Sony has Morpheus, Facebook has Oculus. Were’s Microsoft on virtual reality and headgear?
A: I think it’s great people are experimenting with things like VR. I wouldn’t really call it a mainstream technology yet.… It’s something that we will watch and I think our industry will watch and our customers will watch.
We’ve wanted to make sure the Xbox is at the forefront of any technology investment whether it’s streaming video or something like Kinect and voice and people can just take confidence that we will stay connected to any of these kind of technologies that would impact our platform in a positive way.
Q: Microsoft has become so cautious about sharing its roadmap. If you’re not showing developers that you’re working on far-out stuff, it seems like there’s a risk you won’t get them as excited and thinking the really next generation stuff is going to happen on your platform.
A: Our ID@Xbox [developer] program — we’ve had thousands of developers sign up. I think some of this has been because we’ve shown them a roadmap of what they can do with cloud and Kinect and Live and Xbox One. It’s great to see them linking up.
I think about that ID@Xbox program as something we can look at across all of Microsoft and say, “OK, why are we having such success with this thing? Is there a way for us to look at that as a model for other things at the company.”