Phil Spencer at the Microsoft Spring Showcase

Phil Spencer gave an opening speech at Microsoft’s Spring Showcase in February 2016. Here is some of what he discussed regarding the future of Xbox, Windows, and how they hope their ecosystem will evolve going into the future.

Phil Spencer:
I look at 2016 as the culmination of the last year of us talking about our vision, and talking about how that vision comes together for the betterment of the gamers, and betterment of the games. The team at Xbox inside of MS is the gaming team, everything that we do on any device is being driven out of the Xbox team. And the team is 100% committed to the success on every platform that our gamers want to play on. We get up every morning with the gamer at the center of the decisions we want to make and think about how our ecosystem can get better both for the developer and the gamers. We know that our gamers want better games, they want to play games where they want to play, they want to see innovation in gaming, they want to see gaming coming together to put them, their experience and let them craft the experience the way they want to craft it.

Our fundamental belief is that if we make decisions as the Xbox group, as the gaming group inside of Microsoft with the gamers vision in mind, that we will move our platform forward and we will continue the progress that we were making. We talk about this term gamer, there are multiple gamers out there, multiple kinds of gamers. And as we have been evolving our vision, as we have been going through the steps of announcing and releasing different parts of what we’re talking about and what we will be delivering in the next year we get feedback as we always do. We get feedback around the Xbox One launch, but we also get feedback at every incremental step.

I wanted to talk specifically about some of our constituents out there and how we think our vision is a positive move for them. I get this question all the time, I’ll start with my console only gamer; “I only play games on console my question to you Phil and the Xbox team is how is this vision that you have actually better for me as a console gamer? I see things like my exclusives going on PC which erodes some of the exclusivity I feel like I have on Xbox. I see the PC people and the PlayStation people getting to play games without buying an Xbox One, that feels bad to me”

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I want to talk directly to that customer and talk about why our vision is great I believe for the console gamer. I’m going to start in the weeds on something called the Universal Windows Platform and we talked about it as a development platform we are embracing for gaming across multiple devices. The Universal Windows Platform, which I’ll shorten to UWP, allows Universal Windows Applications, UWAs to run on Windows 10 and that is our focus going forward, building out a complete gaming ecosystem for UWAs.

We are allowing ourselves to decouple our software platform from the hardware platform on which it runs. I think all of us that have been console gamers for a while know that at the end of a generation we get a cardboard box out, put our old console in there with a bunch of old controllers and all of our old games and we stick it in the closet hopeing that someday we’ll get it out for the nostalgia factor. Then we go and buy our new console with a whole new library of games. Every time a generation shift happens in console gaming it’s had the tendency to invalidate every game you have ever purchased and require a whole new purchase motion. It’s great for innovation at that step function, but it’d not great that we invalidate the games we already have.

The other thing it does on the hardware side, and we see this all the time in the console generations, you launch a piece of hardware, a spec for hardware, we’re still selling Xbox 360s. That’s a hardware design that was developed basically 10 years ago and it’s still doing well, but we see another ecosystem. Whether it’s phone or PC you get more of a continuous innovation in hardware that we rarely see in consoles. Because console locks our hardware and software platforms together at the beginning of the generation and you ride the generation out for seven or so years while other ecosystems are getting better, faster, stronger and then you wait for the big next step function. As we look at the console space I believe we will see more hardware innovation in the console space then we have ever seen. We’ll see new hardware capability during a generation and allowing the same games to run backward and forward compatible because we have a UWA running on top of a Universal Windows platform that allows us to focus more on hardware innovation without invalidating the games that run on that platform.

We can effectively feel more like what we see on PC, where I can still go back and play my old Doom and Quake games from so many years ago but I can still see the best 4K games come out and my library is always with me. Hardware innovation continues while the software innovation is able to take advantage. I don’t have to jump a generation and lose everything I’ve played before. As we unite the Windows 10 and Xbox One ecosystem we have more Xbox games in development then we have ever had. Through the ID @ Xbox program our AAA Partners in our first party, because the addressable space of people building Xbox games allows them to get to more customers, obviously you can attract more developers to a lubricate and broad ecosystem of players, and we see that today. Frankly in the console space we’ve borrowed some things we’ve seen in the PC space, our games preview program that we brought to Xbox One has been incredibly successful.Ark-Survival

ARK Survival is a game that’s come on to Xbox One because of the game preview program that was adopted from looking at the PC space allowing game developers to bring their games in more of an unfinished state and engage with the community as they go off and build those games. We’ll get more games developed for the console gamer, we’ll have more gamers to play with on console, and we’ll see more continuous hardware and software innovation trough us realizing this vision as we go forward. That’s a commitment from our team to our console gamers.

One of the other constituents of gamers which is easier for us to address with our strategy and frankly is probably the biggest group are people who just play games. Sometimes I play games on my PC and sometimes I play games on a console, there’s a lot of times where my friends list being in separate places or my inability to make progress on the same game on these different screens it isn’t putting my needs at the center of what I want to do. As we bring Xbox Live across both platforms as we allows for things like cross-play, as we open up business model innovation so people can sell content on one device and have it consumed on another device. All of these capabilities really unify the PC gaming space with the console gaming space, and our visions has probably been most positively reacted to by this group. The group that’s a Windows gamer maybe during the day and a console gamer at night looking at what we’re doing through the decision-making for our console and our focus on Windows 10.

Understanding that focusing on both of these groups, where what you want to play, putting your decisions and your library at the center of what you want to do, is a fundamentally better experience better experience for the group that wants to play on multiple screens. Recently we launched Tomb Raider in the Windows 10 store, and if I focus on this group, the group that we have heard most vocally around this launch it’s from the PC only gamer. The people who are looking at the capabilities we have in the Windows store and with UWAs and giving us feedback on what is working and what isn’t.  This has been a great journey we have started, at Microsoft we have decades of history building PC games going back to Adventure and Flight Simulator. But we’ve also had some missteps along the way, the number of times I see Games for Windows live brought up on my Twitter account whenever we’re trying to make a move into PC gaming it’s staggering. We live based on the decisions in the past and we know we have a lot to prove in the PC space.

Last January we said we’re going to take a focus on PC gaming that’s as important as it’s ever been inside the company, I got a lot of feedback of “well prove it to me”, and we are still in that stage. What I want to say about our focus in this area is it’s obviously very important to the company. Windows is a critical franchise, already today when we look at the people running Windows 10 over 40% of them are playing games, we see that already. We know that those devices get used to play games and we want to make sure as the platform creator that we work hand in hand with our partners there to make it the best ecosystem that we have. ROTTR-Tomb

Let’s walk through the launch of Tomb Raider and some of the feedback that we got. I’ll start on some the positives that I saw, we had a lot of people come to the store buy the game and play it successfully and completely, they look at the performance of that UWA game on their box, they were happy with it; that was an important first step for us. The feedback that we received around some specific issues that people want to see us address, and these are all in our roadmap and we want people to understand we hear the feedback from the community and we will embrace it. Support for multiple GPUs is something people have asked us about with UWAs, “Is this going to be a limitation of the UWA platform?” and the answer is no. We do support multiple GPUs with UWA, we want to make sure the game developers have the tools at the right time so that we are able to support SLI/Crossfire and all the other technologies that are out there in the PC space. But we understand that in order for this to work, UWA has to be seen as a fundamentally better way for developers to build their games or we’ll fail. So the feedback on multiple GPUs is important to us.

We got feedback on V-Sync, and forcing teams to turn on V-Sync. We hear that feedback, it’s in our roadmap to fix it. We got feedback on overlays, mods, injection tools that people use to track frames per second and other things as they’re running PC games. Our intent is to embrace the breath of what makes PC gaming great and make sure that the games we’re developing and the games that our partners are developing in our ecosystem deliver the features that PC gamers want. It’s not us bringing console games to the PC space, it’s about us embracing what’s great about PC gamers and the PC gaming space to ensure the games we’re selling and our partners are developing absolutely reinforce a PC gamers expectation.

Feedback on step 1 has been great, we’ll have some more news about other things that will be coming very soon to the Windows 10 store, big AAA games. I’m sure we’ll get a lot of feedback we’ll make incremental improvements every time, but we are committed to this space. The once concern I hear from people I want to squash altogether is “is this a passing fancy at Microsoft that we’re focusing on the PC gaming space or is this a long-term commitment?” And as much as I stood on the E3 stage and talked about our team’s commitment to making Xbox One the best Xbox console we can make and the best Xbox console Microsoft has ever created, we are 100% committed to the PC gaming space and ensuring that Windows 10 is the best place for PC gamers to play. That is a long-term commitment from us, we understand that in order for Windows to be successful gaming has to be vibrant, healthy, and innovative and we as the Xbox team want to be at the center of that.

Next I want to talk about how we are gauging our success.  Back in the fall we pivoted how we talk about our Xbox success and talk about our monthly active users. Let me talk about why I think that is the critical component for us when thinking about success. People will ask me “is this something do with Xbox One’s run rate relative to PlayStation 4 run rate, is that why you’ve gone to monthly active users?” And the answer is no; the fundamental answer why monthly active users, the number of people in the last 30 days that have engaged with an Xbox Live game on either Windows, Xbox 360, or Xbox One is that critical factor for our team to gauge our success is because that’s what our patterns want. Our partners want gamers, the largest collection of active gamers who are buying and playing games. That is the health metric of any service that you go out and talk about. It’s not how many consoles I sell, if I sold a console 2 years ago and now it’s in a closet collecting dust that’s not good for the gamer, it’s not good for the developer and frankly it’s not good for Microsoft.XboxOne-E3

The other risk with us taking on MAU as our key engagement and success metric for us in gaming is it can go down. The nice thing about us selling consoles is you rarely have a negative month. Your console install base will almost always go up, but that’s not really a reflection of how healthy your ecosystem is. We focus on the monthly active user base because we know those are gamers that are making a conscious choice to pick our content, our games, our platform, our service, to go play games and we want to gauge our success on how happy and engaged those customers are.

It means we need to keep them happy. So when we have some Live issues like we had in the last week that’s not great for our MAU count, that directly hits us. If we go a long stretch without having great games on our platform that will negatively impact MAU. It’s great that we’re seeing our strongest MAU growth ever, when we look at our Xbox ecosystem we have more engaged gamers on Xbox then we have ever had. We’re incredibly proud of that but we know we have a lot more work to do. So we picked this metric not to hide something, in fact I think we are more exposed by picking a number that actually shows how many people are really using our platform, using our service every month and reporting that publicly. But we did that because we do things for you the press, the gaming development community who wants to know how many people they can get to by building these games, and for the gamers themselves, how many people we have playing on our console is the fundamental health point of how we’re doing. It is a success metric that all of you should be looking at.

But all of this really comes down to “hey where are the really great games I get to play?” We have UWP and UWA, Xbox One and Windows 10, we’re tracking MAU but what does that mean for the games that people get to play which is frankly why we’re all here today. We’re here today to see what I think in my opinion is our best first half of the year lineup that we have ever had on Xbox. When I look at the quality of games in 2015 I thought it was incredible, it was a good year for gaming and we’re starting off 2016 and we’re incredibly proud of the game lineup that we have on Windows 10 and Xbox One. Looking at the progress on Xbox One the 343 team continues to make with Halo 5, bringing Firefight and continuing to bring new and fresh content to Halo 5, it’s another example of us continuing to invest in our console customers ensuring our biggest franchise in Halo 5 is well served.

So in closing, we’re here to show you our games, we’re here to answer your questions about where we’re going. We have a vision that we believe puts the gamer at the center  of everything we’re doing. 100% of our focus is on making sure that games people can play on our platform are as great as they can be. We spend zero time thinking about what games other people can’t play, it’s not something that’s part of who we are. We are embracing the gamers that are on our platforms, we are incredibly proud of the breath of games that are there, the quality of games, and our long-term commitment is that we will stay exactly focused on that, what games can you play on Microsoft platforms. Making sure that’s the best platform, best service, best content, best games that you can find. That is our long-term commitment to you.

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