The pieces are still in play, but as we watch them moving around the board, the strategy becomes clear: Microsoft no longer sees a distinction between gaming on Xbox One and Windows PC. And it doesn't want you to see one, either.
Microsoft's ambition makes sense, and this holistic view has had a long time coming. The company has been deeply invested in gaming for ages, and yet the PC and the Xbox console have lived largely separate, parallel lives. Today, though, when Microsoft mentions playing games, it's not just about Xbox gaming or Windows gaming. It's about gaming, period.
For more than a year, the man behind that message has been Phil Spencer. He runs Xbox. After assuming that office in 2014 he made Microsoft's pitch for the Xbox One focus more on games than entertainment. This year, when he talks about gaming, he's as likely to mention Xbox as he is Windows.
"We had discussions before I took this role around where I would want to take gaming and where Microsoft would want to take gaming," Spencer told Polygon at Gamescom 2015. "I think when we look back on Xbox five years from now or so, I think Windows itself will be a critical component to the success I think we can realize of Xbox itself — and gaming will be a critical component of the success of Windows. I really believe that. When we say 'putting gamers at the center,' that's different than putting a piece of plastic or a specific device at the center."
Spencer described his role in two evolutions: The transformation of Xbox One under his leadership and Microsoft's embrace of gaming on Windows. This interview took place at the last of the year's gigantic gaming shows, and he's spent much of 2015 standing on stages talking about Xbox and Windows in the same breath.
Spencer's business cards may call him the Head of Xbox, but in fact that title is becoming less and less accurate. In 2015, Spencer is as much a representative for gaming at Microsoft as he is the head of its console business.
Phil Spencer took the Xbox helm in March 2014, about four months after a less-than-stellar launch for the Xbox One. Prior to his promotion, the 25-year company veteran served as chief of its video game production arm, Microsoft Studios. The moment he started his new job, he inherited, well, a mess.
Microsoft's original vision for the Xbox One was strange, at least to the hardcore gamers it needed to form its early-adoption base. The company unveiled the console in May 2013 with a sales pitch that was as much about entertainment as gaming. Kinect, the first version of which was once touted as the fastest-selling consumer electronics device in history, stood at the center of console. Kinect 2.0 wasn't just about games, Microsoft said. It was a radical new way to interact with a device designed to be the hub of its owners' living room. In the future, we'd interact with the "all-in-one games and entertainment system" using voice commands and gesture controls while streaming video, watching TV and, yes, playing games.
To longtime Microsoft watchers, the Xbox One seemed like the logical conclusion of a longstanding desire to embed the company in living rooms, just as it had in offices with Windows. Yes, Microsoft talked about games and promised to continue that legacy. But the original vision of Xbox One didn't resonate with many gamers — certainly not next to Sony's gaming-centered pitch for the PlayStation 4, which has outsold the Xbox One since both consoles launched in November 2013, according to NPD data.
To compound matters, there were tone-deaf debacles about sharing Xbox One games and requiring an internet connection to use the machine. Microsoft quickly backtracked on both policies after vociferous complaining. There was more. Inside of a year after launch, Kinect went from an "integral" part of the Xbox One to an option. Microsoft began selling a Kinect-less Xbox One in June 2014 and Kinect by itself in October 2014. Then Microsoft aggressively slashed the console's price, more closely matching and often undercutting the PS4, which was introduced at $100 less than the Xbox One. Xbox Entertainment Studios, founded in early 2013 to produce "true interactive content" for the Xbox brand— i.e. video, not games — was dissolved in mid-2014.
Though nobody at Microsoft ever quite said it, Xbox One's first year of existence was the philosophical repudiation of it. Not of its entertainment potential, necessarily, but the ways in which Microsoft sold it all. A few months after the console's May 2013 reveal, Xbox head Don Mattrick left the company. By March 2014, Phil Spencer was the man tasked with its rebirth. He brought a fresh perspective.
His perspective was all about games.
Spencer's vision couldn't have been more clear when Polygon spoke with him shortly after his promotion.
"With me, you're going to get a focus on gaming first and a best platform to play games on," he said last year. "It's not a focus we ever lost, but it's one I'll be accentuating at Microsoft. It's really going to be a gaming-led focus with Xbox and my new role allows us to execute on that."
He believes the best Xbox One experience includes Kinect, but it doesn't have to be an all-or-nothing proposition. Likewise, all that stuff about the console being a media and non-gaming entertainment hub remains important, but the keys to the Xbox One's success, says Spencer, are the games you play on it.
A few months after assuming office, at Microsoft's E3 2014 press conference, Spencer got his first opportunity to tout his vision. He ended it by saying, in effect, "And that was 90 minutes of games." In the 14 months since, Spencer and Xbox have driven that point hard in every public appearance. "Whoops!" is the implication. "We get it now. And we'll prove it with games."
Microsoft still is doubling down with the message. At Gamescom 2015 it proclaimed the console's upcoming slate of games as the "greatest games lineup in Xbox history." Agree or not, the intent is clear.
However you feel about Microsoft's original pitch for the Xbox One, it was a based on a strong vision about the future of entertainment, including games. It staked Microsoft to goals much larger than the new features a piece of hardware could offer. It failed. Spencer marched in, rallied the troops to his side, and upended it all.
"It all starts, honestly, with the team," Spencer said. "Any one person, myself included, the amount of impact I can have around what shows up on stage — I can suggest some things, I can make some decisions on certain things — but what I loved about the show (at Gamescom), from the opening demo of Quantum Break all the way through the end and the partnership with Creative Assembly and Halo Wars 2, I get the sense now and I feel it every day when I show up to work, that the team at Xbox believes in the mission we're on.
"And more often than not, when I sit down with a team and we're going through a review of their game or their part of the platform or service, their innovation that they're doing on their own is beyond anything I can think of. They come in and they surprise me — which you could say is not the hardest thing to do — but they push the boundary beyond what I even thought was possible for us to do in amount of time."
"The first thing was getting the team bought into the vision on where we were going"
Of course, public outcry, disappointing sales and fierce competition played roles in Microsoft's shifting strategy, too. Rather than take credit for the change, Spencer deflects to the the efforts of invigorated gaming enthusiasts at Microsoft.
Spencer uses Xbox One's backward compatibility with Xbox 360 games as an example of what an excited team can do. Microsoft decided last year that it should give "people access to the content that they own on our platform," Spencer said, so they assigned engineers to figure it out. Six months later, they handed him a controller, and he was playing Perfect Dark Zero playing on an Xbox One. The team was "grinning because they're so happy and so proud of the work that they've done.
"So the first thing was getting the team bought into the vision on where we were going and that was pretty easy, because so many of the people on Xbox have been around since the beginning of Xbox, and the beginning of Xbox was a game machine. For many of the people there, it was a return to what the core of the brand was about. And as I said, now, I'm as amazed and surprised by the work the teams do as anybody, and it's invigorating."
Of course, Spencer's vision of the Xbox One doesn't preclude entertainment options. It embraces, even if it doesn't always emphasize them. At Gamescom, Microsoft revealed the console's upcoming TV DVR feature. It may not be as heavy-handed as the previous pitch, but the Xbox team still is investing in the value it believes non-gaming entertainment adds to the console. It's about options, in other words, giving Xbox owners what they want when they say they want it.
"Our happiest customers are Kinect owners"
"The situation last year was kind of beneficial to this, because the vision is around putting the gamer at the center of everything that we do," Spencer said. "We started with some decisions around Kinect and [Xbox Live] Gold on giving gamers choice and saying we want to let people who are Xbox fans and customers decide what games they're going to play and what hardware they want to own and how they're going to use our service. And those were some of the first decisions we were able to make after I got into the job that reinforced that vision of putting the gamer at the center of everything that we do. When I say that, people shouldn't take that to say that it has to only be games. The statement that kind of became a meme of 'games, games, games." I never said that, because I know people use our platform for more than just games.
"Our announcement of game DVR is something that I see gamers asking us for and us wanting to deliver on the features our gaming customers demand, even if that's not just a new game. I've said a couple of times when we go do the customer research, our happiest customers are Kinect owners. Giving them the option to choose to be our happiest customers through the bundle that they buy or when they buy the Kinect is a better outcome."
In 2015, Spencer and Xbox are engaged in a great turnaround, focusing mostly on gamers and gaming. We saw the first phase last year. We began to see the second phase's ambitions this year, and they don't stop at the console.
Consider Spencer's most high-profile appearances in 2015:
This is new, and, some might argue, overdue. For a high-ranking executive, Spencer is refreshingly candid. Of course, it's his job to sell Xbox to the to public, to present the products and the company he works for in the best possible way. But he admits mistakes forthrightly. A good example is what he said during the PC Gaming Show at E3 this year.
"There have been times in our past where Microsoft has lost our way with PC gaming"
"There have been times in our past where Microsoft has lost our way with PC gaming," Spencer said. He also characterized gaming as a "critical" part of Windows 10's success. And announcing titles like Killer Instinct's third season and Halo Wars 2 less than two months later at Gamescom put proof behind that talk.
Such broad statements and plans also are consistent with Microsoft's company-wide strategy, as laid out by CEO Satya Nadella. His pitch: No matter where you are, Microsoft will be there. That's why you see Office and Outlook available on its top rival's mobile devices. That's why Cortana is coming to Android and iOS, too. Just as there's less distinction between gaming on Xbox and PC, there's less distinction between Microsoft apps and services on Android, iOS and Windows.
The way Spencer sees it, the convergence is an acknowledgement that gaming — not Xbox gaming, not Windows gaming, but gaming as its own entity — has become incredibly important for platforms that span the pocket and the desktop.
"As Windows 10 has moved to free upgrade, and us focusing more on service and store, the importance of entertainment and games to the Windows ecosystem has become really prevalent to the company," Spencer told Polygon.
"The importance of entertainment and games to the Windows ecosystem has become really prevalent to the company"
"Obviously, last summer we went through the acquisition of Minecraft, and it was a really good dialogue with Satya and the board of Microsoft around 'What can games mean for Windows itself? Why is this a critical category for Microsoft to be in?' When you look at the device ecosystems out there, you realize if any of these devices are going to work, games are one of the primary forms of applications people are going to play. So it's been a nice journey in the year-plus I've been on the job, not only for my own growth and the team but watching Microsoft think about how games can play a role in that ecosystem from HoloLens — you see some of the HoloLens Minecraft demos we do — to the work with Windows 10 and Xbox we do. It's nice. It's all coming together in a nice way."
Xbox has always been an outlier at Microsoft: part of the company, but with a reputation for operating differently, for a long time even on a separate campus. But Microsoft is changing, and Xbox seems to be having an influence on the company. Spencer, for example, has a literal seat at the table when Microsoft discusses the future of Windows.
"So when we're partnering in these opportunities, it's not only that there's a mentality, there's also people who are having a broader influence," he said. "And even my ability to sit at the Windows leadership table and have a discussion about gaming at Microsoft and not just about gaming on one piece of hardware, it has an impact."
And if gaming has an impact, then it only makes sense for Microsoft to involve the division that knows the most about games. As Spencer said, "you look at gaming and say 'OK, if this Windows thing and devices in consumer space are going to work, games have to be a vibrant part of the equation,' absolutely."
Xbox One in August 2015 is different than it was in August 2014 — and an awful lot different than it was in August 2013. This is by design.
Spencer is happy that Microsoft has sold more Xbox One consoles than it sold Xbox 360 consoles at the same point in the last generation. He's happy about Windows 10's initial installation figures. But there's more to do. "The thing that gives me the most excitement, the most angst and pent up energy is the opportunity ahead," he says.
As turbulent as it was, Spencer describes his first year as head of Xbox as the easy one.
"I think in some ways the first year for me on Xbox the mileposts in front of us to me seemed fairly straightforward, the correct decision, the goal, what's inside a goal," he said. "Focusing on our first party strength and making sure we're building on those. Those to me seem like the necessary things to put together. Now we're at a point where our strategy has to move beyond fixing things. The strategy moves to a point of having a vision, as we talked about, and making sure that that vision is something that gamers buy into or teams can implement and that our partner ecosystem supports. It's a great time.
"Now we're at a point where our strategy has to move beyond fixing things"
"So just in terms of the energy inside of Team Xbox right now, it's incredibly high because we feel, 'OK, the foundation is in place, now let's go surprise and delight people in some ways that aren't just fixing some backward looking things.' That's also probably the high wire act."
He had to get people to buy into his vision, and it seems that he did. A renewed focus on games was a pretty easy sell, inside Microsoft and to gamers, and it seems to be resonating. But he's not done. Phase two — convergence — isn't the end. And phase three, which it sounds like is being primed for 2016, might be even more interesting, too.
"This is where you've got to come up with some real great, unique ideas. I love where we're going. I think of the next year as we start to tell more and more of the story, it'll be great. There'll be certain people who'll throw eggs at certain parts of it and people embrace other parts of it. But I'm really happy around the foundation that we've been able to put in place over the last whatever it's been, 15, 16 months."