Phil Spencer knows the Xbox lost its way. With the Xbox One exclusive Halo 5: Guardians out on October 27th and a slew of top level changes to how people use the console, the Xbox chief is now confident that the game console and its platform are back in a position where they can begin leading the industry instead of playing catch up. "This is a great time to come to Xbox One," Spencer says. "When you look at the totality of what's happening this fall, it’s a really interesting time."
Spencer says the team started from the right place. He’s not referencing when the Xbox One launched in November 2013, but when he was promoted to division head the following April after a months-long whirlwind of controversy. "Let's give gamers choice," he says of the mentality he brought to the job. That decision has sparked one of the more remarkable gaming turnarounds in recent memory. Going from pissing off players to pleasing them is a rare feat in an industry whose dedicated fan base does not forgive easily.
"Let's give gamers choice."
The decision to reorient the Xbox One as a gaming device meant effectively hitting the reset button. Microsoft, in the run up to the Xbox One launch, laid out an ambitious but controversial vision for The One True Living Room Content Box. Plugged between your television and your cable box, it would let you watch live TV, listen to music, play video games, talk on Skype, and download apps — like a smartphone for your television, except controlled via Kinect with voice and gestures. The strategy also envisioned an all-digital future where GameStop, and its bins of used games, wouldn't vacuum up all the money that could be going to developers — and Microsoft for maintaining the digital storefront, of course. In this future, the Xbox One would need to connect to the internet at least once every 24 hours to digitally check in.
Hardcore gaming fans were not pleased with Microsoft’s "closed garden" approach, Kinect failed to connect. and the company ended up removing or downplaying much of the early functionality that would have made the Xbox One more of an all-in-one entertainment box than a gaming console.
Don Mattrick, the public face of the Xbox entertainment mindset, left the company to join Zynga shortly after Microsoft's unpleasant E3 showing. Spencer, having run Microsoft's internal game studios, took charge eight months later in an expanded role that put him in charge of the entire business.
Spencer has in the past acknowledged the woes of the early Xbox One days, when Sony's competing PS4 was crushing it in sales and the Japanese game maker was taking monthly victory laps in the form of press releases. When he took the job, Spencer said outright in a video published online that Microsoft made the wrong decisions and that it would now need "to revisit those decisions."
"The teams are the ones that really delivered," Spencer says of the various groups within the Xbox division that helped roll out a series of new features and improvements to the platform over the last year and a half. "The things that we centered on pretty early is: Let's make sure it's clear on team Xbox who our customer is — and putting them in the center." Phil Spencer made a big move of his own, marking his early tenure as Xbox chief by unbundling the Kinect from the Xbox One, sending a strong message to consumers that the Xbox would be a gaming-first box.
Under his direction, Microsoft announced at E3 this past June that the Xbox One would gain backwards compatibility from an upcoming system update. The solution was a complex software emulation that would run on the Xbox One and let you play your old Xbox 360 games. It was a defining moment for the Xbox One, enticing the millions who had invested money into the software of the previous generation to finally upgrade to the current one.
Backwards compatibility was a defining moment for the Xbox One
There is also Windows 10. The new Microsoft operating system, released in July, made plans to marry the Xbox platform to the PC. The announcement of a Windows-powered Xbox App, that allows players to stream games from their Xbox One to their computer, created some good will for PC gamers who felt Microsoft had left it behind for the console arena. And when Xbox is updated in November with Windows 10, console gamers will have a reason to start spending some money on Windows apps as well.
Spencer says that the Windows 10 launch working in parallel with the Xbox One’s gaining momentum wasn’t planned. "It just happened to come along at the same time, which made it a really interesting time to be on the Xbox team," he says. It's still a work in progress. The company has also enabled cross-play and cross-buy features to sweeten the experience of purchasing titles across devices. In a partnership with Oculus announced in June, Xbox One games will be playable on a virtual reality theatre inside the Oculus Rift headset, which launches next spring. And there are signs of some more exciting developments yet to be announced — Spencer has hinted in the past that streaming from PC to Xbox One may be in the cards.
"We want to lead and we want to be bold."
It's those kinds of partnerships and technical feats that Spencer wants Microsoft to get behind. "We want to lead and we want to be bold," he says. However, that also means preparing gamers for the inevitable end of buying discs and, in an ironic twist, an acceptance of many of the elements Microsoft tried to instill in the original Xbox One vision. It's part of gradual move within the console gaming industry toward games-as-services that resemble the more lucrative and longer-lasting titles found on PC and mobile.
"It is a business. Not every gamer is going to love it," Spencer says, recalling the initial backlash Microsoft faced for trying to force change on consumers. Yet whether those changes one day mean not having the ability to sell back your games for cash — because they exist only digitally — or at some point needing an internet connection most of the time to play, Microsoft has learned a better way of communicating how it moves forward. Spencer calls it the "lens of the console gamer."
"Gamers sense that the team understands them and hears them," he says, "and wants to do the right thing."