I’m fairly impressed by Phil Spencer’s recent interview appearance on the Kinda Funny Xcast. His candor when faced with hard questions about Redfall’s failure was refreshing. He didn’t try to make excuses for Redfall or obfuscate the situation at all, and he took personal responsibility for not being involved enough in the development process and providing Arkane with the resources it clearly needed. I don’t want to pat Spencer on the back too much - Microsoft still charged $70 for a dud game, and I don’t believe the poor reception is as shocking to Spencer as he claimed it was - But CEO’s of game companies don’t usually get in front of influencers and take their lumps for bad games, and I think that’s worth acknowledging.
Spencer was a lot more transparent in the interview than I expected him to be, but there was one part that came across as extremely disingenuous to me. At the end of the interview while offering his final thoughts, Spencer started talking about its position in the console market relative to Sony and Nintendo. Here’s the full quote:
“We’re not in the business of out-consoling Sony or out-consoling Nintendo. There isn’t really a great solution or win for us. I know that will upset a ton of people, but it’s just the truth of the matter. When you’re third place in the console marketplace and the top two players are as strong as they are and, in certain cases, have very discrete focus on doing deals and other things make being on Xbox hard as a team - that’s on us, not on anybody else - our vision is that everybody that’s on console has to feel like they have a great experience and they’re a first class citizen. They’ve invested a ton in our platform. But we’re not in a position - and I see out there, I see commentary, that if you just build great games everything would turn around. It’s just not true that if we go off and build great games, all of the sudden you’re going to see console shares shift in some dramatic way. We lost the worst generation to lose in the Xbox One generation when everybody built their digital library of games.
We want our Xbox community to feel awesome, but this idea that if we just focused more on great games on our console that somehow we’re going to win the console race doesn't really lay into the reality. Most people, ninety percent of people that walk into a retailer to buy a console are already a member of one of the three ecosystems. Their digital library is there. This is the first generation where the big games they’re playing are games that were available last gen (Fortnite, Roblox, Minecraft). The continuity from generation to generation is so strong. I see a lot of pundits out there that kinda want to go back to the time when we all had cartridges and discs and every new generation was a clean slate and you could switch the whole share. That’s just not the world that we are in today. There’s no world where Starfield is an 11/10 and people start selling their PS5s. That’s not gonna happen.”
I find this to be a rather bizarre statement, and I question what his motivations were for saying it. Far be it for me to tell the CEO of Xbox his business, but there’s some things that were said here that don’t ring true at all. It does provide some valuable insight, and it’s definitely important to recognize that the game industry has changed a lot since the year of cartridges and discs. I understand the point that Spencer is making about focusing on building a brand that isn’t trying to beat Sony and Nintendo at their own game, but I think there’s something off about the way he’s framing the problems Microsoft faces, and downplaying the importance of quality games.
Spencer’s position is that Microsoft lost the console war during the Xbox One generation, and that because of things like digital libraries and live-services games, there’s no way it will ever catch up and “win”. Sony and Nintendo built incredible digital catalogs that now live on modern consoles, and it’s not in Microsoft’s best interest to try to compete by putting all its effort into releasing system-selling games. Microsoft’s strategy is to deliver differentiating value in other ways, like through Game Pass, cloud streaming, and its ‘play anywhere’ ecosystem. Microsoft is never going to release more good games than PlayStation and Nintendo, so it isn’t trying to compete in that way.
The problem is that the console war isn’t a zero sum game. The Xbox Series X/S doesn’t need to outsell the PS5 or the Switch to be considered a successful console, and no one that looks at the video game business seriously would suggest that. I don’t understand why Spencer feels the need to frame this in such a reductive win/lose way, when all Xbox owners want more high quality games than they’re getting right now.
Spencer is totally right when he says Starfield isn’t going to get people to sell their PS5s no matter how good it is, but that’s a weird way to look at the market. If Starfield was an 11/10 and there were three Starfields every year on the Xbox, then people would buy an Xbox and put it next to their PlayStations. Spencer points out the ways that the industry has changed since the cartridge days without acknowledging the fact that a lot more people are willing to buy multiple consoles today. These companies aren’t fighting over market share the way Nintendo and Sega did, or the way Android and iPhone did. We have PlayStations and Switches because they both have great games. If Xbox had great games, we’d all have an Xbox too.
It really does come down to the games, and I find it strange that Spencer reiterated three times in that statement that making great games won’t turn anything around. It’s a bizarre claim to make when the Switch is proof otherwise. The Wii U sold less than 14 million units in its lifetime and its failure almost brought Nintendo to its knees. But Nintendo sold 14 million Switches just this year. It’s sold more than 120 million Switches, and it will sell another ten before it’s done. What turned it all around for Nintendo? Releasing tons of great games.
It’s true that the Wii U catalog bolstered the Switch. Mario Kart 8 Deluxe is the best selling game on the console. But new games are what made the Switch the best-selling Nintendo console of all time. Pokemon, Breath of the Wild, Super Smash Bros. Ultimate, Animal Crossing: New Horizons, Super Mario Odyssey, Splatoon 2 and 3 - these are the games that turned things around for Nintendo. I love the things that Microsoft is doing to move the industry forward, but it’s still, and always will be, all about the games.
The end of this interview makes it seem like Spencer has a defeatist attitude towards Xbox’s ability to compete. These comments aren’t out of line with things he’s said as far back as 2020 about Microsoft’s vision and his denouncement of console war ideology, but this sentiment doesn’t exactly align with Microsoft’s actions either. It acquired Bethesda in 2021 to bring high-quality exclusives to Xbox, and it's trying to acquire Activision Blizzard for the same reason. I don’t think Spencer is just speaking off the cuff because things seem hopeless for Xbox. But then, why is he saying it?
Throughout the Activision Blizzard acquisition process, an important part of Microsoft’s narrative was positioning itself as an underdog. The scrutiny it faces from regulators is meant to discern whether merging Xbox with Activision Blizzard would make it too powerful and create an anti-competitive risk in the market. By putting himself in the hot seat after a big flop, hat in hand, Spencer has an opportunity to present Microsoft as a distant third in the console race. I don’t think Spencer’s words are pure theater, but they’re likely motivated, or at least informed, by the ongoing acquisition process. If nothing else, it was certainly a useful way to present Xbox’s position in the industry right now.
People that want Xbox to “win” are mad about the things Spencer said. Part of me appreciates his willingness to put off the people that consider themselves Xbox’s biggest fans, because the console war mentality is toxic to discourse and harmful to this community, and I applaud Spencer for pushing back against it. At the same time, I don’t think his words paint an accurate picture of how the industry works, and I can’t help but think the CEO of Xbox must know that too. At the end of the day we all know that the Xbox needs more games, and Phil Spencer knows that better than anyone.