Podcast Summary
Microsoft's Gaming EVP discusses pandemic's impact and future of gaming: The pandemic boosted gaming trends, Microsoft offers online, subscription, and streaming services, and Microsoft aims to expand game streaming on Apple and Google platforms
Phil Spencer, Microsoft's Executive Vice President of Gaming, discussed the current state and future of gaming during the launch of the new Xbox consoles. The pandemic has accelerated gaming trends, leading to mainstream popularity and an inflection point for game streaming. Microsoft offers various services like Xbox Live, Xbox Game Pass Ultimate, and XCloud, which include online gaming, game subscriptions, and game streaming, respectively. Spencer shared his thoughts on the impact of the pandemic, the decision to launch two consoles, and the challenges with pre-orders and supply. He also touched upon the competition with Sony's PS5 and the future of game streaming, including Microsoft's efforts to get its streaming service in Apple and Google app stores. The conversation provided insights into the gaming industry's evolution and Microsoft's strategies in this space.
Gaming Surges in Popularity Amidst Pandemic: The pandemic accelerated the growth of the gaming industry, making it a powerful means for social connection and entertainment. New communal games like Among Us, Fall Guys, and Animal Crossing emerged, and content creation democratization led to a new generation of creators.
The gaming industry has experienced a significant surge in popularity during the COVID-19 pandemic, acting as a powerful means for people to connect and entertain each other. This trend was already underway but has been accelerated by the need for social distancing. Gaming has always been a communal activity, with platforms like Twitch, Discord, and YouTube allowing players to come together and share experiences. The pandemic has brought genres like Among Us, Fall Guys, and Animal Crossing to the forefront, providing a welcome distraction from the realities of the world. Moreover, the industry's democratization of content creation has given rise to a new generation of creators, further solidifying gaming's place in our culture.
Lessons from Microsoft Leaders Shaped Xbox Chief's Decision Making: Xbox head Phil Spencer learned consistency, focus, customer connection, empathy, and empowerment from Bill Gates, Steve Ballmer, and Satya Nadella, shaping his approach to making decisions about new console launches, such as releasing two consoles at once, the Xbox Series S and Xbox Series X.
The leadership styles of Bill Gates, Steve Ballmer, and Satya Nadella at Microsoft have shaped Phil Spencer's decision-making approach in his role as the head of Xbox. Spencer learned the value of consistency and focus from Gates, the importance of customer connection from Ballmer, and the importance of empathy and empowerment from Nadella. When making a decision related to the launch of a new Xbox console, Spencer considered the potential impact on customers, the importance of competition, and the company's commitment to making a positive impact on the world. The decision to release two consoles at once, the Xbox Series S and Xbox Series X, was a bold move that required a balance of these learned principles. Spencer drew on Gates' competitive spirit to ensure the consoles offered unique value to customers, Ballmer's focus on the customer experience to ensure the consoles met their needs, and Nadella's empathy and commitment to empowerment to ensure the consoles were accessible to as many people as possible.
Expanding the gaming market with two console options: Microsoft launched two next-gen consoles, Xbox Series X and S, to make gaming more accessible and inclusive, attract new customers, and contribute to industry growth
Microsoft's decision to launch two next-generation consoles, the Xbox Series X and S, was driven by their commitment to making gaming more accessible and inclusive, despite the added complexity and potential supply chain challenges. The company wanted to expand the gaming market by appealing to a wider audience, including those who might not have been able to afford the more expensive Series X. This approach was a deliberate choice to focus on growth by attracting new customers, rather than solely relying on increasing revenue from existing ones. Microsoft believed that by offering a lower-priced option, they could bring more people into the gaming community and contribute to the overall growth of the industry.
Xbox Series S and X: Differentiated by Cost: Xbox Series S and X are popular due to their distinct price points. Xbox Game Pass is a successful unifier, bringing more people to the Xbox community. Microsoft struggles to meet demand due to high sales.
Microsoft's Xbox Series S and X consoles, with their different price points and capabilities, are resonating well with consumers, who primarily differentiate between them based on cost. The Xbox Game Pass, which aims to unify the Xbox experience across various platforms, is also a success in bringing more people into the Xbox community. Microsoft started manufacturing the consoles late summer, but due to high demand and limited supply, units are selling out quickly at retail shelves. The development of the console was completed before manufacturing, and units have been shipping to retailers for several months. Despite the challenge of keeping up with demand, Microsoft is pleased with the positive response to their new hardware.
Microsoft Prioritizes Xbox Series X Production During Holidays: Microsoft prioritizes Xbox Series X production during holidays due to high demand and pricing considerations, adjusting production ratio for Series S in spring and summer.
The current high demand for gaming consoles, specifically the Xbox Series X and S, is leading to supply chain challenges and limited availability. Microsoft is working to increase production but is facing physical limitations in manufacturing capacity. The company made a strategic decision to prioritize the production of Series X consoles during the holiday season due to consumer demand and pricing considerations. However, they plan to adjust the production ratio between the two models in the spring and summer. Despite the challenges, Microsoft values its retail partnerships and is exploring ways to improve the consumer experience, such as allowing customers to reserve their console purchase and pick-up dates. The traditional release model of consumers lining up to purchase consoles on a specific day may not be the most effective solution in today's e-commerce age, and Microsoft is considering alternative approaches. Overall, the console market is experiencing significant demand, and Microsoft is working to meet that demand while also providing a positive consumer experience.
Breaking down barriers in the console industry: Collaboration and innovation, like cross-play, can help create a positive and inclusive gaming environment, reducing negativity towards competitors and improving customer satisfaction
The console industry, despite its successes, still faces challenges with customer satisfaction and tribalism between consumers. The speaker expressed his love for the industry but acknowledged the destructive side of competition, where some consumers take it to an extreme by damaging consoles or rooting for failure of other brands. He emphasized that the industry should focus on creating great products and catering to the needs of consumers, rather than fueling negativity towards competitors. The speaker believes that collaboration and innovation, such as cross-play, can help break down these barriers and bring people together in the entertainment industry. Ultimately, the goal should be to create a positive and inclusive environment where all consumers can enjoy the best gaming experiences possible.
Microsoft sees gaming as a collaborative industry: Microsoft focuses on the global gaming market's growth and transformation, committing to delivering new, great games for Xbox fans, with a long-term perspective on industry success
Microsoft views gaming as a collaborative and growing industry, rather than a competitive one where others must lose for them to win. Phil Spencer, Microsoft's Head of Gaming, emphasized that Microsoft's perspective is to focus on the global gaming market's transformation and growth, with Microsoft playing an important role. In the console launch context, Spencer acknowledged the importance of having standout titles and regretted not having Halo Infinite ready for the Xbox Series X/S launch. However, he emphasized the fan promise and commitment to delivering new, great games for Xbox fans. The focus is on the long-term growth and success of the gaming industry as a whole.
Xbox Head Sees Future of Gaming in Hybrid Model of Cloud and Local Compute: Xbox boss Phil Spencer envisions a future where games utilize both cloud streaming and local hardware for optimal performance and experience.
Phil Spencer, the head of Xbox, believes that the future of gaming lies in a hybrid model of cloud streaming and local compute capabilities. While he acknowledges that game streaming is an inevitable trend, he doesn't think it means the end of local hardware. Instead, he envisions a future where games can take advantage of both the power of the cloud and the capabilities of local devices. Spencer also expressed excitement about the Xbox Game Studios lineup and the upcoming acquisition of Zenimax and Starfield. Despite missing the launch window for Halo Infinite, he remains optimistic about the game's eventual release and the overall health of the team. Additionally, Spencer addressed the potential inflection point for hardware, acknowledging that it's a possibility but emphasizing that the company will continue to react to what fans and customers want. He used examples of streaming audio and video to illustrate how local hardware can still be relevant in a streaming world.
The lines between traditional entertainment devices are blurring: As technology advances, media delivery consolidates into single devices, but dedicated gaming consoles and other devices aren't obsolete yet. Companies must adapt to meet changing consumer demands and competition from tech giants, focusing on low latency, safety, and security for multiple users.
The lines between traditional entertainment devices, such as gaming consoles and TVs, are becoming increasingly blurred as technology advances. The convergence of various forms of media delivery, such as streaming and app platforms, has led to the consolidation of functions into single devices. However, this doesn't necessarily mean the end of dedicated gaming consoles or other devices. Instead, companies will need to adapt and evolve to meet changing consumer demands and competition from tech giants like Apple and Google. The amount of compute capability in our homes is increasing, not decreasing, and gaming is expected to be a significant part of that. Ultimately, the key will be to provide low latency, safety, and security while allowing for multiple users to play together on different screens.
Microsoft's Plan to Bring Xbox Cloud Gaming to iPhone: Microsoft is working on a web solution to bring Xbox Cloud Gaming to iPhones due to Apple's restrictions on storefronts. Apple prioritizes its own subscription service, Apple Arcade, while Microsoft emphasizes openness and competition on large compute platforms.
Microsoft is exploring alternative ways to bring Xbox Cloud Gaming (XCloud) to the iPhone, as Apple has not allowed a storefront on the device. Microsoft is currently planning to use a web solution, allowing access to capable web browsers and bringing games to a wide range of devices. While Apple remains open to the user experience Microsoft wants to provide, the company is prioritizing its own subscription service, Apple Arcade, on its platform. Microsoft believes that as compute platforms reach large scales, there's a responsibility to keep them open and allow for competition. However, Apple and Google, as platform holders, have different business models and scales compared to game consoles. Microsoft sees a significant difference between the two and believes that maintaining openness and allowing competition on large compute platforms is essential.
Microsoft's approach to acquisitions benefits third-party developers: Microsoft views Game Pass as a platform, not just a subscription service, and invests in content to attract customers, benefiting third-party developers by increasing visibility and providing distribution and monetization capabilities.
As platforms grow in scale, they carry a significant responsibility, particularly from a legal perspective. Microsoft, which has faced regulatory scrutiny in the past, recognizes this and aims to ensure that its acquisitions of game studios, such as ZeniMax Media, benefit not only Microsoft's Game Pass subscription service but also third-party developers. Microsoft views Game Pass as a platform, not just a subscription service, and wants third parties to see the distribution and monetization capabilities as beneficial to their businesses. Microsoft invests in content to attract customers and create a scalable flywheel, recognizing that smaller games struggle with discovery and that Game Pass has been an effective avenue for increasing visibility. The fundamental difference between Game Pass and streaming services in other media industries is that games are still for sale, and Game Pass can help smaller games gain traction.
Microsoft's Game Pass drives game discovery and growth: Game Pass acts as a marketing tool for game developers, attracting subscribers and creating a community, ultimately increasing the value of the subscription and providing a platform for third-party developers to monetize their content.
Microsoft's Game Pass subscription service is revolutionizing the gaming industry by acting as a powerful marketing tool for both first and third-party game developers. By investing in first-party games and curating a large library of titles, Game Pass drives discovery and growth for games on the Xbox network. This viral marketing effect is reminiscent of Netflix's early days, where licensing third-party content attracted subscribers, who then became invested in the platform and its original content. However, unlike Netflix, Microsoft is focusing on attracting third-party developers to the service and providing them with a platform to grow their audiences and monetize their content. This symbiotic relationship benefits both Microsoft and the game developers, as it increases the value of the Game Pass subscription and creates a moat around the content. Ultimately, Game Pass is not just a distribution platform but also a community-building tool for game developers, enabling them to engage and grow their fan bases.
Subscription models changing gaming industry: Publishers take creative risks with subscription model, focus on engagement time, explore new genres, offer safety net for developers, measure success by hours played, and have flexible deals with platforms
The subscription model of gaming platforms like Game Pass and Apple Arcade is changing the way publishers approach game development and commissioning. With the focus on engagement time and the ability to reach a larger audience, publishers are taking more creative risks and exploring new genres. The business model also allows for more opportunities in episodic content and delivery methods. For developers, the subscription model offers a safety net with guaranteed returns and the potential for retail sales. The success of these platforms is measured by hours played, rather than catalog size or retail price. The deals between developers and platforms are flexible, ranging from flat fees to usage-based payments. Overall, the subscription model is opening up new possibilities for both publishers and developers in the gaming industry.
Xbox's Hybrid Business Model and Hardware Innovations: Xbox explores a hybrid business model for Game Pass, aiming to benefit both parties, while also planning to add API calls for haptic feedback to its controller for cross-platform compatibility.
The gaming industry is constantly evolving, and companies are experimenting with various business models and technologies to stay competitive. When Xbox started with a usage-based model for Game Pass, many partners were skeptical and preferred an upfront payment model. However, Xbox hopes to find a hybrid model that benefits both parties, allowing them to share upside and cover downside risks. This model has led to the funding and creation of games that might not have been greenlit otherwise, similar to how Netflix has produced shows that wouldn't have been made under traditional broadcasting models. Regarding hardware, Xbox admires Sony's innovation with the DualSense controller and its integration with the PlayStation system. Xbox recognizes the benefits of owning the entire hardware stack but also sees the opportunity to be everywhere by commoditizing a little. However, executing advanced haptic technology on every phone in the world with low latency would be challenging. Instead, Xbox plans to add API calls for haptic feedback and rumble to its controller, which already works on Apple and Android devices. Overall, the gaming industry should learn from each other's innovations, whether it's business models, controller tech, or VR. By staying open-minded and adaptable, companies can create platforms that developers and players will look for, ensuring long-term success in the ever-changing gaming landscape.
Microsoft's approach to Xbox controller innovation: Microsoft recognizes the importance of the Xbox controller's ubiquity but aims to innovate beyond gaming scenarios, learn from competitors, explore cloud and edge technology, and contribute positively to the gaming community.
The ubiquity and common expectation of the Xbox controller, despite its limitations, presents both opportunities and challenges for innovation. The controller's widespread use extends beyond gaming scenarios, making it a strength in terms of user experience and expectation. However, Microsoft recognizes the need to consider various use cases and adapt to new technologies. The company is looking at what other companies do and learning from them to enhance their offerings. This discussion also touched on the intersection of cloud and edge technology, where local hardware can still be innovated upon, even with cloud streaming. Lastly, the increasing prominence of gaming in the entertainment industry brings new responsibilities for the industry to help build social norms that apply to both physical and digital spaces. Microsoft sees this as an opportunity to learn from past mistakes and contribute positively to the gaming community.
Leveraging AI and ML for social issues in gaming: Microsoft invests in real-time community moderation and provides tools for developers to monitor and manage online gaming communities, addressing issues like bullying, grooming, and social stress.
The gaming industry, represented by companies like Microsoft and Xbox, has the opportunity to address significant social issues, such as detecting online bullying, grooming, and social stress, using advanced technologies like AI and machine learning. This opportunity extends beyond just creating safe spaces for children, but also involves diversifying voices in the creative process and building inclusive communities. Microsoft, in particular, is committed to being a leader in this area by investing in real-time community moderation and providing developers with tools to monitor and manage their communities. The industry as a whole must remain active and engaged in shaping online environments, as passive approaches like relying on community norms or rankings are not effective in ensuring safety and empathy. Microsoft sees this as a constant opportunity to bring people together and build empathy, but with the responsibility to maintain a positive and inclusive environment.
The Growth and Impact of Art Beats and Lyrics in Atlanta: The Art Beats and Lyrics art show in Atlanta started as a humble event and has grown into a cultural phenomenon, showcasing the unique roles of its founder and curator in the city's art scene and attracting thousands of fans.
The documentary "art beats in lyrics" on Hulu showcases the growth and impact of the Art Beats and Lyrics (AB&L) art show in Atlanta, which started as a humble event and has now become a cultural phenomenon. The film reveals the origin stories of the event's founder, Chabari Graham, and curator, Dwayne W. Wright, and how Atlanta has shaped their lives while highlighting their unique roles in the art scene. The documentary follows several feature artists as they prepare for AB&L's 20th anniversary tour, attracting thousands of fans at each show. It's a must-watch for art enthusiasts and those interested in the cultural significance of Atlanta's art scene. Additionally, the podcast Decoder, featuring an interview with Phil Spencer, provides insightful discussions on various topics, including the gaming industry. Don't forget to tune in every Tuesday for new episodes and share with your friends. Cheers to responsible drinking and enjoying Jack Daniels, a registered trademark of the Jack Daniels Distillery in Lynchburg, Tennessee.
