Xbox' Phil Spencer on Scorpio, and the changing console landscape

We flew over to Sydney to have a one-on-one chat with head of Xbox, Phil Spencer. We talk at length about Project Scorpio, the changing state of the console landscape, and Microsoft's plans for the future.

I flew up from Seattle on Saturday, landed on Monday. Still spinning a little bit, but people have been great. We’ve gone to some really nice events, and Xbox Fans in Australia are some of the most passionate, so I’m really glad to be down here for my first time.

Keith Milburn: I went to the Forza event yesterday. Its location seemed appropriate, because the game is set in Australia. Did you stop by for that?

Phil Spencer: I was at the Forza event last night.

Oh, you were?

Yeah, I had to do a couple Microsoft things here, and then I went out to the drag strip. Got to do the drifting – did you do that?

I did – it nearly made me sick.

There’s a lot of stink, a lot of it [laughs].

Yeah I got used to the smell of burnt rubber, it was real weird.

[Laughs] Yeah! And then we did the drag strip with the two cars that the community built, or designed. I thought the event was great. It was really good to see all the fans out there enjoying themselves, and I always get great face-to-face feedback when I’m talking to users of our products. It’s an important part of what we do.

So Microsoft at the start of this generation had a bit of a shaky start, but recently you’ve built up a lot of momentum.

Thanks!

It’s been interesting seeing you guys pivot; less of an emphasis on Kinect, backwards compatibility, the One S, your Play Anywhere initiative. Even the Scorpio – you posit it as the most powerful console on the planet. But with the length until its release being so long – about a year – will that dampen any of that momentum?

That’s a good question. If I rewind all the way back to E3 and the decision we made to talk about both of them – which, you can say is a little crazy.

It was cool though; it was the hardest hitting conference.

But I mean you could imagine going into the planning, and “OK, we’re going to open with the S reveal,” but I think everybody knew we were going to do something like that – we hadn’t shown it. And then closing with the Scorpio – it was a lot of noodling going over whether that was the right plan. We’ll still have to wait until it launches to say “OK, did we do what we said we were going to do.” The gamers are always good at keeping us honest.

I’m really, really happy with the response to S. I think most of the hard questions I got after E3 is “Did you just kill the S?”

Right.

That was the meme – because everybody is just going to wait. But when people finally got their hands on it, and saw what we did with S in terms of the 4K UHD blu-ray, 4K streaming, and the nice form factor – I think people saw what we saw as we were designing both of the products. That this console stands on its own, it’s at a price point -- $499 [for the 500GB model] in New Zealand – and that price point is just different than the Scorpio’s when it comes out, right? There’s a real price-conscious, value-conscious customer who’s going to look at that aspect of your product line, and that’s what they want.

And then there’s some core people who are looking for the best price and performance, and that what’s we designed Scorpio for. I wanted to make sure it was all part of one console, so that if you move from one to the other, or happen to have two, you’re not buying two versions of the games. Your games just work across both. A lot of that learning came from our work with Back Compat, and just the reception we’ve seen over that.

So you’ve been doing a lot of innovative, experimental stuff this generation – like mods on a console. How has it been testing the waters with this weird, new territory for consoles?

Yeah, I mean I don’t want to make it seem like we’re inventing anything here – because our friends in Bellevue at Valve might take umbrage with that [laughs]. Like if we said we created water, you know?

If I look at our ID@Xbox program, our work with indies, the game previews which allows people to try out games that aren’t completed, and get funding for those games – like Valve has that program, Steam has that program.

The work that we’re doing with the XPA [Xbox Play Anywhere] and buying across platforms, the mods – first with Fallout, but I’m sure it will come to more – this is us listening to what creators need in order to build the games that they want to build. I want to be the best platform for that.

Like with the mods thing, it wasn’t actually my intent – or even Todd Howard’s, when we were talking about this – the intent that this would become a platform specific feature. Like, I expected all platforms to support this – and I don’t mean that as a shot. In fact, back when they announced it they kind of talked about the fact that this would be coming not just to Xbox, but I looked at it as something that is for Todd – who I have a ton of respect for him and his team, and what they’ve doing for mods on Fallout and Skyrim – it just seemed like that was an important part of that ecosystem.

Also, owning Minecraft – obviously, mods on that are massive. So I just see that as a creative outlet for the community to take part in the games that are being played, and [we] wanted to support it. It does require that as a platform we’re a little more nimble [sic], a little more open to certain things, which requires some work. But in the end, if it leads to better content, I think we’re doing the right things.

One of the main misconceptions people have between the Scorpio and the Pro is that you are competing on a feature-level basis – when in reality, the specs of these machines were probably locked in ages and ages ago. So with that, has the relative strength of the Scorpio been a way of you future-proofing the system past the regular 8-10 year console lifespan – if that’s even a thing that’s going to exist anymore?

Yeah, I think you’re asking a good question – and I don’t know.

When you think about the life span of the 360 generation – we built for a decade, sold millions of units. Even in the last year of production, sold millions and millions of these things. How the console generations are going to play out going forward – or even, you know some people at my own company will talk about it as the end of generations are probably less grandiose, in my language.

But really, what I think about is when I buy a game, I want to be able to play it as long as I can on the console that I own. I also want to be able – as new technologies like 4K, HDR, VR come along – I want to make sure that the console eco-system I bought into is going to be forward-looking in its adoption of that technology.

Previously in consoles that meant “OK, put everything in a cardboard box, put my Dreamcast in the box, and Samba De Amigo and everything else goes in there,” and I don’t play that stuff again until I pull out that box and plug everything back in. I just don’t think that’s good for content creators, I don’t think it’s great for gamers. We’re pushing against that.

What that’s going to mean going forward will be interesting to watch. What I can say: my goal is not to get somebody to buy a new console every one or two years. You hook them up to your TV, and it almost becomes part of the furniture in the house in some way.

Yeah, it gathers dust when it probably shouldn’t.

[Laughs] But I also know because we’re the Windows company, and I see what happens on PC and I play a lot of games [there]. There’s a certain core of your market that is always about the most modern technology, and I wanted to try and bring some of that capability to console. It’s meant us embracing PC at the same time, so that we can test things like 4K games and other things – because they’re there.

That has an impact on things like Scorpio, and the designs that we’re building.

The main push for the Scorpio has been that bump in fidelity; 4K, HDR. You claim that first party titles will run natively at 4K, instead of being upscaled compared to the Pro. Microsoft has been very bullish in its claims in social media – that Tweet with all the check-marks, saying what our systems can do. If you’re so power conscious – if a big push for you is to reach a subset of the console market that really cares about performance – aren’t you just making a case for the PC? What is it to stop people from jumping right over the Scorpio, and going to the PC?

Yeah, it’s like you’re in our design meetings in a way, as we’ve talked about this. I usually don’t do this, but for this one I will specifically talk about Sony. I think they’ve come out and said PC is their competition.

Right.

And I just don’t look at it that way. I know that some of our best Xbox customers also play games on the PC. I think for many gamers, there’s this artificial decision when a new game comes out – let’s use an example like Overwatch, because it’s an incredibly popular, great game from Blizzard and not one of ours.

So with Overwatch, when you go and buy this, you’ve got to make this decision on day one: “Are my friends playing on PC, or on console? If they’re on console, which one are they playing on?” And that’s going to dictate which version of Overwatch you’re going to buy.

When I think about it, I think that’s an unnatural decision tree that doesn’t help Blizzard, and doesn’t help the gamer. Really, what I want is people to be able to buy games, and play it where you want to play it right now. If that means you want to play it on your PC because you’re at work, and if you want to use the controller we have Bluetooth, or keyboard or mouse then PC games support that. Then when you’re at home, if you want to sit on the couch with a controller in your hands and play on your TV – you should be able to play the same games, with the same state, the same friends, the same progress and achievements. That’s kind of what led us into XPA.

So if I get to your question, I don’t think I’m pushing people over – I think I’m actually putting the game at the center of how we think about our platform. What do they want to do? If they want to play their games on PC, I’m not trying to trick anybody into buying an Xbox.

What I’m saying is, for our first party games we’re seeing more adoption of XPA, and with third-party games as well. Just buy the games that you want to play. If you want to play them on PC today, and console tomorrow, we’re going to support that. If you never want to play on an Xbox, that’s OK. If you said you only want to play an Xbox that’s OK as well. You make the decision about the games you want to play, and where you want to play them. We’re going to build a platform that supports that.

Well traditionally a lot of things that split the userbase haven’t been very pro-consumer. It looks like you’re being forward-facing about, which is cool to see.

Thank you. I mean, I can see the dialogue and the minute you get to “Oh, why isn’t Halo on PlayStation,” and you know in the end I want the hardware we built on console to stand up based on the hardware that it is. Our first party games get played based on the quality of the games that they are.

We’re not there yet, where everything plays anywhere – and I’m not sure that that’s the natural extension of where we go. But owning something like Minecraft, and seeing how incredibly impactful it is on Nintendo’s platform, on PlayStation platform, on Android and iOS, on Xbox, on PC – it’s the most vibrant gaming community I’ve ever been around. And I don’t say that because I own it – I don’t know if you even own it, you’re the curator [laughs].

We just had 14,000 people at MineCon, and I see the vibrancy of that community, and it’s such a great thing for games. I want to build a platform to support that.

One of the hardest battles that you’ll have with the Scorpio is showing it off at a press event, or via stream. How do you show that bump in fidelity and strength in a public environment – how do you intend to attack that?

Yeah, that’s also a great question. It’s funny – after E3 of this year, and then I watched the Sony event. I happened to be out of the country so I saw it on a stream – and they run into the same streaming issues that anyone runs into: How do you show a 4K HDR stream when a majority of people are on the web?

It’s something we’re seriously looking at for E3 of next year. How do we make sure in the venue itself – that 100 ft. screen behind us as we’re talking – that wasn’t 4K, I don’t even think they have 4K displays that big yet.

And then I think about more importantly all those people at home, and how you get to 4K. In the end, I think it’s going to be about – and you’re hitting it – gamers seeing it for themselves. I look at our Microsoft Stores – we just launched one here in Sydney, our first store outside of North America – and I was out there in the last two days, it was fantastic. And I look at how we show the games there. We’ve got to make sure that we’re showing them at 4K in stores, that’s going to be critical. Where 4K TVs are being sold Xbox One S today is getting shown a lot with Netflix and 4K blu-ray.

But we’ve got to make sure for people at home that we get a way of showing the fidelity of what’s actually coming out of the box. It’s something we’re actively working on right now.

So I’m from New Zealand, and we have terrible internet.

I hear that about Australia too – is it worse in New Zealand?

It’s probably slightly better in New Zealand, because we’re smaller. But generally it’s kind of dreadful – to the point where streaming 4K content isn’t a very realistic option for many people down here. Does the Scorpio lose any of its value if some of its audience can’t stream 4K content – is there any way around that? Or are the games themselves a big enough feature for that?

It’s one of the reasons we’ve put the 4K blu-ray drive in. There are a lot of markets – either because of bandwidth caps or bandwidth capability – where having physical media with 4K – and I’m buying a lot of 4K UHD blu-rays right now, they look fantastic. I watched Revenant the other day and it was ridiculous how good it looked.

[Laughs] That bear scene must be really gross.

I mean literally! The Martian looks great.

It was one of the reasons we made the physical media decision that we did. I know that if you look at usage on the box, you would say “Hey, everybody is watching YouTube, everybody is watching Netflix. Why would you do anything physical?”

But I do think markets where bandwidth capabilities and caps, and cost is prohibitive. So we wanted to make the decision that there would be physical media. I think for us games and the native rendering of 4K games is going to be important for Scorpio, which obviously alleviates any kind of need to stream.

But I think we’ve been conscious that not everybody lives in a bandwidth happy, uncapped world.

So you said the Scorpio would have that 4K drive –

I didn’t confirm that. [Laughs]

OK – well, [laughs].

We’ve seen great adoption of it with the S. People seem to like it, but those kinds of decisions aren’t the decisions that we announced at E3. That’s not a push-back, I’m just saying those are the kind of decisions that can kind of bind later, what the drive is. But it has been really great to see how people have responded to the S, and it seems like we would want to continue to ride that option.

So yeah – it’s going to have, as far as we know, more RAM. Bigger processor. Stronger GPU. Those things can’t be cheap. If this thing is going to be a premium system, is the cost also going to be prohibitively higher than what regular console buyers are used to?

You use the word “prohibitively,” and I don’t think the word “prohibitive” is –

[Laughs].

No, no. I’m trying to be honest.

So you can see the price of the S today. When we designed both of these, which we kind of designed it in parallel. We thought about the price performance of what we wanted to hit with the Scorpio, relative to what we were going to be able to do with the S. So that we would have a good price continuum, so people wouldn’t look at these two things as so disconnected because of the price delta.

So I think you will feel like it’s a premium product, a premium console. And not something, anything more than that. So I wouldn’t get people worried that this thing is going to be unlike any console price you’ve ever seen. We didn’t design it that way.

That said, the opening price point for the Xbox One S, and the different hard drive sizes, that is a critical part of this whole product. When I think about it as a product line, you should expect the pricing to kind of be in line with that.

Where do you see Microsoft at the end of this console generation, if that is even a thing anymore? Are you confident that you’ll catch up with the competition? Where do you want to see Microsoft at the end of this?

The thing that’s probably most important to me and the team is not a direct competition with Sony and PlayStation in terms of catch-up. And people question whether I’d say that if we were in the lead, but I honestly kind of believe that. We don’t drive our program, thinking about how that’s the primary goal.

I want to be the best platform for developers and gamers. I want gamers to feel like their best gameplay experience is on an Xbox – from an Xbox Live performance standpoint, from a feature set like cross-play and mods, and game previews and stuff like XPA that we’ve been adding.

Developers see it as a place where they can deliver their best content, reach the most customers. And while it’s not the most sexiest [sic] thing to say, make the most money. That’s the thing that keeps game development going. I’m listening to them on things like game preview, supporting things like EA Access, and unique business models that publishers and studios are coming up with.

The indie community. The indie community here in Australia and New Zealand is really critical. I know a lot of the big publishing work isn’t here anymore. On Thursday I’m going to see Swinburne [University] and go to the arcade. There’s a real vibrant indie community here. A lot of them are publishing on Xbox, and that feedback we get from them to be successful is critical.

So I’ll say at the end of this generation – and I don’t think you and I know what that is yet – but I’ll say I want Xbox to be seen as a great consumer, gaming brand. Where gamers feel like they have the best experience from the capability of the hardware, all the way to the service. And developers see it as the best platform for them to deliver their best work, and make the most money.

Cool! Thank you for your time.

Thank you, I appreciate you for coming!

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  1. 8 years ago
    ptys

    The more he discusses forward and backwards compatibility, the more I question where they were when we requested this before the Xbox One was even in development.

  2. 8 years ago
    oconnomiyaki

    Cool interview. Spencer always comes across as so likable. I'm glad he's in charge of the division now; it's done wonders for not only the quality of the product and the public image as well.

    I would have liked to have seen him quizzed on the ratings obstacle when it comes to launching indie games Down Under, especially when he states "The indie community here in Australia and New Zealand is really critical." It's fairly possible that these kinds of issues get drowned out when moving up the food chain and that's why they don't get addressed. I would have liked to have seen if he had any position on it and any possible solution.

  3. 8 years ago
    CoffeeAddict

    Great read and good interview. I like Spencer and how he seems to be someone you would like to sit down and have a conversation with. I like how he avoids baiting/diminishing Playstation overall whilst still acknowledging them.

  4. 8 years ago
    jtbthatsme

    Great interview he is definitely the right man for the job...better than that other guy they had doing their promo stuff Don Mattrick. That guy is a polar opposite of Phil who has taken Xbox forward a long way (sadly needed it too after DM).

    Look forward to more for the Xbox team and certainly look forward to the Scorpio and seeing what it can do.

  5. 7 years ago
    Nick2016NZ

    Yeah I agree with everyone here, he really does come across as a nice guy, and honest as well. He seems genuinely passionate about what he does and respects the gaming community at large. If he had of been in charge of Xbox right from the start, I'm positive the Xbox brand would be seen vastly different from some of the negativity it has generated in recent years. Great read.

  6. 7 years ago
    captain X nz

    "It was cool though; it was the hardest hitting conference." - E3 16? Really Keith?

    He is a great face for the brand though, I sat through one of his presentations on Friday and I was convinced, after being a concerned sceptic that he was going through the motions, I came out thinking he was genuinely engaged with the community and open to listen.

    He's quite open that they are building a platform to make the most of VR and advances in the future rather than rushing tech out to first adopters like me.

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