Over the past few decades, Microsoft has had a well-crafted image of the console wars with the impression that Xbox execs are cheery, cool, and unnerved. But the lawsuit between the U.S. Federal Trade Commission and Microsoft has seen that mask slip, revealing how management used media and news releases strategically and even effectively marketed its own cloud gaming product. I was able to get a glimpse from the inside of how they are thinking about how to make money from Gamers were thrilled.
Another side of the brand was shown through evidence uploaded this week. Microsoft Gaming CEO Phil Spencer called the console wars “a social construct within the community” and said that in reality, Xbox was far behind PlayStation and Nintendo, “ranking third for quite some time. I was staying in.” Matt Booty showed in his email that Xbox is indeed greedy and competitive internally. In 2019, he wrote that Microsoft could “put Sony out of business.”
I’ve been interviewing Microsoft and Xbox executives since 2019, taking careful notes on how the company has marketed its new consoles, cloud gaming services, and position on Sony. We found that some of the insights gleaned from court testimony and documents show what Microsoft really was thinking internally, in direct contrast to external marketing. While Microsoft has sometimes confidently shown off new products, internally it has acknowledged greater concerns, but it’s all about how the gaming industry relies on a culture of secrecy and why this lawsuit is taking place. It highlights what is an important moment in understanding this industry.
When asked for comment, Microsoft declined to provide a new statement, pointing to past testimony and arguments with IGN.
Closed-door deal
The trial gave us more insight into the companies Xbox was considering buying to compete with Sony and Nintendo. That long list includes Sega, Warner Bros., Nexon, Supergiant Games, Niantic, Zynga, Bungie and even Final Fantasy publisher Square Enix, according to internal documents.
Interestingly, in 2020, Bloomberg reported that Microsoft: I was thinking of buying a Japanese studio. At the time, Microsoft Gaming CEO Phil Spencer denied the reports. In an interview with GameSpotsaid the report was “inaccurate” and said, “I mean, I don’t attend every meeting every team has, but I tell you otherwise.”
In November 2020, just days after GameSpot’s interview, Microsoft indicated its willingness to pursue Japanese companies, particularly Sega. In a November 2020 email to Microsoft executives, including Microsoft CEO Satya Nadella, Spencer said, “SEGA will continue to deliver well-balanced gaming across segments with global geographic appeal. We are building a portfolio that we believe will help accelerate Xbox Game Pass both on and off console.”
On a technical note, it could be argued that it is true that Mr. Spencer said he has not yet reached out to the Japanese studios, but a few days later he will carry out Sega’s request up the food chain. These internal documents are attested to by a Bloomberg report in 2020, as it began to do so. It was indeed accurate.
I recall examples like Bungie categorically deny the reports Microsoft wanted to buy it, but the documents revealed that to be true, not a one-to-one comparison, but Variety magazine interview with Bobby Kotick In May, he said the company had no systemic problems with harassment and said these were “misrepresentations reported in the media.” He blamed the efforts of the workers’ union for the problem.I reported these systemic issuesand saw Blizzard evades reporter follow-up Ask about Kotik’s comments.
These are examples of well-sourced journalists denying and denouncing their inaccuracies. Why does this happen? In the gaming industry, big companies and executives have made all sorts of claims against journalists, but without a strong gaming press, these companies can’t keep up with the past. is difficult to hold accountable for his remarks. Few game journalists can interview Kotik or Spencer every year, and even fewer remain in the industry to keep tabs on them.
put on a brave face
The trial also gives a peek behind the veil of marketing and PR that companies like Xbox use to raise expectations for products they lack confidence in.
In 2019, I walked the final physical E3 show floor. That year’s gaming conference was ignored by Sony, but Xbox came to the fore, showcasing its upcoming console and its cloud gaming service, Project xCloud, on a sleek, green-backlit black stage. .
A few months later, xCloud VP Kareem Chowdhury told me in a 45+ minute video. CNN interview“We often talk about a 16-year-old boy in Mumbai. Hello, but probably don’t have the ability to play it today. That’s where we think streaming presents a real opportunity. “
Choudhry’s confident and highly optimistic remarks masked great fears about Microsoft’s cloud gaming and the reality of who would even want to use Project xCloud. Spencer’s 2019 internal emails, which were released Monday, are more likely to be published soon. He wrote that in the future, mobile gamers will seek more casual cloud gaming titles, such as: Mine Craft and robloxis not Hello.
Project xCloud’s first adopters are probably hardcore Hello Spencer hypothesized that if the players didn’t care, neither would the other players. “If they like us, they will spread the gospel,” he wrote, comparing the service to: Fortnite.
“If you ask a mobile gamer what they want, they wouldn’t say it’s a Bluetooth connection to an Xbox controller and playing Halo on their phone. Let’s go,” Spencer wrote.he pointed out that Hello It didn’t even have the right business model to appeal to these mobile gamers. They want free-to-play games.
last October, Xbox happily called When the UK expressed concern that owning Activision Blizzard could give Xbox an unfair market advantage over competitors such as Sony and Nvidia, cloud gaming was described as ‘immature’ and ‘early technology’. ” was said. UK regulators didn’t buy into the allegations and still blocked the deal, citing Microsoft’s huge market share in cloud computing through its Azure service.
“We’re just like Polaroid,” Spencer said in an email, comparing the Xbox to film photography, both of which have struggled to grow in market size. He and his Xbox cloud gaming executive Katherine Rookstein spoke candidly about the shortcomings of cloud gaming services. He likened mobile gaming to digital photography, seeing that both markets are growing rapidly.
“Our solution here isn’t really customer-driven. It’s guided by what we have and what we want. I don’t like this, but I’m not smart enough to come up with anything else.” wrote Spencer. Spencer highlighted how Xbox’s core business runs counter to what gamers actually want, and the big problems the company faces as a result.
Mr. Spencer outlined how he sees the industry. Gamers are growing on mobile, but they’re playing Chinese games, free-to-play titles, and more casual games. All of these areas Xbox has a lot to offer. The core of the Xbox is Halo, but that core hasn’t grown.
What could Xbox do next? Spencer loudly brainstormed several options, including the acquisition of Warner Bros. and South Korean video game publisher Nexon. Glucstein, an executive in the cloud gaming division, agreed that he didn’t want to build a “golden toilet” — something flashy but essentially useless.Both executives expressed concern that xCloud could become such symbol of excess.
Console wars are being waged in secret
Another part of the Xbox story changes depending on whether you speak to regulators or journalists in court. That’s the tone in the so-called console wars, where the importance of Xbox to different audiences clearly varies. In 2020, Xbox told me: the strategy is Reach gamers wherever they are, whether on the subscription service Game Pass or on a Windows PC. However, in internal documents and testimony, Xbox admitted that it only wanted to sell games on the Xbox console…and began bundling these titles with Windows to drive revenue, Spencer said. . “That’s not Sony’s business,” he said in court.
During a panel discussion with reporters earlier this month, Spencer echoed this, saying of Xbox’s strategy, “We’re going to focus on enabling player choice, but we’re going to make sure the console is central to how people think. I know it’s like that,” he said.
Xbox is trying to play every aspect here, changing tunes to suit everyone’s demands. But the FTC trial has given us a unique perspective on what’s really going on. According to internal documents, Microsoft executives had noticed their company’s growth was slowing and were looking to use cloud gaming to build an attractive way to reach mobile gamers. When UK antitrust regulators cited cloud gaming as the reason for blocking the deal, Microsoft cited a serious flaw in the technology, an issue Spencer and Grookstein discussed in his 2019 internal email. clarified. The company ostensibly expected casual mobile gamers to pick up Project xCloud, but internally, only hardcore gamers would try the cloud, and even they wouldn’t mind. I was worried about it. And despite falling behind its console competitors, Microsoft is fully committed to coming out on top. Tried Mixer and its $10 million deal To lure Twitch streamers.
The lawsuit continues until Thursday, and a judge is expected to make a ruling within the next two weeks. The contract with Microsoft Activision expires on July 18th. If the deal fails, Microsoft could renegotiate with Activision, with a $3 billion penalty.
The lawsuit is one of the few opportunities for transparency in an industry that is usually extremely tight-lipped in a secretive industry. Some of these documents were deleted and quickly redacted. In a world where companies craft narratives about upcoming products to market conditions, it’s invaluable to get a peek into what a company is really thinking. The next time a company pushes its product hard, it’s always worth asking why.
Rebekah Valentine contributed to this report.
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