Opinion: For Xbox, The Phil Spencer Era Is Over – Lords of Gaming

“In Phil We Trust”

When Phil Spencer took over as head of Xbox in 2014 fans were elated. The previous Xbox lead, Don Mattrick, represented everything wrong with Xbox and bore the brunt of criticism for its failures during his reign. The Xbox One launch was an unmitigated disaster. Focusing on seemingly everything but video games and the conversation about the console always being online was the dagger that the competition was all too willing to take advantage of. In stepped Daddy Phil, as fans have called him, to save Xbox and guide it to dominance once again. Flash forward to 2023 and Xbox is again at a crossroads. One of which may be even more dire than with its stewardship under old Don, so what happened?

The above was Phil Spencer’s 3-point strategy to save Xbox and move the company forward. To his credit, he did all of those things for better or worse. While he’s credited with saving the brand, I’ll propose that’s highly dubious. But the fan outcry was gung ho about Phil because he was a breath of fresh air, he also wasn’t Don Mattrick. Phil wasn’t corporate, he wore cool t-shirts and handled himself well on stages like at E3. He was open with the media and fans. Constantly keeping them informed and apprised of what was going on with Xbox. Phil was likable, we like that in our corporate overlords. That likability has given Phil Spencer a long rope but there’s an end to that rope.

In the years since Phil has taken over though, Xbox hasn’t gained any ground on its competitors. In fact, the gap has widened. There was a ton of optimism surrounding the launch of the Xbox Series X. That optimism has carried forward the goodwill from fans and media for a lot longer than it deserved if you’re asking me. The Xbox Series X was touted as being the most powerful home console ever made, it isn’t. Xbox Series X launched with exactly no exclusive games and the major entries that followed were disappointments. Xbox routinely sells fractions of software compared to its competitors on third-party releases and quite often, these third-party games released on Xbox perform technically worse than the competitors’ PlayStation 5 versions.

The lone bright spot has been Gamepass. Which seemingly hit its crescendo and subscriptions are beginning to drop. The numbers released by Xbox’s recent financials are muddy and misleading. It’s difficult to get a picture of the state of Gamepass. But needless to say, if it was doing gangbusters, it wouldn’t be this hard to find out. If this sounds familiar that’s because it is: a disappointing next-gen console launch, underpowered hardware, and few exclusive games to speak of, I think you’re getting my point.

Pretty much everyone can agree that they’ve seen enough to admit something is wrong with Xbox, and if something is wrong with Xbox then someone has to be blamed…

It’s not about Redfall, but it’s also about Redfall

Microsoft acquired ZeniMax Media and all of its studios in March 2021 for US$7.5 billion, becoming a sister organization of Xbox Game Studios. Arkane Studios is a widely respected studio under the ZeniMax and Bethesda umbrella. While not slapping commercial successes left and right, critically, games like Dishonoured, Prey, and Deathloop have fit the bill. Rare is it to hear someone criticizing the actual quality of Arkane Studio video games. That is until the recent launch of Redfall.

Don’t let your favorite Xbox pundit sway you on this, Redfall absolutely sucks. It performs horribly, visually looks worse than launch PS4/X1 games, and the enemy AI is inadequate, to put it kindly. And all of this was after a significant delay! Not only that but pre-release messaging misrepresented key components of how the game ran and played. How does a studio known for quality video games suddenly release a dud of this magnitude? Redfall isn’t a one-off unfortunately, it’s a symptom of a years-long Xbox trend that many have tried hard to ignore.

Unlike others, I don’t find it coincidence that Arkane suddenly releases the worst game in its history after being acquired by Microsoft. Long-standing questions have surrounded the management and day-to-day running of Xbox’s first-party studios and rightfully so. Halo Infinite was touted as a return to form for Xbox’s biggest exclusive gaming brand. After being pushed out of the launch window for Xbox Series X, it released without promised features and visually wasn’t up to snuff at all. It’s taken over a year to get the game to its promised launch state and by now, people have more or less forgotten about Halo Infinite outside of diehard fans. How does this happen? How does a brand as big and as prominent, with almost infinite resources continually fumble their most valuable properties? Mismanagement, that’s how, and more specifically? Phil Spencer.

Recently, Ryan McCaffrey at IGN spoke about the state of Xbox after the Redfall debacle. Always a staunch supporter, Ryan seemed at a loss for words at the state of the game and really, the brand itself. Everyone on the panel of IGN’s Podcast Unlocked looked and sounded bewildered, betrayed even after the vertical slice they all had played during preview coverage was not at all indicative of what was delivered at launch. What I want to latch onto is Ryan’s analogy to sports and how video games don’t work the same in terms of hiring and firing executives. Well, video games are a business and in business, there are winners and losers just like sports. Maybe not at the trigger finger level, but at some point after repeated misses at the first-party level and a distant last place in relation to your competitors. You have to look to the top of the mountain and take a hard look at what is going on.

When All Else Fails, Throw more Money at the Problem

If I had to point to a positive during Phil Spencer’s tenure it would be Gamepass. A service only a company like Microsoft could provide. Gamepass promised a vast catalog of established games along with day-and-date AAA releases. The ploy worked at an image level and that was the big swing for Phil’s Xbox strategy at the onset of the new generation. It worked, good faith poured in as did the games available to people for sometimes as little as $1 a month.

Unfortunately, the pessimist in me viewed Gamepass as a “wolf in sheep’s clothing” ploy. A ploy to condition the gaming populace to view video games as a subscription service as opposed to the traditional model of buying physical/digital versions of our favorite video games. Once that would settle in, Gamepass in the long term would become the only viable option for developers where fees to be on the service would be scaled back and only serve to hamstring developers to be on an essential service. Conjecture sure, but forgive me for having a negative outlook on megalithic corporate conglomerates.

Phil Spencer never was able to solve the first-party issue that has plagued Xbox since he took over. No doubt their game situation changed little during his tenure as big boss. The strategy to win pivoted with Xbox Series X‘s launch though and that was one of assimilation. If they couldn’t beat their competitors with what they had, Xbox would simply throw as much money as possible at their deficiencies and buy their way out of their problem. But that has only exacerbated the issue. Phil Spencer’s Xbox transformed, becoming an acquisition-first company without fixing the mismanagement issue that’s plagued them. That strategy, at least in the short term, has failed with the CMA rejecting Xbox’s purchase of Activision/Blizzard and now with Redfall‘s disastrous launch representing the first release after their purchase of Zenimax.

If your studios are constantly having management issues, with multiple losses at the executive level happening repeatedly, you have to look at the people who are in charge. You can’t keep blaming the players/studios, if you’re making the big bucks along with all the decisions you have to be accountable.

The Interview and the Proverbial White Flag

What spurred me to write this though wasn’t Redfall, or Microsoft’s history, acquisitions, mergers, or cool t-shirts paired with a blazer, it was Phil Spencer’s recent appearance on Kinda Funny’s Xbox Podcast. In my 44 years on this earth, I’ve never heard someone wave the white flag quite like this.

“We are not in the business of out consoling Sony or Nintendo. There is no real solution or win for us”

Wow, just wow. In one capacity I respect the candid nature of the interview. You rarely if ever get someone at Phil Spencer’s level to speak like this. But, this admission of defeat is astounding. A testament to how poorly it’s going at Xbox when your CEO flat-out admits it. That said, this quote, along with other statements, made here are entirely misleading, a few being flat-out lies. Let me break down why with Phil’s own quotes:

“It’s not true that if we go off and build great games all of sudden you’ll see console share shift in dramatic ways”

This is false and it’s unbelievable to hear the head of Xbox say this when the direct competitors Phil is referencing specifically fixed generational dips by releasing great, first-party video games. PlayStation 3 was losing to the Xbox 360 and rightfully so. They were arrogant, the PS3 was overpriced and everything around it was convoluted. Sony pivoted mid-generation and embraced a mantra of releasing as many great first-party video games as possible, listening to developers, and facilitating relationships with indies to gravitate to PlayStation. Here is Shawn Layden, former PlayStation CEO, describing exactly this: (please forgive the fan nature of the source here)

Tip No 2 pic.twitter.com/zqNPx6p0dR

— PlayStation Forever (@Ps5ver) May 5, 2023

Layden called it PlayStation’s “Icarus Moment” and that “they hadn’t listened to their customers“. What followed was a miraculous turnaround for the PlayStation 3, ultimately outselling the Xbox 360 with a year less on the market, and the launch of the PS4, the third-best-selling home console in video game history.

Further, Nintendo bounced back as well after 2 straight home console flops in the Nintendo 64 and Gamecube. While their strategy was slightly little different, they proved that mediocrity was not a mainstay, simply temporary, and that great gaming companies battle back. How do they do this? By releasing great video games.

I’m not naive, Phil isn’t saying that Xbox’s goal isn’t to still try and release great games, but what is he saying then? An admission that Xbox is resigned to a distant third in the video games business comes across as defeatist and even if you do believe this internally, you definitely don’t say it out loud. Why? You insult the fans that have backed you and send the message that all their support was mostly in vain. “Gee, sorry guys, I know you backed us with your hard-earned money after we promised that Xbox would be the best place to play games this generation, but we can’t do anything about it even if we tried. You were wrong to believe in us” I’m paraphrasing of course but that’s what I got out of Phil’s statement here.

“We lost the worst generation to lose in the Xbox One generation where everyone built their digital libraries”

This is a stunning quote that shirks responsibility entirely. Yes, Xbox lost the X1 vs PS4 generation but what role did Phil play in this? Don Mattrick took the fall but who was right there beside him? It was Phil Spencer and he had plenty of time to pivot mid-generation just like PlayStation did with the PS3.

The Xbox 360 built plenty of goodwill. One generation doesn’t squander that and the loyalty you see to this day tells that tale. Phil continued to double down further in his statement, and even by releasing great games, Xbox wouldn’t be able to shift the needle as fans were now too entrenched within their digital loyalties. Nonsense and even if that were true, you’re not even going to try? It’s one thing to say that you can’t change hearts and minds with great games but it’s another entirely to make this claim while not releasing any great games to speak of put up a fight damn it!

Resigning to Last Place

Whether Microsoft wants to admit it or not, this is the end of Phil Spencer’s tenure as head of Xbox. I’d be shocked if there wasn’t some sort of mutual parting of ways within a year’s time. No CEO in video game history has resigned his company to its last place fate like this outside of Phil Harrison and that was right before SEGA announced they were leaving the home console industry entirely. A truly sad day for this proud SEGA fan, but I digress…

Yes, a lot of this here is broad strokes with a lot of detail and context missing but it’s very easy to learn more about all of the issues, history, and situations I’ve covered here if one is so inclined.

I like Xbox, I want them to do well and competition is needed in the video game space. They are the home of wonderful franchises born purely because of Xbox’s existence. Sadly many of those have either all but disappeared or are in a state of turmoil due to gross management issues.

Xbox Must Learn from their Lessons

Going all in on acquiring new studios gave fans fleeting wins but it was duct tape to mask the real issues. Instead of the billions spent on buying shiny new toys, Xbox should have invested in their current studios to figure out what was going wrong. Fix communication, patch up pipelines, give support where and when your current studios need it, and get some quality first-party video games out the door in a consistent manner.

It wasn’t like Xbox’s competition was clamoring to buy up rival publishers at the beginning of this generation. Not before the billions started getting tossed around anyway. Xbox got that ball rolling and set the tempo for the new reality in video games. PlayStation followed their lead and by doing so, broke a tradition of only acquiring companies they had long-standing relationships with.

I like Phil Spencer, he’s hard not to like and he’s been refreshing to see in terms of his candor and openness. But I can confidently say in 2023 he’s done a poor job as the head of Xbox. Their first-party game situation is actually worse than when he took over. The console has gained no ground on its competitors, his divisions have raised spending by billions and billions with little to show for it. While the gross mismanagement that has plagued Xbox hasn’t rectified itself. Redfall does not happen to Xbox’s competitors, it just doesn’t. Under Phil Spencer, Xbox has proven they can not learn and adapt. Now with his admission in recent interviews and podcasts, he’s driving the most staunch Xbox fans to the brink.

Year after painful year Xbox faithful were told the games were coming. “I know 2021 didn’t work out but wait until 2022” Now with 2023 hinging on the hope of Starfield it’s almost looking like never, isn’t it? I’ll end this with one final quote that summarizes a lot of what I’ve put forward here and why it’s time for a fresh set of eyes on the multi-billion dollar experiment that is Xbox.

“There is no world where Starfield is an 11 out of 10 and people start selling their PS5s”

Read between the lines people, this is called lowering expectations and for Xbox, expectations have been lowered enough.