This past month, long-time Microsoft veteran and Xbox lead Phil Spencer retired, giving the floor to incoming CEO Asha Sharma.
Microsoft responded with a big partnership with AMD for an Xbox-Windows hybrid console, that will play not only Xbox console games but also full PC games from the open Windows marketplace. Xbox’s Project Helix is on the horizon, and from speaking to various staffers, the general mood at Xbox couldn’t be more energizing.
This past week, incoming CEO Asha Sharma was joined by Microsoft top CEO Satya Nadella in an internal Q&A to discuss Microsoft’s top-down vision for gaming. Donned with an Xbox hoodie, it was honestly refreshing to hear Satya Nadella speak so positively on the Xbox division. We verified the transcript of the Q&A with multiple sources. Here’s what was said.
Asha Sharma introduced Satya Nadella, who remarked about his happiness to be there. He also noted how when he initially came on as Microsoft CEO, there were similar doubts about his knowledge on cloud and infrastructure — before he led Microsoft towards being a global leader in the space. He also noted that gaming remains one of Microsoft’s biggest capital investments, representing a long-term view of its role within Microsoft.
“There are core identities in this company. I don’t think Microsoft will exist without these identities continuing to thrive. We’re a platform company, a developer company. Being a knowledge worker company, and gaming. These are the main identities of what Microsoft has always meant, and will always mean. Therefore, we need to take that — we don’t take it for granted. We need to renew it. I’m really thankful to Matt [Booty] and Phil [Spencer] and Sarah [Bond], and all of you who have built this franchise into its 25th year.”
Sharma thanked Satya for the opportunity, and noted Xbox’s uniqueness. She hailed the Xbox team, calling them “incredible,” noting that that over 10% of the Xbox team had been there for over twenty years. She said it emphasized Microsoft’s long-term mindset, reiterating Nadella’s comments on being “long on gaming,” and asked him to elaborate on that point.
“Frankly this applies to anything that we do. We should be in the core of what we do here for gaming’s sake. It’s not about anything other than being just an excellent company, and an excellent steward for what it means to produce great games, produce great systems and hardware.”
Nadella emphasized gaming’s legacy and influence on Microsoft and the wider technology stack, talking up how gaming has served as an accelerator for cloud, Windows, the GPU-based server tech revolution, and beyond. But he also said that doesn’t mean moving away from what people expect of gaming, and explained why Microsoft will “always” continue to invest in gaming.
“The trickle from that excellence to the rest of the company becomes straight forward. I joke with [NVIDIA CEO] Jensen Huang, if it wasn’t for gaming [NVIDIA] wouldn’t exist. Think about it, without DirectX, I don’t think the entire GPU revolution, or the acceleration would’ve happened.”
“That’s why I’m long on it. Phil, he’s always talked to me about how gaming is the largest entertainment category — what is gaming in its most expansive form going forward? This doesn’t mean we walk away from people are doing today — when we think about a AAA game on a console. The question is about where else can we go to extend that. For me, we’re long on gaming. We’ll continue to invest, and we’ll always do so. It’s up to this team to show an excellence in execution, and creativity. Software always carries risk, but this is software with lots of creation risk. It’s way different. But yet, we have to be the best-in-class at it.”
“For me, we’re long on gaming. We’ll continue to invest, and we’ll always do so.”
Microsoft CEO Satya Nadella
Xbox CEO Asha Sharma discussed the time she’d been spending with Xbox’s different teams, and talked about Microsoft’s long-term legacy as a software company “factory” historically, emphasizing that great games can’t be “manufactured” in this way, but instead need to be “crafted” by humans. “I’m spending a lot of time thinking about how I can empower these worlds, these stories, and these characters,” she said, asking Satya Nadella for his thoughts on Microsoft’s responsibility as a company to protect the Xbox fanbase.
“The storytelling,” Satya began, “why do we love games? They tell the stories, the mythologies that make us who we are. Getting down to that core, the craft that goes with it, this is the place where we have to get the cultural zeitgeist and then have it manifest in everything that we do. In the games, in the marketing approach, everything that we do in this brand represents that.”
Nadella said he hoped other parts of Microsoft could eventually learn from Xbox, he said Xbox “at its best lifts the entire company,” owing to its consumer-facing nature. He told anecdotes about how some of Microsoft’s bread-and-butter high-powered enterprise customers often want to meet him specifically because they’re Xbox customers at home, not just because they’re in enterprise. Gaming “emotionally touches us,” he said, saying he wants that aspect of Microsoft to exist “always.”
Xbox CEO Asha Sharma acknowledged Xbox’s difficulties as of late, saying that gaming had been in a transition phase. She said “everything is being relitigated” in regards to Xbox’s strategy, echoing our recent interview with Asha Sharma, where she said that she’s investigating some of Xbox’s decisions over the past year. They discussed where gaming will go over the next phase of its life, but Satya Nadella cautioned that Xbox can’t lose sight of what it already has.
“We have to make sure that the friends we have today, are the friends that you have tomorrow,” Satya said of Xbox’s existing customers. “You want to wake up feeling like your friendship has even grown stronger. We have to really make sure, whether it’s console, whether it’s PC, whether it’s the lover of Forza, Halo, we really want to make sure they love us for what they expect us to do.”
“We have to make sure that the friends we have today, are the friends that you have tomorrow. You want to wake up feeling like your friendship has even grown stronger. We have to really make sure, whether it’s console, whether it’s PC, whether it’s the lover of Forza, Halo, we really want to make sure they love us for what they expect us to do.”
Microsoft CEO Satya Nadella
Satya Nadella talked about how gaming can be a force for good in the world, and took a swipe (pun lol) at the doom-scrolling culture that has begun encroaching on our free time. He said “joy” in active-engagement hobbies like gaming and coding have an opportunity to make the entire world a better place.
“Attention is the a finite thing humans have. How can we earn permission, tastefully, for more of that attention? It brings joy back … that’s the thing I always think about. Gaming is an active engagement. It’s not that passive ‘scrolling’ on things, and so on. I do want us to be the ones to bring back that active engagement. That’s what console and PC represents in some sense. Why do people love the controller, the console, or their PC … it’s because you’re immersed. I look at the reports. The level of hijacking of our attention that’s going on … I want us to reverse that. Joy in coding, joy in gaming, that’s all I want us to live in. If we can bring that back, I think the world would be a better place for it.”
Welcome context from Satya Nadella is long, LONG over due
Based on conversations I’ve had with Xbox staffers over the past few years, I can’t help but feel some of Satya Nadella’s comments here are probably long overdue.
I concede fully that I’ve taken a dim view of the way Satya Nadella has handled aspects of Microsoft’s business, whether it’s the rush to AI tools before they’re really fit for purpose, the mishandling of the Surface brand, the death of Windows Phone… and the disconnection between Xbox and its fans of late. But it really does seem like Microsoft has identified that it’s stepped off the rails a bit as it seeks to find itself in an increasingly chaotic consumer tech market.
“I want us to keep rediscovering that moment. The games people love, the consoles and systems people love, and really just doing the best job we can as a company. That’s it. And that’s all I want us to do,” Nadella said in closing. “For those fans who have counted on us, I just want to make sure that we live up to what they expect of us. I know there’s a lot of feedback … believe me, I’m on Twitter too sometimes … but I really think it’s that passion, though, that they have. This is the base of folks who just want us to do a fantastic job, of really doing what we’re meant to do as team Xbox.”
“The level of hijacking of our attention that’s going on … I want us to reverse that. Joy in coding, joy in gaming, that’s all I want us to live in. If we can bring that back, I think the world would be a better place for it.”
Microsoft CEO Satya Nadella
This realization and acknowledgement of negative consumer sentiment does seem to be echoing across other Microsoft divisions beyond Xbox too, including contacts I have in Microsoft’s AI and Windows stacks. The teams in Microsoft’s various divisions have privately and even publicly in some cases spoke up about how energized they feel lately, and I think it’s in part due to a generalized re-focusing on wanting to move Microsoft to a better place.
To hear it directly from Satya Nadella that the firm will “always” invest in gaming should be reassuring to those who have succumbed to fears that Microsoft isn’t taking a long-term view here. Portents of Xbox’s demise are decades old, and will probably continue as it celebrates its 50th anniversary in another 25 years from now too.
Xbox has a mountain of challenges to overcome. Xbox’s marketing has become virtually non-existent and when it does exist, it has not resonated. The decision over exclusive content continues to cast a shadow over the console brand, and the anaemic hardware production and global footprint has left Xbox hardware with a sense of sliding relevancy. And this is before you consider external challenges, like the battered attention spans Nadella alluded to, and spending squeeze as non-gaming platforms and free-to-play games soak up revenue for traditional play.
Project Helix, comprising the large Xbox console ecosystem and wider Windows ecosystem, could be the unique catalyst Microsoft needs to rediscover its edge in the space. It’ll be the fight of Xbox’s life, but it sounds like the team is more ready than ever.
Should Xbox have exclusive games?
The debate over whether or not Xbox should have exclusive content has reignited since new CEO Asha Sharma took the reins. What do you think?
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