The Big Phil Spencer IGN Live Interview: on the Health of Xbox, Handhelds, and More

ByNews Polite

Hot on the heels of Microsoft’s Xbox Games Showcase, CEO Phil Spencer sat down with IGN’s Ryan McCaffrey at IGN Live 2024 to run through what some have called the best video game showcase in years.

The reveal included fresh looks at upcoming big hitters in Xbox’s now enormous arsenal of franchises following its $69 billion acquisition of Activision Blizzard. Xbox mainstays Gears of War, Fable, and Perfect Dark were joined by the likes of Call of Duty, World of Warcraft, and Diablo… all these huge series got their time to shine. It was a blistering showcase focused squarely on the games, and based on initial feedback online, the games looked good.

But Microsoft’s showcase has hit the headlines during one of the most troubling times for Xbox in recent memory. Earlier this year, Microsoft announced 1,900 staff would lose their jobs across its gaming business, and then came the shock closure of Redfall developer Arkane Austin and Hi-Fi Rush developer Tango Gameworks as part of devastating cuts at Bethesda. Is any studio, regardless of critical or commercial acclaim, safe?

Meanwhile, Microsoft faces difficult questions about the future of Xbox consoles, which have seen sales plummet year-on-year, as well as an apparent struggle to grow subscription service Game Pass. Microsoft is bringing even more of its games to rival platforms with the announcement that Doom: The Dark Ages will launch on PlayStation 5 alongside Xbox Series X and S and PC. When it comes to Xbox, the times certainly are changing.

During our interview, Spencer discussed all this and more. Read on for the complete IGN Live interview with Phil Spencer.

Ryan McCaffrey: I think you just had the best showcase you’ve ever had. I said it before you got here.

Phil Spencer: Thank you, Ryan.

Ryan McCaffrey: It really was fantastic. Now I know you plan these things months and months in advance. For anybody that doesn’t know, planning for this starts like the beginning of the year. So I’m curious, at what point do you, with this one this year, do you get a feeling that, oh, this one’s looking pretty good?

Phil Spencer: Honestly, until our fans, the customers, you guys give us the feedback… Aaron Greenberg and I were talking about this two weeks ago. The thing that probably hit me the most was obviously just the passion of the teams of putting their amazing work on stage and seeing so many teams do great work. But it was, I’d say two months ago, when I just looked at the scale of the franchises, how much work the teams were doing to show up in the way they did and the partners that we had in the show. I was in awe of the show.

Ryan McCaffrey: There’s a couple games I want to ask you about specifically before we’ll talk about some other stuff too. For me, of all the great stuff from today, stole the show for me was something I wasn’t expecting to see today again, which was Perfect Dark.

Phil Spencer: I knew you were going to say that!

Ryan McCaffrey: Perfect Dark, a first-person spy espionage, some parkour, a little Mirror’s Edge in there, which I love.

Phil Spencer: All playable, all in-game.

Ryan McCaffrey: And that game’s been cooking for a long time.

Phil Spencer: It has. Our partners at Crystal [Dynamics] have been doing amazing work there.

Ryan McCaffrey: So what has it been like for you to follow the very long trajectory of that game from, that started with Darrell Gallagher starting a studio [The Initiative].

Phil Spencer: Just down the street.

Ryan McCaffrey: And now we’re finally here. So how has it been getting to this point with Perfect Dark?

Phil Spencer: In parallel, building a studio while you’re building a game, and something that Perfect Dark back to N64 and obviously us with PDZ on 360, like there’s just such anticipation for that game, and I really appreciate everybody’s patience because we’ve been talking about this for a long time. And my team can verify this – when I saw it, I said, this is the one that Ryan’s going to love. Because we know his love for spy and I said, this is the one. I’m just so proud of the team and it really just came together so well.

A cool little story: Darrell had our other studio heads down at the studio just yesterday and walked through that same section in-game to show them, this is a game being played. And I love seeing our community of creators coming together that way.

Ryan McCaffrey: The one more thing, which we were all hoping for and got was a new Gears of War game, but it wasn’t Gear 6!

Phil Spencer: It was not!

Ryan McCaffrey: You have a visibility into everything, but I’m curious, when you’re in a meeting with, maybe it’s Matt Booty, maybe it’s Alan Hartman, but The Coalition folks, but when you learn they’ve gone down the E-Day road, the prequel road rather than Gears 6, what was your reaction when you found out that that was going to be the next direction for Gears of War?

Phil Spencer: Well you know this, we’ve had some changes in leadership at the studio. Rod [Fergusson], who was there, is now leading Diablo for us. So I actually thought – a Diablo game I’m playing a ton of – I thought it was a nice opportunity for that team to establish their Gears. Following on Gears 5 just because of the numerical thing, I think it would just… this was an opportunity for them to take it back to an origin story that has a lot of real depth to it in terms of Emergence Day and tell that story through The Coalition as it is today. I thought, what a great opportunity. I was excited.

And then you probably saw, I know you heard it, the Mad World tune, for those of us who remember the 360 commercial, how iconic was that? So when they went back and sourced that and brought that through the piece, I think it just showed that they stayed true to what Gears is, but tell a new story, a new arc.

Ryan McCaffrey: Now you’re wearing a very cool Xbox Pride shirt today, but a year ago at the Xbox Showcase, you freaked out people like me by wearing a Hexen shirt, which is a game that I have very near and dear to my heart. You had just acquired Hexen. You own that as a part of many other things. But then today I see the reveal for Doom: The Dark Ages, and I go, wait a second…

Phil Spencer: How awesome was that?

Ryan McCaffrey: … are you secretly making a Hexen game in the Doom universe? I know you and I share the love for this.

Phil Spencer: Yeah. No, I would like to say I’m actually smart enough to predict anything like that. I wasn’t. But definitely if you look at Doom: The Dark Ages, and thanks to Marty [Stratton] and the team they let me introduce that. I was going through all my old-school stories, for those as old as me who remember it’s Doom 1 on a floppy. My only PC that could run it was my PC at Microsoft. So I would sneak in at night, put it in so I could play. So the opportunity to stand there and get to announce a Doom, and then Doom: The Dark Ages, which definitely has some Hexen in it, and I just thought, Hugo [Martin] and the team, fantastic work. I’m so proud.

Ryan McCaffrey: Now I can’t help but bring up something that’s been a topic of conversation a lot recently, which is that Doom: The Dark Ages is also going to ship on PS5, something that you’ve done with some other games. So from a business level, can you walk me through… you paid $7.5 billion to acquire Bethesda / ZeniMax. So what’s the calculus? What’s the process there for deciding, okay, new Doom, let’s keep it multi-platform as it has been rather than just put it on Xbox? So what’s the thought process there?

Phil Spencer: Well, on Doom, it’s definitely one of those franchises that has a history on so many devices. I think they have Doom running on a lawnmower somewhere. It’s a franchise that I think everybody deserves to play. And to be honest, I was in a meeting with Marty and the team a couple of years ago and I asked Marty what he wanted to do and he said he wanted to ship it on all platforms. I said, let’s go do that. It was as simple as that.

Now I want to bring it back though, because I get a lot of questions about, hey, if I’m an Xbox owner, what does it mean? And what I want to say – and I thought it showed up so well in the show today – you saw an amazing collection of games that are coming to Xbox. They’re going into Game Pass day one, and Game Pass showed up so well. If you buy the game on our console, you get to play it on PC. So the cross-entitlement stuff is all there.

And we’re focused on future hardware with forward compatibility. Our commitment to our Xbox customers is you’re going to get the opportunity to buy or subscribe to the game. We’re going to support the game on other screens, and you are going to see more of our games on more platforms. And we just see that as a benefit to the franchises that we’re building. And we see that from players and the players love to be able to play.

Ryan McCaffrey: You haven’t really commented publicly much in the last couple months, so I wanted to ask you about the studio closures and Tango Gameworks and some of the thoughts behind the decision-making there. I mean, you had a critical darling in Hi-Fi Rush. You had folks like Aaron Greenberg saying it checked all these boxes for us and did all the right things here. So walk me through the decision of why really Tango specifically, not to disrespect the other studios that were closed, but that was the one that really seemed to kind of stick in the community’s craw a bit. I’m hoping here that you can take the opportunity to address that closure and some of the recent changes in Xbox.

Phil Spencer: Yeah, the closure of any team is hard, obviously on the individuals there, hard on the team. And I try to spend all of my focus, as you said, I haven’t been talking publicly about this, because right now is a time for us to focus on the team and the individuals. It’s obviously a decision that’s very hard on them and I want to make sure through severance and other things that we’re doing the right thing for the individuals on the team. It’s not about my PR, it’s not about Xbox PR, it’s about those teams.

In the end, I’ve said over and over, I have to run a sustainable business inside the company and grow. And that means sometimes I have to make hard decisions that frankly are not decisions I love, but decisions that somebody needs to go make. We will continue to go forward, we will continue to invest in what we’re trying to go do in Xbox and build the best business that we can, which ensures we can continue to do shows like the one we just did.

Ryan McCaffrey: On the Activision Blizzard saga…

Phil Spencer: You call it a saga?

Ryan McCaffrey: Well, just from covering it and watching it it felt like it put five years on my life to somebody that covers Xbox. I can’t imagine how it was for you. But as that came to a close and you started integrating Activision Blizzard King into Xbox Studios, has that changed the way that you think about running the business at all? Because the organization just got quite a bit larger almost overnight in a sense.

Phil Spencer: No. I mean we’re still, and I hope we showed this today, we’re going to be about building great games for people to play, about giving them choice on Xbox to go play. We’ve got a broader library of games. The thing I’m starting to see, which I really love, is the organic collaboration between our teams that are coming out and trying to build that community of creators that, I mean, you and I will go back to the time of Xbox where we basically had four games: Fable, Forza, Gears, Halo. And we would just literally, every four years I would have to come to E3 and I’d somehow try to make those four games seem different every year for the community.

And now what we have in gaming is just an amazing collection of teams and franchises that are doing great work. I feel an added responsibility as somebody who loves this industry for the franchises that show up on our stage. But I still think in the end it’s about putting amazing games out. I’m really proud of the work that Ninja Theory did with Hellblade and the response to that. And we have an amazing internal team now that’s focused on us doing a bunch of Unreal games as an example. And then you see things like South of Midnight, which might’ve been my game of the show, I thought it looked so good, you got Perfect Dark, you have Gears.

So for us, as the organization gets bigger, I think it’s just more important that we can take bets together and try to do innovative, creative things, and that will continue to drive us.

“I’m really proud of the work that Ninja Theory did with Hellblade and the response to that.

Ryan McCaffrey: Phil, you and I in the past have talked a lot about the past of Xbox because there’s a lot of great memories. But the present, as we saw today on the Xbox Game Showcase is great. The future looks super promising here, and the Xbox business has changed dramatically.

Phil Spencer: It has.

Ryan McCaffrey: And so when you make an almost $70 billion acquisition, do you start hearing from your bosses more? Or are they still staying out of your way and letting you run the business? Because that’s not an insignificant amount of money to spend on growing the business.

Phil Spencer: It’s definitely not an insignificant amount of money! No. The support we get from the company, and my boss is the CEO of Microsoft, Satya Nadella. Hey, Satya. We are given a ton of leeway to go and run and grow our business. But I’ll say the thing that we challenge ourselves to do is to try to do new things.

If I go back eight years ago, we said, hey, we’re going to go ship all of our games on PC and console, and if you buy one on one, you get it on the other. And I got some reaction from people of, this is the worst decision ever. This is going to be the end of Xbox. We announced Game Pass and we started doing Game Pass, and I know some people looked at that and said, oh, you’re going to teach people that games are free and you’re going to undermine the value in games.

And what I can say sitting here today from our decisions on cloud, on Game Pass, on console, right now we have more Xbox console users than we’ve ever had in the history of Xbox. And even when I look at things like the impact of Game Pass, because I watch that and I love Game Pass, how it showed up in the show today I think was fantastic. But we also want people to be able to buy games. So I go back and I look and I say, okay, over the last five years, what’s happened to game sales on our platform? We’re up double digits every year over the last five years on game sales, on Xbox consoles.

Doing a $70 billion acquisition will push us to try to do more. It’ll push us on cloud, it’ll push us to go find customers in new places, continue to think about access to amazing games, enabling creators to do great work. But I actually think for the team, that’s just a self-motivation that the team has and it’s fun to be a part of.

Ryan McCaffrey: Black Ops 6 day one Game Pass.

Phil Spencer: Some people said I wouldn’t do that.

Ryan McCaffrey: Most people in this room have probably been used to spending 60, 70 bucks on it every year. Now if they’re already subscribing to Game Pass they’re good to go.

Phil Spencer: But it’s a choice. We didn’t say to anybody, you have to subscribe to play. If you want to buy Black Ops, great. It’s great for us, it’s great for the developer. If you want to subscribe, it’s also great. I want to give you the choice on how you play your games and who you play with and not try to do slimy platform things to force you to do what I want you to do. Give the players choice and what they want to do and who they play with.

Phil Spencer: Photo by Loren Elliott/Getty Images.
Phil Spencer: Photo by Loren Elliott/Getty Images.

Ryan McCaffrey: So the Activision Blizzard thing, we watched it play out in courtrooms.

Phil Spencer: With my tie on!

Ryan McCaffrey: I’m curious, what was the biggest unexpected challenge for you and the team at Xbox during the course of that?

Phil Spencer: For the management team like Sarah Bond, Lori Wright, Linda Norman, who’s our lead lawyer at Xbox, we all had our same job of running Xbox and doing the things that we needed to go do. Matt Booty. But then we actually added this second job in the time of having to work through regulatory.

It’s my fault as the head of the business, I didn’t really internalize that in the beginning of what a drain that would be on the team. And I think we saw that. I think we saw it in our execution on a couple things that we were doing multiple things at that time that we hadn’t planned for. And I’ll say it’s really nice to be post the acquisition working with those amazing teams. I mean, how they showed up in our show today… fantastic. I just thought it was great. I mean, we had World of Warcraft in an Xbox show. It’s just crazy.

Ryan McCaffrey: Was there ever a point in the process, because it really, between the CMA and the FTC and all these places, was there ever a point where you thought, oh, this might not happen, this might get rejected?

Phil Spencer: Well, we always have to plan for all contingencies. We consider everything. You have to in running the business. But we felt like we were on the side of right, meaning we weren’t doing this so we could pull Call of Duty from PlayStation players. It was never in our plan. I mean, I think my whole inbox leaked on the internet, so if anybody wanted to find that that was the plan, you would find it somewhere and it wasn’t there.

So we believed we were in the right on getting this deal done, so we stayed convicted. But there were dark days, like when the CMA came out and said, no, this isn’t going to go through. And the drag on the teams, the teams at Activision, Blizzard and King, they’re dealing with this uncertainty. So it’s so nice to have it behind us, and now we can just focus on building great games together.

“We love that we have so many PC players, more than we’ve ever had. Our console’s doing so well.

Ryan McCaffrey: On that topic, we talk about all these huge changes to not just the industry, but again, specifically your business, the Xbox business over the last five or so years. What is today as we sit here now, what’s the thesis statement? What’s the modus operandi for Xbox today, and how has it changed over the last five years?

Phil Spencer: Yeah, I see some of the feedback that our messaging from some people that maybe our messaging hasn’t been consistent, and I always hear the feedback and I take it. Feedback is great. I will say from early on, we would say, when everybody plays, we all win. How do we get in a place where everybody can play video games? And we’ve made different progress on PC. Now PC is a huge business for us. We love that we have so many PC players, more than we’ve ever had. Our console’s doing so well.

But I think if you sit back and you try to frame this industry through the lens of the tradition of who sold a console today, and that’s the only solution to making gaming better, I think Xbox is doing something different than that. We love our consoles, we love our PC players, but really it’s about creators and players and amazing games coming to them.

Ryan McCaffrey: It has, admittedly, for all of us, creators, players, it has been a weird generation because it started weird in this pandemic. And I’m curious, would you do anything differently in this Xbox Series generation if you could go back and tell yourself?

Ryan McCaffrey: I’m not really a regrets guy. There’s a hundred decisions I made that, yeah, in hindsight, maybe I would make it different with all the data. But you got to just bet. You got to bet on yourself and bet on the teams, have a vision of what you’re trying to do. When you get punched in the face, you get back up and you try to go do things. So I’m not really one who looks back and say, I wish I would’ve done this or that. If you’re in a position like this, with the team that we have, you just have to believe and you have to keep pushing forward and take the feedback from amazing customers that talk to us every day.

Ryan McCaffrey: Has the calculus changed? You spoke to Game Pass and how much of the value proposition has increased after today even. But has the calculus changed on how much Game Pass subscriptions are valued at Microsoft versus direct sales? Because when Game Pass started, it was, wow, this sounds really cool, and you’ve pledged to put every first-party release in there. And at the beginning there weren’t a lot of those, but now you’re almost like you had a whole show full of them. So what is that metric for success? How does Game Pass influence the success of the business?

Phil Spencer: The thing I look at every morning is how many people played on our platforms and how long did they play? If they played through the subscription or they paid for their games, or they’re playing a free-to-play game, honestly, that’s not the most important thing.

So Game Pass, I love it. The thing I really love about Game Pass in our show today, a game like Mixtape. Nathan Vella [co-head of Annapurna Interactive] and I can have a conversation and say, with a team that’s been in Game Pass before, when you think about the studio behind it, they had great success, now we’re going to do a second game. Or Winter Burrow, another just awesome game that we can go invest in.

And Game Pass gives us an ability… you can go invest in Call of Dutys and Diablos all day, and we love that, but you also get to invest in new things that come out, and we just think that’s a really important part of the equation.

Game Pass is up double digits. PC is growing really well, cloud’s growing really well. But if somebody decides they want to buy their games and build their library, peace. There’s no, we need to turn everybody into this or that. We just want people to play.