Today, we’re talking about the future of Xbox. Phil Spencer, a two-time Decoder guest who’s led Xbox for more than a decade, resigned last week.
But in a shocking twist, his deputy and long-assumed successor, Sarah Bond, is also out too, and the Xbox division is now in the hands of Asha Sharma, one of Microsoft’s AI executives with no prior game industry experience. It’s a major leadership transition that suggests Microsoft wants to make serious changes to its gaming division, which owns franchises like Halo, Call of Duty, and Minecraft.
There is no better person to talk to about all of this than Tom Warren, a senior editor here at The Verge and author of the excellent Notepad newsletter. Tom is actually on parental leave right now, but Microsoft has a longstanding habit of disrupting his well-earned time off with major news. So, Tom was gracious enough to come on the show after he published a major scoop about what exactly went down at Xbox this past week.
There is a lot to say about Xbox: The story of the console and Microsoft Gaming is a complicated one, with a lot of twists and turns since it made its big splash in the video game industry 25 years ago. Yet for a majority of that time, it’s been stuck in third place, behind Nintendo and PlayStation. That’s a surprising thing to say for a division of a company worth trillions of dollars that also owns some of the most celebrated gaming properties in all of entertainment.
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So Phil Spencer, who started at Microsoft in the late 1980s and took charge of Xbox in 2014, was given the job of trying to turn the division around. Since then, Spencer has tried numerous moves: the Netflix-style Game Pass subscription service; a major push into cloud gaming; buying Activision Blizzard King, the maker of Warcraft and Candy Crush; and many, many different iterations of Xbox hardware. As of last year, there are even plans to bring Halo to PlayStation — something game industry insiders thought was basically impossible just five years ago.
But as you’ll hear Tom explain, the game industry has been changing faster than Xbox has been able to transform itself, and almost none of Spencer’s strategies have really clicked. Xbox is still far behind Nintendo and PlayStation, and on PC, it still stands in the shadow of Valve, which runs the dominant Steam store and now makes the Steam Deck handheld. Microsoft has spent tens of billions of dollars trying to acquire its way to a stronger position against the rise of Fortnite and Roblox, mobile giants like Tencent, and a zero-sum war for attention dominated by apps like YouTube, Instagram, and TikTok. And yet the company has very little to show for all of that.
Today, Spencer’s grand vision of 100 million Game Pass subscribers streaming Xbox games to whatever screen they want using the cloud still feels out of reach. But, as Tom says, it’s not lost forever — Xbox is far from dead, and there is still hope yet that new leadership can take some big swings and make something happen again.
Okay: Verge senior reporter Tom Warren on the future of Xbox. Here we go.
This interview has been lightly edited for length and clarity.
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