Phil Spencer Doesn’t Want To Sell You A Games Console

Phil Spencer Doesn’t Want To Sell You A Games Console
Image: Supplied

Phil Spencer doesn’t want to sell me a new console. He says that and I believe him.

That charming man. That lovely fella.

When you write about Phil you’re tempted to refer to him by his first name. I wonder why that is.

Is it because he’s the E3 guy? The professionally affable, smooth talker with a gaming shirt beneath that sports jacket. Smart casual Phil. He’s one of us, right. He uses the word “gamer” a lot. He wanders the halls of the EB Expo and people want to talk to him, they stop for pictures. It baffles Phil, but he never says no.

Just before our interview he’s stopped in his tracks. A selfie or two later and we’re on a couch. A set up built for video interviews. Designed to look like a casual space where casual conversation takes place. Phil looks comfortable here. At the very least it’s a scene he recognises.

“I see the gamer at the center,” he tells me.

It’s easy to be cynical about a man like Phil Spencer. He works for Microsoft — a Microsoft in recovery. When Phil Spencer took over the top job from Don Mattrick, Xbox as a division was in a strange place — that was the perception. The Xbox One: a mainstream experiment gone awry. Kinect, always online, product decisions that were made then swiftly unmade. From the outside in the Xbox One felt like Microsoft’s version of the PlayStation 3 — a bloated reflection of a division whose mouth was bigger than its belly. A console with delusions of mainstream grandeur.

You always got the sense the vision for the Xbox One was one that stretched out from its core to something grander, something just beyond reach. But Phil Spencer’s reign has been different. One might characterise his leadership as a calculated contraction. He’s not abandoning a platform (or that expanded market) more like securing home-base. Home-base being the people that play video games. Home-base being you and me.

That’s been the story of the Xbox One over the past two years.

“We have to start from who our customer is,” explains Phil.

And that story really begins with the console itself.

The year 2016. Personalised technology. Mobile phones and tablets. The looming potential of virtual reality and augmented reality and powerful PCs and Smart TVs.

How strange that, in this environment, the video game console still exists.

To Phil it’s all about the perpetual relevance of the television.

“The way you play games today is you plug this dedicated device into your TV. I sit 10 feet away with a controller in my hand.

“That communal large screen gaming experiences that exist on the TV as it exists today has a long future.”

The success of both the PlayStation 4 and the Xbox One, believes Phil, is proof of the continuing relevance of the console as device right now. The relevances stretches towards an unknown future.

“I think it will be a part of that future for a while.Are there different ways for that content to get to my TV? Maybe. But right now the easiest way to do that is to go and for a few hundred bucks buy a games console and plug it in.”

In relation to the devices that currently dominate our modern lives, the console is something of an anomaly. In 2016 the personal device is king. The mobile phone, the tablet, the laptop — devices that belong to us and reflect our passions and interests. In that sense consoles are unique. They are stationary, they are plugged into our television and forgotten about. We personalise our controllers, they come in red and blue and every possible colour you can imagine, but the console itself? The console is designed to disappear.

“It is this device that I plug into the wall and I never really look at,” says Phil. “My phone is always in my hand, it’s always with me, the laptop is the same. But the console — it turns on, it might make a noise when it turns on but it just sits there.”

If there’s an elephant in the room it’s this: the console as multi-media device. Considering the Xbox One’s initial vision for the Xbox One, and the public backlash to that vision, there’s a statistic that Xbox One always seems reluctant to brag about: in terms of hours spent, Xbox One users spend just as much time watching (on YouTube, on Twitch, on Netflix) and they do playing.

I suggest to Phil, if that’s the case, why do people get so angry when we talk about consoles as devices for media consumption — for TV, for Music. Isn’t there a dissonance at play here? We’re quick to complain when the narrative shifts from video games, but the cold reality: there’s a 50/50 split here.

“That’s a hard one for me to answer,” admits Phil. “Our first customer is someone who is primarily going to see this device as something that plays games. I can get to YouTube from many devices. I don’t need a console to watch YouTube or Twitch.”

That’s part of the issue, Phil believes. The idea that all devices do everything and, today, the major differentiator for the Xbox One is video games.

“There’s was some question about our motivation,” says Phil, “if we still believed in gaming. I think that’s a Microsoft question. I’m really proud of the work the team has done over the last two years to answer that question. To say look, we’re going to drive this as a team putting gamers needs at the center of our decision making process. We want to know the role gaming plays in their life and build Xbox and Xbox LIVE around that.”

Image: Kotaku

When designing the Xbox One, the question: how do we take a home console to that broader audience. The most successful home console ever was the PlayStation 2, which sold around 140 million units. How do we get a console to that point and beyond? That purpose explains the Xbox One’s focus in the beginning, but the goal posts have shifted and, as a result of that, so has Microsoft’s approach.

Phil Spencer calls it a ‘pivot;.

“There’s been a pivot towards Xbox LIVE when we think about numbers,” he says. “Not because I’m trying to hide from a comparison with PlayStation, but hundreds of millions of people have cell phones. That’s not gonna be true of game consoles. It’s not even true of PCs.

“We want create a service that can reach you wherever you are. We want you to choose where you want to play.”

Phil is talking about PCs, he’s talking about mobile. It speaks to a secondary Microsoft purpose — the idea of fluidity between devices. The idea that the device disappears and the service itself takes priority. Phil believes this is the philosophy that will push consoles through that glass ceiling, towards those stratospheric mainstream numbers. Then we see the domino effect of that shift. The end result: more video games and better video games.

“Instead of trying to say is there a way for everyone to need a game console — I don’t think that’s true. It’s a large market and it’s a good market, but we can’t turn consoles into something like a cell phone.

“But if we look at the people who are playing games on our service at any point. A lot of them are on consoles, a lot are on windows. More and more are coming from phone. That’s when we start to look at numbers like 200 million, 300 million.

Is this a world where the console, as a fetishised product we purchase and worship, is dead?

Not exactly, says Phil.

“The device becomes the ‘on ramp’ to where I play,” says Phil. “I want there to be multiple on ramps.”

Gaming without boundaries. That’s the tagline. That’s the marketing schtick. It’s also the end goal.

But is this a vision at odds with the fact that Microsoft announced not one, but two consoles at E3 this year?

Is this vision, the idea that the console disappears into your entertainment unit and all that’s left is the ‘service’. Does that make sense with an Xbox One S and an Xbox Scorpio releasing within (most likely) six months of each other? Does that obscure things.

No, says Phil. These consoles are merely a response. To two things: the consumer and their needs relative to the technology consoles interface with.

“I don’t need to sell you a new console every year,” laughs Phil. “In fact you could say it hurts me if you buy a new console every year!”

To be clear, the console market operates at low margins. Quite often those margins don’t exist. More often than not there’s a clear operating loss.

“Consoles are an enabler to make money with our partners,” explains Phil.

So what is the Xbox One S? Simply put it’s an attempt to redefine the original Xbox One in the face of consumer feedback. What is the Xbox Scorpio? A direct response to the increased uptake of 4k televisions and a customer base desperate for games that take advantage of those increased resolutions.

It’s essentially Phil’s job to see what’s happening out there in the wide world and respond to it quickly, efficiently and at a price point that consumers feel is palatable.

“We’ve got no set timeline on when we need to sell you the next console after Scorpio,” says Phil.

“We look and say, are there important consumer features? We looked at 4k TVs, we could see the uptake in 4K. People want to play at higher resolutions, higher frame rates — but the next thing after that? I don’t know what it is yet!

“I don’t need to give you a reason to buy a new console every year. In fact, I don’t actually want to!”

Image: Kotaku

Phil Spencer has a few regrets. He’s happy to discuss them. Backwards compatibility is one. In keeping with the idea of games as a ‘service’ and the ‘without boundaries’ philosophy, he believes that backwards compatibility is something the Xbox One should have had at launch.

“From an art history perspective these games have a story to tell,” he says. “You can go back and watch old movies. Gaming has that same history. It bums me out when consoles go away and the content also goes with it.”

PC gaming is another. It’s bizarre, he says, that a company like Microsoft has had so little to do with the rapid growth of PC gaming in the last decade.

“Our customers were there and we weren’t,” he explains. “We have work to do.

“Thank goodness companies like Valve and Blizzard have done such a good job there, but I think we have something to add. I want to be part of that, so we’re doing that work.”

But where do consoles fit into that vision. Are consoles still at the centre of Microsoft’s Xbox division?

“This might feel like a PR answer, but I see the gamer at the center.

“We want to make sure we’re creating a platform that enables consumers to flow where they wanna flow. Console is critically important there, but the customer is the one at the centre. They decide.”


  • Phil Spencer looks smug and sounds like a PR guy, which, to be fair, he is.

    “There’s been a pivot towards Xbox LIVE when we think about numbers,” he says. “Not because I’m trying to hide from a comparison with PlayStation…”

    That’s a lie right there, although it might be “Not just because I’m trying to hide from a comparison with PlayStation…”

  • I suggest to Phil, if that’s the case, why do people get so angry when we talk about consoles as devices for media consumption — for TV, for Music. Isn’t there a dissonance at play here? We’re quick to complain when the narrative shifts from video games, but the cold reality: there’s a 50/50 split here.

    The use of gaming consoles as media consumption devices is a passing phase, though. Pretty much any new TV you buy these days is a smart TV which already has things like YouTube, Netflix and all those other apps built in. When you’ve got it built into the TV, why are you going to bother turning on your console to watch Netflix? So right now a lot of people (myself included) use our console as a way to watch Netflix on our TV’s. Over the next 5-10 years as our old TVs die and / or we upgrade to 4K, the need for use to use our consoles as media devices will gradually fade away and they’ll come full circle back to being pure gaming devices.

    • I don’t know if I agree. I see the logic in what you’re saying, but when I have my console on I can just go from game to media to browser with the controller in my hand. I don’t have to use a different remote. It might be a small thing, but you could equally say, if your console can do media, why bother using the TV?

      • I have a chromecast. Two actually. One is in a smart TV. I don’t even know what the interface of that looks like. It’s a 100% chromecast TV.

        The other TV has a console on it, but I haven’t even considered using that for Netflix. Chromecast too.

      • Because in this example, the console is *another* unit to turn on. You have to turn on your TV (that’s the big point he was making – that the TV is the central item holding this all together), and then you have access to Netflix, YouTube, etc. Why would you then turn on another device to get access to what you already have? You’re adding more steps to get to the same endpoint. If your TV already has Netflix, etc, then you’d only need to turn on your XBox for gaming.

        If anything, this actually provides an interesting argument in favour of integrating consoles into TVs (once we’re at a stage where we don’t have console hardware, but are instead streaming games to play).

        • If we ever reach that point then gaming will just be another app in our TV like Netflix or YouTube. God knows when our internet would become reliably and consistently fast enough for that to be anything other than a pipe dream, though.

          • Yeah, when PS Now becomes feasible for everybody then the need for console hardware will evaporate. Until then, as long as there is a need for separate hardware to play games, it makes sense to make that hardware capable of doing less intensive operations like media and streaming/browsing.

        • Hm. I’m primarily a gamer. I get home and I turn my console on first, have a smoke while it loads up, then turn on my tv. I do more gaming than watching of TV. I watch netflix when I want to take a little break from gaming. Or I watch netflix on my computer while I’m gaming. The console is always on because my desire to game is always on. Watching tv kind of gets me anxious that there are games waiting for me to play, and even more after I finish those.

          This is by no means everyone’s experience. I realise that my experience as a hardcore gamer without a family will be different to that of other people. Actually, thinking about it, your example might be far more common among your average people.

          Now if the TV offered some picture in picture so I can watch tv and game on the same screen, I’d be pleased, but that’s not a make or break thing for me.

          As far as streaming gaming directly from tv…. eh, we’ll see.

        • Another unit to turn on? That’s why CEC exists. I press the PS button on my controller, which turns the PS4 on, which turns on the TV via CEC; grab my headphones, and I’m two button presses away from Netflix or the last game I was playing. Only thing I use my TV’s remote for turning it off when I’m done.

        • I just walk into the Theatre and say “Xbox On!” It turns on my TV, and Theatre Surround Sound on, and goes straight to the TV. I use my voice to change the channels, volume, go to Stan and watch TV shows with the wife, and when I am done say “Xbox Off, Yes” and it turns everything off for me. No controllers, no batteries, no headaches, no fusses!

          Seriously, I cannot think of a time since the Xbox One TV Adaptor came out that I haven’t watched TV or Movies without it, or needed a remote to operate it.

          I also play all the FPS, RPG, and Adventure games when they come out and have been an avid gamer since ’92.

          Really, I think people really just like to bash anything they don’t agree with / understand. Been that way since civilisation invented languages, and the monkeys ain’t ever gonna put down their Bananas!

      • I have a smart TV and an Xbone that’s plugged into it and for Netflix/Stan/YouTube etc we use the Xbone because it far easier to navigate the Xbox than to use the TV’s remote

    • I’m kind of the opposite. I’ve never really had an interest in smart TVs because I already have a console that does Netflix, YouTube etc. Plus, from what I hear the UX for smart TVs is often very bad.

  • The modern ‘gamer’ that exists in speeches in boardrooms full of PR people is the same sort of ‘movie-goer’ that only ever spends money on whatever movie has superheroes or lightsabers in it and ignores everything else by just pirating it – ie a vocal minority.

    Television as a medium ebbs and flows over periods of time. We’re seeing a (welcome) return to story-rich and mature shows instead of the glut of reality tv crap. Before that, ‘good TV’ was around but hard to come by because of how cinema itself matured.

    And the audience is responding. ‘TV is back’ is the phrase I think.

    One hopes the console industry (that is, separate from the software houses, separate from the phone makers, hell, even separate from PC) and whoever is still in it four or five years from now looks to the lessons ‘Television’ as a whole learned instead of say, the record industry.

  • Well…..I’m an Nintendo/Sony fan for many a year.

    Recently bought an Xbox one S as a UHD bluray player primarily……and if I’m honest, that single purchase has me thinking that next gen I may go the way of Xbox. The One S is fantastic as a media consumption and games console.

    • That and it coincides with a bunch of great xbox releases.
      Full credit they have really turned things around. Lets hope for gaming they keep it going.

  • Does that make sense with an Xbox One S and an Xbox Scorpio releasing within (most likely) six months of each other?

    Xbox One S is out already. The xbox scorpio was announced as holiday 2017. Not within 6 months.

  • Large part of myself having moved away from consoles in the past was the industry’s move towards multi-functionality in their devices. Pretty glad to see that my future is going to remain unchanged.

    • I like points like these, because they are stupid.

      You are correct, you can’t upgrade a console. But if you want value for money, a console is a WAY better option.

      Xbox 360 lasted for 8 years before the One came out. PS3 lasted 7 before the PS4 came out.

      You pay for it, it’s yours. Knowing full well that no matter what game you buy on that console it will always work. At launch Xbox 360 cost $650. Good luck having a PC that cost $650 being able to play the newest games for 8 years as the devs intended it to look.

      Yup. PCs have the potential to have games that look WAY better, if you’re willing to pay the upgrade costs every couple of years.

      I enjoy both platforms, console and PC. But don’t be ignorant.

      • what are you ? 12?
        consoles will become redundant soon and the tech companies know it.

        PSVR shouldnt be made as it is driving VR backwards and not forwards, the games that are being made for it and will be made for it are left in the void that is the current hardware of the consoles

        this does not drive VR forward…. it actually keeps it stale, low res and laggy for as long as people fall for the crud that sony and microsoft sell…

        we want to push 4k times two so hard that it makes hardware bleed… console VR is not helping, we need 10 years revloution in 2 years.

        • Oh I get it, you assume everyone wants to play vr.

          Right, ok, you’re an idiot. Carry on, my wayward son.

          • it was just an example of how held back we are by consoles, game engines, textures and game sizes on disk is also held back by them….

            Also you havn’t tried VR have you… I can tell

            you are so triggered by my posts you have to answer? get your own comment

  • I’ve stuck to PS4 for the last few years, but I like and trust Phil. He is a business man, sure, but he is working to create something that is good for consumers. You don’t have to be evil to be corporate.

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