Ahead of the first-ever Xbox & Bethesda Showcase on Sunday, Xbox CEO Phil Spencer hosted a series of talks with Satya Nadella, Microsoft’s CEO, and members of Microsoft’s Gaming Leadership Team about the future of gaming at Microsoft. We shared some of the highlights of the day in another article, but we also wanted to share one of the greatest moments of the day for ourselves.
The conversation between Spencer and Nadella focused on the importance of gaming at Microsoft and in the world. Since this was such an important conversation we thought it would be best to share it in its entirety. (Please note that we have edited something for the sake of clarity.)
Phil Spencer: I’m really excited to speak to Satya Nadella about how Microsoft can advance gaming in general. Thank you for being here, Satya. Why don’t we start by talking about why gaming is such a high priority for the company?
Satya Nadella: Thank you, Phil.
Gaming has been key to Microsoft since our earliest days. Our oldest currently supported software franchise is our Microsoft Flight Simulator game, which we released three years before the first version of Windows. Gaming is fundamentally aligned and interwoven with our mission as a company. When you talk about Xbox’s mission to bring the joy and community of gaming to all of the people in the world, which I absolutely love, this is exactly what I think of when we think of Microsoft’s mission, which is to help every person, every organization around the world empowering planets to achieve more.
As a company, Microsoft relies on gaming. We believe we can play a leadership role in democratizing gaming and defining that future of interactive entertainment, frankly, on a large scale. I think there are really three areas or key areas where we believe we have an incredible competitive advantage. First, our leading position in cloud computing; second, the resources we have to build subscription value with Xbox Game Pass; and third, our overall focus is on empowering YouTubers. I am very excited about the opportunities in gaming.
Spencer: How about if we start talking Azure blue? Here’s the thing when I think about it. Since the birth of personal computing in the 1970s, the ability to play games has been limited by the cost and performance of whatever device you’re using, be it an arcade cabinet or a PC, a phone, a tablet, whatever whatever. And these costs and requirements have always severely limited who can play, where and with whom they can play.
When I was a kid it was crazy to think of one Galaga Machine or a Mrs. Pac-man Machine in your house. You had to go to the arcade. More recently, if you couldn’t spend hundreds of dollars on a game console, possibly thousands of dollars on a high-end PC, you just couldn’t get any significant part of the global gaming community.
The cloud will allow us to completely remove these barriers to global gaming. Of course there is still a place for consoles and PCs, and honestly there will always be, but through the cloud we will be able to offer a robust gaming experience to anyone connected to the internet, even on the most underperforming ones and cheapest devices, devices that people already own. And with the cloud, gaming gamers can fully participate in the same Xbox experience as people on local hardware. We couldn’t do that if we weren’t part of Microsoft.
Nadella: That’s so well said Phil. I mean the cloud and Azure basically allowed us to really put people at the center of the game and allow them to play the games in high fidelity like you said where and whenever you want, on any device. Cloud gaming really is a game changing experience. I mean, for me you just go to Xbox.com/play, and I’m telling you, it’s a really quick and easy way to get into gaming. It was a game changer for me. I love that I can switch from my PC to my Xbox to my Duo, pick up any game right where I left off, and even use Duo’s touch controls. That was a great success and of course I can also use my controller on my PC.
You can also see the power of the cloud when you watch the development of some of our first-party games like Flight Simulator. It illustrates, at least to me, what we can do in a unique way by bringing together the power of the entire Microsoft technology stack, from Azure AI to Bing Cards to Spatial Computing, which essentially literally created a digital twin of a the whole planet.
And as you know, Phil, we also see a tremendous pull in game development on Azure with companies like Pearl Abyss Scaling their games, with the performance of our cloud. And of course, game development doesn’t stop when the game is released. In fact, from all of the work you’ve all done, we’ve learned that, in a way, it starts after you start the game because you want to be able to experiment, learn through analysis, and continually change the gameplay.
And one of the things I look forward to the most is how we game developers enable just that Azure PlayFab, which now has more than 2.5 billion player accounts. It’s used as the backend for 5,000+ games, so a lot of exciting things the cloud can make possible.
Spencer: Yes, and the complementary piece opens access to the games themselves. And that’s where Game Pass comes in.
Nadella: That’s true. With Game Pass, we’re really redefining how games are distributed, played and shared. Content is the driving force behind the growth of Game Pass, which is why I’m so excited about our acquisition of ZeniMax, which brings some of the most iconic and popular games in the world to the service. When Game Pass gets into the browser, the subscription value is transferred from the console to the phone through the PC and it’s great to see the progress.
I look forward to as we continue to invest in Game Pass to add more content and bring the service to even more regions as we progress.
Spencer: Yeah, I’m so excited about the potential here. We’re building on Game Pass’s value proposition by building our first-party game studios. As you said, I am really proud of the recent acquisition of ZeniMax where we are bringing an amazing catalog of games to Game Pass just like you mentioned.
For the first few decades, the only way to play the game was to buy the game outright. And for many players, this can be an investment that limits their ability to play. That cost, the retail model, has limited audiences for creators and the entire industry. That’s why we created Game Pass to give gamers the ability to play more games with their friends, ultimately attracting more players and making games more accessible to everyone.
Earlier this year we announced that our Game Pass subscription had exceeded 18 million members. And what really surprises us is that it is changing the way our entire industry thinks about Xbox and how we can reach a wider audience. And we’ll hear more about it later.
Finally, let’s talk about YouTubers who I know are a huge priority for you and the company as a whole.
Nadella: Yes absolutely. If you take a step back and look at the next decade and technological advances, I think one of the most defining trends will be how the balance between consumption and creation is achieved and what changes it will bring. More and more people are already creating something new and magical every day. You see this on all sorts of platforms, and there are growing communities out there looking to discover, explore, and build on the creations of others.
I believe that for everything we build, we will need this positive cycle between content consumption and community-driven commerce. And there is no better example of this than gaming. That’s why I’m so excited that so many games are developing into these metaverse economies and societies, just like Minecraft, Law? It is one of the leading platforms in the creator economy.
Some of the coolest things I’ve seen over the past year is how people have used it Minecraft To create new worlds in order to maintain the all-important sense of community and belonging in times like these. They build whole college campuses Minecraft. They also expand this economic opportunity. In fact, the developers generated over $ 350 million from more than a billion downloads of the mods, add-ons, and other in-game experiences. And that’s fantastic to see.
And when I think of our new platform Microsoft Meshwhich allows you to naturally holographically interact with other people with real presence, one of the most exciting uses in my opinion is going to be gaming. Niantic, for example, showed a great demo Pokémon Go with mesh at our last event. We are very excited to see what YouTubers can do with the platform changes over the next 10 years.
Spencer:Yes, and we’ll learn a lot more about YouTubers in our first group discussion that’s coming up next. We have created an entire organization dedicated to supporting the game industry and developers of all sizes. But you’re right, we see developer health in and around our games as one of the most important barometers of our overall business health.
Thank you, Satya, for joining us today.
Nadella:Thank you Phil. It’s great to see how we work together as One Microsoft to bring the joy and community of gaming to everyone in the world.
