Speaker 1: So I think the last time we saw you talked
Speaker 1: your son was playing minecraft. Yes, yes, minecraft, he does
Speaker 1: do some good because of you. We have an Xbox,
Speaker 1: but we have not graduated to minecraft on the console.
Speaker 1: You know, because I've talked to you about my own
Speaker 1: sort of fear of kids playing too much, and a
Speaker 1: friend was try to think of it like he's it's
Speaker 1: like a painting, like show it. Asked him to show
Speaker 1: it to you like, like the same way you would
Speaker 1: treat a painting. I want to see what you made. Yeah,
Speaker 1: that's right. So make it a family thing. Hi Everyone,
Speaker 1: and welcome to this edition of Bloomberg Studio. One point out.
Speaker 1: I'm Emily Chang. He's in charge of one of the
Speaker 1: top gaming consoles in the world, Microsoft xbox, a sixteen
Speaker 1: billion dollar business home to minecraft, Halo and perhaps soon
Speaker 1: call of duty if a seventy billion dollar deal to
Speaker 1: buy act division goes through. The executive behind that deal
Speaker 1: is Phil Spencer and if he has his way, he
Speaker 1: helps the gaming industry will level up in the next
Speaker 1: twenty years and be less a battle between rival consoles
Speaker 1: and more a home to platforms that reach every potential
Speaker 1: Gamer on the planet. Joining me on this edition of
Speaker 1: Bloomberg Studio at one point. Oh, Microsoft Gaming CEO, Phil Spencer,
Speaker 1: so great to see you here in person. It's great
Speaker 1: to be here in person things. So we're gonna start
Speaker 1: by going in the way back machine a little bit.
Speaker 1: Uh Did some research. You worked at a computer mart
Speaker 1: in Vancouver, Washington, where you were selling and playing a
Speaker 1: lot of computer games in the eighties. I'm thinking like
Speaker 1: stranger things, stranger things resonates with my definitely growing up,
Speaker 1: my inner geekdom is there. was there punk hair or
Speaker 1: weird outfits or I definitely had long hair at the time.
Speaker 1: Drove my forward pinnow my Blue Ford Pano. Funny thing
Speaker 1: is my my wife of thirty one years this year.
Speaker 1: We were together in high school, so she still remembers
Speaker 1: those days and she's like, you just haven't changed. You're
Speaker 1: the same punky kid you were back then. I just
Speaker 1: video games a little bit bigger now, but it's kind
Speaker 1: of the same thing. I'm going to need some photographic
Speaker 1: evidence of this. What were your most played games in
Speaker 1: the eighties? Uh So, it's funny. When I started growing
Speaker 1: up playing video games, most of it was going to
Speaker 1: the arcades. Now most people won't remember these days of
Speaker 1: like going to a store where you put quarters in play.
Speaker 1: Robotron was one of my favorites in the arcades. I
Speaker 1: would go play that and then probably more in the
Speaker 1: seventies and the Eighties, I remember my dad bringing a
Speaker 1: video game, the Atar, with the cartridges home, and that
Speaker 1: was kind of the beginning of it and I just
Speaker 1: kept playing and it's still with me. What was it
Speaker 1: that you got from games? You know, I think at
Speaker 1: first it was just like I was a kid who
Speaker 1: read a lot of comic books, Played Dungeon Dragons, like
Speaker 1: it was just kind of watch those movies and it
Speaker 1: was just kind of in the in the space of it.
Speaker 1: When I started working at Computer Mart, one of the
Speaker 1: things I haven't talked much about this, one of the
Speaker 1: things I did is I ran our bulletin board service,
Speaker 1: which is where people used to dial up on the phones,
Speaker 1: if you remember those, like the kind of whistling noise,
Speaker 1: and people would log into our bulletin board service at
Speaker 1: Computer Mart to see like what was going on with
Speaker 1: computer games at the time and that kind of sense
Speaker 1: of community, of people seeing this as a hobby as
Speaker 1: much as it is just kind of entertainment. And then
Speaker 1: seeing it grow to kind of online games and other things,
Speaker 1: that sense of community and bringing people together. Something's always
Speaker 1: just stuck with me about video games. You started out
Speaker 1: at Microsoft as an intern Um. How would you compare
Speaker 1: Microsoft's history on Games under Bill Gates versus Steve Baber
Speaker 1: versus such a Nidela? Yeah, I think like many things
Speaker 1: at Microsoft back in the eighties we started in video
Speaker 1: games as much out of kind of a defensive we
Speaker 1: were worried that other companies might be putting the home
Speaker 1: pc in place and the avenue to get there was
Speaker 1: through video games and game consoles. So we say, okay,
Speaker 1: WE'RE gonna go start our own game console because if
Speaker 1: anybody is going to build a computer for the home,
Speaker 1: we wanted it to be Microsoft. I think through Steve's
Speaker 1: years it was more about growing the business and how
Speaker 1: do we bring kind of business leadership into this group
Speaker 1: of rag tech people who are out there just having
Speaker 1: fun building video games as part of Xbox. I think
Speaker 1: with Satia, when I first took this job and I
Speaker 1: got this job as head of xbox, about two months
Speaker 1: after Satia Nadella became the CEO of Microsoft. Well, and
Speaker 1: when Sata started there were activist investors targeting the company
Speaker 1: stock hadn't been doing well. They were targeting xbox. Absolutely, yeah, yeah,
Speaker 1: and somehow you convinced Sacha to double down on games
Speaker 1: at the time. Absolutely right that there was a question
Speaker 1: of why are we in video games? In fact, one
Speaker 1: of his first questions to me was because he had
Speaker 1: come from the cloud part of the business being and
Speaker 1: then cloud was he didn't actually understand why we're in
Speaker 1: video games, not as a negative, just as literally, why is?
Speaker 1: Why is Microsoft this at the time what one trillion
Speaker 1: dollar Market Cup company. Why are we in the video
Speaker 1: game business? And he he challenged us like, let's go
Speaker 1: figure out why we're in the video game space and
Speaker 1: see if it makes sense and if it does, let's
Speaker 1: be all in and if it doesn't, we'd make other decisions.
Speaker 1: Early in that journey is when this game, which I
Speaker 1: know you know about, is minecraft, and the opportunity to
Speaker 1: acquire minecraft came about like months after this moment. So
Speaker 1: I might have a kid or two that pays minecraft. Yes,
Speaker 1: and it really caused us as a team to think about, okay,
Speaker 1: if you're gonna go spend two and a half billion
Speaker 1: dollars on this blocky Java base game. How does this
Speaker 1: fit into the mission of this company? I'm gonna sit
Speaker 1: in front the Board of Microsoft and explain. Here's this
Speaker 1: game written by this one person in Stockholm, Sweden, that
Speaker 1: we're going to go spend billions of dollars on. How
Speaker 1: does it fit into the where Microsoft is going? Um,
Speaker 1: and it was a great kind of because it happened
Speaker 1: so fast. It was a great, just concentrated effort to
Speaker 1: build a strategy that we saw around video games and
Speaker 1: we're still here. Let's talk about that strategy. Was the
Speaker 1: idea to tie gaming to the cloud? Was that the clincher?
Speaker 1: We started from the industry itself. We said, okay, what
Speaker 1: do we see going on in the games industry and
Speaker 1: do we think Microsoft has a capability to play in
Speaker 1: where gaming is going and the things that we saw
Speaker 1: through minecraft wasn't there at the time, but I know,
Speaker 1: like roadblocks is familiar in your household, is today people
Speaker 1: play the biggest games on any device. Like if you
Speaker 1: think about a game like minecraft or fortnite or roadblocks,
Speaker 1: these are games that play on IPADS, they play on Xboxes, playstations, PCs.
Speaker 1: That games were going from per device to per user
Speaker 1: and cloud would be an enabler for that. But we
Speaker 1: didn't start with how do we fit cloud into video games?
Speaker 1: We were just kind of watching the trends of eiders
Speaker 1: and where they were building and saw this transformation of
Speaker 1: games being ubiquitous. How does this all, as you see it,
Speaker 1: connect to Microsoft's future? The cool thing I see going
Speaker 1: on now, and it does fit with the investments Microsoft's
Speaker 1: making an Azure in other places, is today the world
Speaker 1: anybody is a creator in the world. Anybody with a
Speaker 1: camera can create content. Anybody who can record their voice
Speaker 1: or record themselves playing an instrument can become a creator.
Speaker 1: And Video Games are going through that same transformation where,
Speaker 1: if I rewind to my childhood and playing video games,
Speaker 1: I walked into like an egghead software and there was
Speaker 1: a line of boxes and as a creator, if you
Speaker 1: and I wanted to go create a game, we might
Speaker 1: go create the best game in the world, but there
Speaker 1: was no way for us to get it in front
Speaker 1: of an actual person who might want to go play
Speaker 1: because we couldn't get shelf space. All these things. Today
Speaker 1: we see gamers on our creators on our platform from
Speaker 1: all over the globe who can create a game that
Speaker 1: can literally reach billions of people through our distribution capability
Speaker 1: and that game sits in the lineup right next to it.
Speaker 1: Like you take ten people in Slovakia. It's true, lute
Speaker 1: rivers a game on our platform. Ten people in Slovakia,
Speaker 1: they can put that game on Xbox and build an
Speaker 1: xbox game. The game will sit right next to the
Speaker 1: biggest budget games out there. FIFA A low call of duty.
Speaker 1: It just sits there. To A to a player, a
Speaker 1: game is a game and you can deliver that game
Speaker 1: through the cloud to anybody who has a device that's
Speaker 1: capable of reaching the Internet. I hear you're still an
Speaker 1: avid gamer. How often do you play games? Like, how
Speaker 1: many hours? I go to bed early, so I gotta
Speaker 1: BET at ten at Seattle, at ten o'clock. People who
Speaker 1: play with me online they tease me about how militant
Speaker 1: I am. At ten o'clock I'm out. I probably play
Speaker 1: fifteen hours a week, I'm guessing. Now my children, two daughters.
Speaker 1: They're out of the house now. Um, my wife and I, Kelly,
Speaker 1: have been together for a long time. She likes movies,
Speaker 1: since I'm not a big movie watcher, so we kind
Speaker 1: of do our things and then we we have our
Speaker 1: places that will go. I was playing last night. I
Speaker 1: was playing escape room with a friend of mine in
Speaker 1: New York City. I hear you play at work too,
Speaker 1: like that's totally work. UH, yeah, I mean, I, uh, it's,
Speaker 1: as I said, like I think I've been and luck's
Speaker 1: really not the right word, but I'm privileged enough to
Speaker 1: end it up in a position where I get to
Speaker 1: do something I really love, Um and match something I
Speaker 1: care about and the capability that I see in games
Speaker 1: with just who I am. You are also behind some
Speaker 1: of Microsoft's biggest gaming deals, and you mentioned minecraft at
Speaker 1: two and a half billion dollar acquisition. Of course, activision
Speaker 1: we're waiting on. Talk to us about your act your
Speaker 1: talk to us about your acquisition strategy. How do you
Speaker 1: find in size up a good target? I'd say early
Speaker 1: on we had gone through a time prior to satia
Speaker 1: becoming CEO where we had downsized a lot of our
Speaker 1: student yeos out of kind of business necessity. So at
Speaker 1: first it was how do we just get more creative
Speaker 1: capability inside of Xbox? So early on it was about
Speaker 1: investing in creators that we knew who were kind of
Speaker 1: at the forefront of thinking about some innovation once I
Speaker 1: felt like our studios organization was back to the capability
Speaker 1: that we needed, then we thought about unique capability to us.
Speaker 1: You see creation modes in Halo. You see creation modes
Speaker 1: and flight simulator. You see us learning from things that
Speaker 1: we've we learned from the minecraft team when they came
Speaker 1: in Um. One of our other acquisitions was a company
Speaker 1: called Xenomax, which has a long history and PC gaming
Speaker 1: and you would think Microsoft would understand windows gaming, but
Speaker 1: we kind of lost that DNA in the organization as
Speaker 1: we focused on console. So bringing in xenomax and really
Speaker 1: hearing from a lot of teams that were kind of
Speaker 1: native to pc gaming and what they were what they
Speaker 1: cared about it was very, very important. So we're thinking
Speaker 1: about new additive creative capabilities to our studios organization that
Speaker 1: hopefully makes our platform better. As I understand that you
Speaker 1: do your own deals. You don't necessarily need permission from
Speaker 1: Sacha to do a deal. Is that true? Now? There's
Speaker 1: there's definitely. It depends on the amount of the money
Speaker 1: and the deal. But when we think about some of
Speaker 1: our bigger deals, we go to the board Um and
Speaker 1: so Sati Nadella Amy Hood, the CFO have been incredibly
Speaker 1: supportive Um and the board has like when we go
Speaker 1: to the board and we talk about this space, I
Speaker 1: mean as Xbox were one of the biggest consumer businesses
Speaker 1: in the company. Were a brand that makes Microsoft relevant
Speaker 1: to a whole generation that probably doesn't think about a
Speaker 1: lot of other Microsoft products in their day to day life. Well,
Speaker 1: you're in the process of a potentially monster deal, seventy
Speaker 1: billion dollar acquisition of activision. Talk to us about how
Speaker 1: this deal came together when we were thinking about on
Speaker 1: that idea of what are we capable of doing today
Speaker 1: and where do we need to go? The biggest gaming
Speaker 1: platform on the planet is mobile phones. UH, one and
Speaker 1: a half billion people play on mobile phones and I guess, regretfully,
Speaker 1: as Microsoft, it's not a place where we have a
Speaker 1: native platform as gaming. Coming from console and PC, we
Speaker 1: don't have a lot of creative capability that has built
Speaker 1: hit mobile games. So I know it's it's not the
Speaker 1: focus of a lot of attention on activision, blizzard king,
Speaker 1: but I'd say that the king component of it, of
Speaker 1: what they've done with candy crush and the learning that
Speaker 1: they have around mobile. They've taken some of their biggest
Speaker 1: call of duty and Diablo franchises to mobile and and
Speaker 1: done well. We thought that was a really interesting capability
Speaker 1: of what they had. The one thing about the video
Speaker 1: game space is if you've been around, maybe too long,
Speaker 1: you know most of the creators out there, so you
Speaker 1: kind of know teams. That could be a good fit
Speaker 1: in terms of what we were trying to do. But
Speaker 1: we really started the discussions internally, at least on activision blizzard,
Speaker 1: around the capability they had on mobile and then pc
Speaker 1: with blizzard. Those are the two things that we're really
Speaker 1: driving our interest. Big Tech is under a lot of
Speaker 1: regulatory scrutiny. Big Tech deals are under scrutiny. What's the
Speaker 1: status of the deal? What have your conversations with regulators
Speaker 1: been like? You know, I kind of come at this
Speaker 1: that big deals should be scrutinized right. I think that's
Speaker 1: the role of regulators, why they're in place. I feel
Speaker 1: good about the progress that we've been making, but I
Speaker 1: go into the process uh supportive of people who maybe
Speaker 1: aren't as close to the gaming industry and what the
Speaker 1: dynamics are asking good hard questions about okay, what is
Speaker 1: our intent? What does this mean? If you play it
Speaker 1: out over five years. Is this constricting a market? Is
Speaker 1: it growing a market and just being transparent about the
Speaker 1: things that we care about. We care about choice. We
Speaker 1: care about people being able to play where they want,
Speaker 1: when they want. Clouds an important part of that. I
Speaker 1: think about business model diversity and we brought in subscriptions
Speaker 1: to a retail model. You have free to play games
Speaker 1: that do really well. We think the multitude of business
Speaker 1: models is an important consideration as well. So sitting down
Speaker 1: with regulators and having discussions about our long term vision
Speaker 1: of there are three billion people who play video games
Speaker 1: on the planet, which is crazy. It's like half the
Speaker 1: world's population nearly plays video games and we want games
Speaker 1: that can reach all of those people under an economic model.
Speaker 1: So you're confident the deal is going to happen. I've
Speaker 1: never done a seventy billion dollar deal, so I don't
Speaker 1: know what my confidence means. I will say the discussions
Speaker 1: that we've been had, that we've been having seemed positive
Speaker 1: and we're actively engaged in the conversations, trying to be
Speaker 1: transparent about what our motivations are, but I feel good
Speaker 1: about it. Microsoft had its time in the antitrust spotlight.
Speaker 1: Now the spotlights on Google and Meta and apple and Amazon.
Speaker 1: How is it that Microsoft is skirted the spotlight? Your
Speaker 1: competitors might say it's unfair. Well, I think your point
Speaker 1: about US having grown through that time, I might call
Speaker 1: that the adolescent ears for us, as we were kind
Speaker 1: of learning. I think it's an important consideration that we
Speaker 1: did learn a lot as a company through that time
Speaker 1: and what it meant, and I think that sticks with
Speaker 1: us today. And I think the transparency of our business model,
Speaker 1: our longevity in the market grown through our adolescent ears
Speaker 1: and the stuff that we learned has been important and
Speaker 1: how we show up, and I also know the team
Speaker 1: does a lot of work to continue to share our
Speaker 1: views on things and as a company and make sure
Speaker 1: that we're public about what we stand for. You've been
Speaker 1: a really big advocate of cross platform play and this
Speaker 1: idea that Gamer should be allowed to play whatever games
Speaker 1: they want on whatever platform they want. Why is that
Speaker 1: so important to you? I think about the industry growing
Speaker 1: and if I think about maybe you happen in your
Speaker 1: household to buy an xbox and I buy a playstation
Speaker 1: and our kids want to play together and they can't
Speaker 1: because we bought the wrong piece of plastic to plug
Speaker 1: into our television. It just seems that these artificial constraints
Speaker 1: that the industry might put up for near term kind
Speaker 1: of business dynamics in the long run. If you take
Speaker 1: a business that is at three billion people, growing to
Speaker 1: four billion people over the next decade, and saying how
Speaker 1: do we continue to grow this business, reducing friction for
Speaker 1: our customers has, as an industry, has to be at
Speaker 1: the top. If I think about reducing friction, safe and secure,
Speaker 1: so when our players are online they have the experience
Speaker 1: that they should have and they want to have that.
Speaker 1: Parents feel in control of what the of the experience
Speaker 1: their children are having. So how far does this go?
Speaker 1: Does this mean that activision games that call of duty
Speaker 1: you'll be able to play on any platform and perpetuity? Yeah,
Speaker 1: we've we've made the public commitment that we want call
Speaker 1: of duties specifically to be playable on other platforms the
Speaker 1: platforms it's on today. Most people specifically asked about playstation forever. Forever.
Speaker 1: I don't like, I don't know what that means in forever,
Speaker 1: like when you think about how long, and it's not
Speaker 1: for any kind of nefarious business reason, it's just like
Speaker 1: what do we even platforms mean ten years ago, like
Speaker 1: I think the definition of some of these things might
Speaker 1: change over time, but our expectation is we want more
Speaker 1: people to play and if you look at our history
Speaker 1: through the acquisitions that we've done, when we bought minecraft,
Speaker 1: we increase the platforms it was available on. We didn't
Speaker 1: decrease it. We added it to the switch and brought
Speaker 1: it to other places. The other minecraft games that we've launched,
Speaker 1: minecraft dungeons, minecraft legends, have come to the switch and
Speaker 1: playstation like. When we have games that are on other platforms,
Speaker 1: even kind of near term competitive platforms, we want to
Speaker 1: support those platforms and continue to grow the user base
Speaker 1: there and make those customers happy. We we haven't pulled
Speaker 1: games away from players that are playing those games today.
Speaker 1: And what about the reverse? Will Sony exclusives be available
Speaker 1: on Xbox? Not a question for like that I can answer. Um,
Speaker 1: I do think over time the idea of exclusive of
Speaker 1: a game for one device is something that we're just
Speaker 1: going to see less and less of. I mean we
Speaker 1: made the decision a few years ago that when we
Speaker 1: launch any of our xbox console games, they're available on
Speaker 1: the same date on on windows, and that was kind
Speaker 1: of blasphemous at the time of what. No, these games
Speaker 1: are supposed to be the things that cause people to
Speaker 1: have to go buy an xbox. Why would you make
Speaker 1: them available on windows at the same time? In fact,
Speaker 1: we went so far that if you bought the xbox version,
Speaker 1: you got the PC version as part of the entitlement,
Speaker 1: like you could. You could play the game on both
Speaker 1: platforms and then cross play and cross save and things
Speaker 1: that you were talking about Um and I think the
Speaker 1: industry and more and more is going to go in
Speaker 1: that direction and I think it leads to better games,
Speaker 1: because if the business is growing and there's more users,
Speaker 1: creators will take more risk, they'll try new, unique things.
Speaker 1: So I know you're working with Sony on some things
Speaker 1: for the benefit of gamers. Can you talk to us
Speaker 1: about that a little bit? Where do you think your
Speaker 1: relationship with Sony will be in a number of years,
Speaker 1: like what are the hard things to work through and where? where?
Speaker 1: Where do you draw a line? Where do they draw
Speaker 1: a line? I think in the in the near term,
Speaker 1: we're a big publisher on their platform. When you think
Speaker 1: about minecraft and games that we have, death loop and
Speaker 1: ghost wire, where Games are studio shipped that because of
Speaker 1: contractual things, were only on playstation when we launched. So
Speaker 1: we have we have a pretty big publishing footprint on
Speaker 1: playstation as well as Nintendo, which means we have good
Speaker 1: relationships with those platforms because we're they're a big part
Speaker 1: of our business and we're a big part of their business.
Speaker 1: I think our long term ambition of where we see
Speaker 1: this industry growing is also shared. When you think about
Speaker 1: people should be able to play games in more places,
Speaker 1: things like accessibility, things like safety, we find a lot
Speaker 1: of common ground. I think the area where things get
Speaker 1: stuck a little bit it's in the kind of near
Speaker 1: mid term competition. If somebody walks into a store and
Speaker 1: they have one bill, they're probably going to walk out
Speaker 1: with either and they want to gaming console. They're either
Speaker 1: going to walk out with a switch, which is what
Speaker 1: most people buy, or they're gonna walk out with a
Speaker 1: playstation five, or they're gonna walk out with an xbox,
Speaker 1: or maybe somebody will go buy gaming a windows PC.
Speaker 1: But in that world of somebody's got to make a
Speaker 1: decision for one platform over another in the beginning. Um,
Speaker 1: that is where I think we we get stuck in
Speaker 1: some of the kind of near term competition. I don't
Speaker 1: think that's bad. It's just the dynamic of each of
Speaker 1: us pushing each other Um to build the best product
Speaker 1: for our customers. Now, while you've been working to make
Speaker 1: the gaming industry more collaborative, the gaming industry has historically
Speaker 1: been tough for women, for diverse voices. When you look
Speaker 1: back on game or gate, do you think you did enough?
Speaker 1: Do you think Microsoft did enough? I can always look
Speaker 1: back at any incident for me and think about things that,
Speaker 1: in hindsight, I should have done more, I should have
Speaker 1: done better. It's just Um. I'm I'm proud of how
Speaker 1: our team evolves, how our leadership team evolves, how we
Speaker 1: do I mean there are mistakes that happened on our
Speaker 1: own teams all the time and our our teams learned
Speaker 1: from this and they grow. The thing I love is
Speaker 1: the intent of the team, the intent of the team
Speaker 1: to get better. But I think you point out their
Speaker 1: societal issues around us. The gaming industry is not kind
Speaker 1: of immune to those. Um. There's a history and video
Speaker 1: games of, as you say, kind of being a male industry,
Speaker 1: perceived that way and a reality of that way. People
Speaker 1: in my position sitting there as kind of old white
Speaker 1: guy as head of gaming platforms, not in I'm more
Speaker 1: the norm than I should be. I talked about three
Speaker 1: billion people who play video games and if you say
Speaker 1: your cut, your audience, is three billion people, then the
Speaker 1: demographic is the planet's demographic right there. It has to
Speaker 1: be when you get to those kind of numbers. Three
Speaker 1: billion people playing video games. A Gamer is a human
Speaker 1: uh and our I want our team to reflect the
Speaker 1: customer that we aspire to earn. I know that our
Speaker 1: teams ship their culture with every product that they shift,
Speaker 1: whether it's front and center on kind of obvious decisions
Speaker 1: that we make or almost subconscious in what we do.
Speaker 1: So our teams have to reflect the customers that we
Speaker 1: want to earn, from the leadership team at Xbox all
Speaker 1: the way through those teams. And those voices not only
Speaker 1: have to be there, they have to be heard. They
Speaker 1: have to feel safe where they can do their best
Speaker 1: work and that's a journey and it's a journey that
Speaker 1: we're on, I think forever more at least I will
Speaker 1: be in terms of my career. Well, activision specifically is
Speaker 1: facing a lot of challenges here. There have been lawsuits,
Speaker 1: there have been employee walkouts. There have been accusations of
Speaker 1: sexual harassment, sexual assault. How much did that concern you
Speaker 1: when you're thinking about this deal? We had access to
Speaker 1: data from the company before we we announced the acquisition
Speaker 1: to see what the actual numbers were in terms of reports. Um,
Speaker 1: we definitely, as a team, signed up to say, just
Speaker 1: like we're on our own journey with Xbox, that we're
Speaker 1: going to expand that journey if this deal closes. It's
Speaker 1: a lot of people and a lot of people that
Speaker 1: will feel very dedicated to and committed to to building
Speaker 1: a great workplace environment for them. That's true of any
Speaker 1: of our studios right but it's obviously a com versation
Speaker 1: that you're going to have. You think about the board
Speaker 1: of Microsoft and when they're thinking about the deal and
Speaker 1: they're typing into their search engine activision, what are the
Speaker 1: headlines that they're coming back and there were questions that
Speaker 1: we had. We've learned from this, we will continue to
Speaker 1: learn Um and we're committed to that that journey, not
Speaker 1: only for the betterment of our teams but our customers,
Speaker 1: the creators on our platform. We think it's critical to
Speaker 1: our business success that we make progress here. Is Bobby
Speaker 1: Kodak going to stay on? Yeah, I'm not in a
Speaker 1: position to make comments about their leadership team. Were in
Speaker 1: the regulatory phase and and how that will close, like
Speaker 1: when the deal closes, then we have say and how
Speaker 1: they're managed and how it goes, but until that point
Speaker 1: I'm not really in position to say. There have been
Speaker 1: very specific allegations of bobby being aware of things, uh
Speaker 1: that happened and not reporting it to the board. What
Speaker 1: has he communicated to you about what he knew what
Speaker 1: he didn't know? The discussions we've had were about the
Speaker 1: team's where they're at. Can they make the progress they
Speaker 1: need to make, because the closing is a long process.
Speaker 1: Are they putting in the work that they need to
Speaker 1: put in two move along their journey, and I believe
Speaker 1: they're committed to that. When I look at the work
Speaker 1: that they're doing now. There's always more that can be done,
Speaker 1: but I believe from the studio leaders there that I
Speaker 1: know very well, some of them former xbox members, that
Speaker 1: they're committed to this journey as a as a company,
Speaker 1: and I applaud that. Regardless of the deal. I applaud that,
Speaker 1: but obviously as somebody WHO's looking forward to getting to
Speaker 1: work more closely with them. I definitely applaud it. So
Speaker 1: what's your plan for merging these two cultures and navigating
Speaker 1: some of these challenges? Every creative team has its own culture.
Speaker 1: One of the discussions, and I think about even the
Speaker 1: culture at Xbox, is we are a culture of cultures.
Speaker 1: Teams reflect the creative work that they do. So if
Speaker 1: you went from the minecraft team team to the halo team,
Speaker 1: that those teams, those teams feel different when you walk
Speaker 1: into the studios because they're working on different things. And
Speaker 1: so when I think about the teams that they have,
Speaker 1: teams that we've worked with at a high level, because
Speaker 1: they all, most of them, ship on our platform, I'm
Speaker 1: actually first interested in hearing from them and where do
Speaker 1: they aspire to be culturally and helping support them along
Speaker 1: our journey. I don't think there's something that they plug
Speaker 1: into as much as let's get aligned on what our
Speaker 1: goals are as teams and how can we bring capability,
Speaker 1: our own learning and resources to help them. activision has
Speaker 1: divisions that are unionizing. I don't know. Microsoft has said
Speaker 1: they'll recognize those unions. What does that look like? I've
Speaker 1: never run an organization that has unions in it. So
Speaker 1: but what I can say, and working through this, is
Speaker 1: we recognize workers needs to feel safe and heard and
Speaker 1: and compensated fairly in order to do great work. We
Speaker 1: definitely see a need to support the workers and what
Speaker 1: the outcomes that they want to have. So we shared
Speaker 1: that right. We shared it publicly, our intent Um, because
Speaker 1: we wanted to make it clear to anybody who's looking internally,
Speaker 1: most important thing for me are the members of those teams,
Speaker 1: what our intent was post acquisition. So we thought it
Speaker 1: was important to make a public statement on that front
Speaker 1: for workers that are there that are making decisions about
Speaker 1: their employment and how they want to know what that
Speaker 1: relationship looks like to understand what it would mean if
Speaker 1: Microsoft was able to close the deal. In general, there
Speaker 1: are concerns within the gaming industry about crazy work hours.
Speaker 1: It's the crunch, I believe it's called Um. So you
Speaker 1: know what, if this goes farther, what if xbox employees
Speaker 1: want to unionize, would you welcome that? And what? What
Speaker 1: role do you think unions will play in the future
Speaker 1: of the gaming industry in general? Yeah, I don't know
Speaker 1: the answer to the second question, Um, and it'll it'll
Speaker 1: I'm curious to learn as we grow. In terms of crunch,
Speaker 1: I think that's an important one. I've been in this.
Speaker 1: I've been at Microsoft, as he said, since N I
Speaker 1: started as a software programmer. I've worked on Xbox for
Speaker 1: twenty plus years. When I think about the environment on
Speaker 1: any of our teams, I build from a perspective of people,
Speaker 1: of building a workplace where people feel like they can
Speaker 1: do their best work in a sustainable way and they
Speaker 1: could see this as a long term career for themselves.
Speaker 1: So if xbox employees decided to unionize with Microsoft support,
Speaker 1: that we knew. We made the public statement that it was.
Speaker 1: It wasn't that it would have a broader impact than
Speaker 1: just the impact at what would potentially happen on the
Speaker 1: close of activision blizzard. So let's talk about some of
Speaker 1: the broader trends. You and I talked a lot during
Speaker 1: the pandemic gameplay surge. During the pandemic we were all
Speaker 1: stuck at home. Has that changed? It has changed. We've
Speaker 1: seen gameplay hours come down a bit, which I will
Speaker 1: say I think is a good thing. People should get outside,
Speaker 1: people should moderate long term growth trajectory for the business
Speaker 1: is incredibly durable and strong. You have adults now that
Speaker 1: have grown up playing, like myself, and it's become a
Speaker 1: more normal part of of how people entertain and how
Speaker 1: families spend time. As the economy has has tightened for consumers,
Speaker 1: as gas prices are higher, people are worried about what
Speaker 1: what their home economic situation looks like, we're seeing gameplay
Speaker 1: hours kind of stay strong because I think from a
Speaker 1: value perspective, gaming is a good value for people at
Speaker 1: a time of kind of economic constriction. People bought minecraft
Speaker 1: that can continue to go play minecraft. What about supply chain?
Speaker 1: What challenges are you still seeing? Are All the consoles
Speaker 1: that you want to have made in time for the
Speaker 1: holiday is going to be here? I still think demand
Speaker 1: will outstrip supply for us this holiday. Specifically on our
Speaker 1: consoles we have to in market. We have a series S,
Speaker 1: which is our lower cost. That one's easier to produce,
Speaker 1: so you can find that one in the stores, which
Speaker 1: I see is a good thing that we've been able
Speaker 1: to produce enough that we can get them in the stores.
Speaker 1: The series x is the bigger one, Um and it's
Speaker 1: more complex to build and supply chains constraints hit that
Speaker 1: a little more. I think that one will still be
Speaker 1: supply constrained through the holidays, but we're seeing the end
Speaker 1: of it. I think we will um, we we'll see.
Speaker 1: When we get into three you'll start to see more
Speaker 1: that supply is catching up with demand and maybe actually
Speaker 1: see one in the store when you walk in. And
Speaker 1: is demand really going to hold up? I mean in
Speaker 1: record inflation, consumers getting squeezed on gas and groceries, are
Speaker 1: they going to want to pay up for expensive this
Speaker 1: is why our strategy has never been around selling you
Speaker 1: the next device that if you want to play minecraft
Speaker 1: on an IPAD, we think that's great. We want to
Speaker 1: have an experience with our consoles that if people want
Speaker 1: to play games on their television, we think we have
Speaker 1: a great platform for that. To that point, what's the
Speaker 1: future of the console? I mean our console is going
Speaker 1: to be around in ten years if even Microsoft is.
Speaker 1: You're sort of de emphasizing. Yeah, I equate in my
Speaker 1: head gaming on console the gaming on a television. The
Speaker 1: console enables that experience on the television, but absolutely people
Speaker 1: are playing on more screens and I think for us
Speaker 1: as a platform, if we don't adopt that as part
Speaker 1: of our strategy, G we're kind of pushing against what
Speaker 1: our consumer what our customers are asking for. We talked
Speaker 1: a bit about kids earlier and you know, as a
Speaker 1: mom I'm always slightly terrified that my kids are playing
Speaker 1: too much video games, are ruining their brains, they're gonna
Speaker 1: be exposed to all this bad stuff. You're very pro
Speaker 1: game for kids and I'm wondering, I wonder, how do
Speaker 1: you support that? This will sound like such a bad answer,
Speaker 1: but I'll start by saying as a parent, you know
Speaker 1: what's best for your kid first. Like I'm not going
Speaker 1: to say what's best for any individuals kids. What we
Speaker 1: can say, and the research backs this up, that gaming
Speaker 1: can be a great on ramp for kids into stem education.
Speaker 1: As they think about, well, how are these Games built?
Speaker 1: They'll go from I only want to play games too.
Speaker 1: Maybe I want to create my own stuff. Maybe you're
Speaker 1: even seeing that in your household a little bit. Of
Speaker 1: players become creators. It's how I end up sitting here
Speaker 1: as somebody who started playing games and became a computer
Speaker 1: programmer and now I'm in this business. Not that everybody's
Speaker 1: going to take that same that same path. I also
Speaker 1: think the community power of gaming is something that doesn't
Speaker 1: get talked about enough. Last night I was playing escape
Speaker 1: room on xbox with one of my friends who lives
Speaker 1: in New York City. Are in New York state and
Speaker 1: he works in he he installs wires for for Internet
Speaker 1: access into people's homes and I and we play together
Speaker 1: often and I think, like what other construct on the
Speaker 1: planet puts these two people together? And while the conversation
Speaker 1: might start about how are we going to escape from
Speaker 1: this room, then we're talking about his daughter who's looking
Speaker 1: at colleges, and we just talk about life like people
Speaker 1: will when they're in the same place. And that ability
Speaker 1: for gaming, whether it's with kids or adults, to bring
Speaker 1: people from different backgrounds, different geographies, different socio economic different religion,
Speaker 1: different genders together and shared experiences is pretty unique out there.
Speaker 1: It's and and you find that, I mean you find
Speaker 1: net in roadblocks, you find that in Minecraft, that people
Speaker 1: come together, and I think building those connections that video
Speaker 1: games can enable. Maybe this is too altruistic, but there
Speaker 1: aren't enough of those things in the world today. There's
Speaker 1: a lot of things that put us in us in them,
Speaker 1: but if you and I are playing destiny together and
Speaker 1: running a strike, we're just trying to save the world
Speaker 1: from the aliens again and like that's that's good stuff
Speaker 1: and it's silly stuff, but it's also just such a
Speaker 1: good platform for finding connection with people that you might
Speaker 1: not normally find in your day to day life. which
Speaker 1: brings me to the metaverse. You know, obviously Sacha came
Speaker 1: on my show. I hope that this is the next
Speaker 1: big thing that happens after the mobile Internet. Facebook changed
Speaker 1: its name to Meta. Some gamers don't even want this
Speaker 1: whole metaverse thing. How big do you think the metaverse
Speaker 1: is really going to be? Gamers have been in the
Speaker 1: metaverse for thirty years. When you're playing games, if you're
Speaker 1: playing a world of warcraft game, you're playing in roadblocks,
Speaker 1: you're playing in a racing game where everybody is in
Speaker 1: a shared world, these three d shared worlds that gamers
Speaker 1: have been playing in for years and years. I think
Speaker 1: what we've found is there's more connection, as I was
Speaker 1: talking about before, because we have shared purpose and we
Speaker 1: meet other people. So my view is the metaverse is
Speaker 1: kind of the enterprise world figuring out the value of
Speaker 1: these immersive game experiences that the gamers have been playing
Speaker 1: for years. So it's not at all surprising to me
Speaker 1: that gamers might look at metaverse and think, well, I
Speaker 1: don't really get it, because we've we've already. I already
Speaker 1: have an Avatar of myself and I could already go
Speaker 1: into a shared world and I can already sit there
Speaker 1: and have voice conversations with people anywhere. But I do
Speaker 1: think the skills that we have as game designers and
Speaker 1: game creators make a ton of sense and a lot
Speaker 1: of enterprise experiences, and this is why Sati gets excited
Speaker 1: about it. I think about people coming in, enterprise, customers
Speaker 1: coming to Microsoft and maybe, in addition to wanting to
Speaker 1: meet with the office team, wanting to talk to a
Speaker 1: halo level designer to understand the kind of human compulsion
Speaker 1: and that we build into these online interactions because we
Speaker 1: want those same things and meetings, we want those same
Speaker 1: things in work environments and I think the metaverse in
Speaker 1: the end will be taking a lot of the learning
Speaker 1: that the game industry has done for many, many years
Speaker 1: about these shared worlds and putting them in non gaming
Speaker 1: experiences for our talent on our teams. I think that
Speaker 1: there's value in that. Their skills are more broadly applicable.
Speaker 1: Now it's not just in games. They can work in
Speaker 1: other industries. What about Crypto? Play to earn is all
Speaker 1: the rage right now. Play to earn specifically is something
Speaker 1: I'm cautious about. Um, it creates a worker force out
Speaker 1: of players for certain players to kind of monetize. Now,
Speaker 1: to be fair for us in the game, in the
Speaker 1: game industry, this has existed for years and years. There
Speaker 1: have been gold farmers of people who literally just spend
Speaker 1: their time doing some menial task in a game to
Speaker 1: accrue some currency that then they could sell to some
Speaker 1: other rich player and for real money so that that
Speaker 1: person doesn't have to spend their time. Now you find
Speaker 1: games that are starting to build that into the economy
Speaker 1: of the game itself and I, like most technology, I
Speaker 1: think technology in itself is mostly inert from a good
Speaker 1: or bad perspective. The use of the technology is the
Speaker 1: thing that, as as a platform, we have to be
Speaker 1: cautious about. We made some comments and minecraft about how
Speaker 1: we view N F T S in this space because
Speaker 1: we saw people doing things that we thought were exploited
Speaker 1: in our product and we said we don't want that.
Speaker 1: But technology itself of somebody being able to own something
Speaker 1: digitally that they feel like it's theirs and I could
Speaker 1: give it to you or trade it to you. Um,
Speaker 1: I think there's value in that. I don't get fixated
Speaker 1: on the back end technology. I think sometimes it's it's
Speaker 1: hammer looking for a nail when these technologies come up,
Speaker 1: but the actual human use, or player use in our case,
Speaker 1: of these technologies, Um, I think there could be some
Speaker 1: interesting things. So let's talk about your priorities looking forward.
Speaker 1: You know you're in the middle of trying to do
Speaker 1: this really big deal. Are we going to see you
Speaker 1: keep doing deals? Are you still on the lookout for
Speaker 1: new studios or new geographic locations where you want to
Speaker 1: build out Microsoft's gaming presence? Definitely, on the second part,
Speaker 1: geographic expansion is critically in what we've hired our first
Speaker 1: people in Nigeria now as part of our team. We
Speaker 1: have teams in India, teams in South America. You know, again,
Speaker 1: when I talk about three billion Gamers, I'll just use
Speaker 1: Africa for a second. Like one point two billion people
Speaker 1: in the continent. Average Age is what twenty or twenty
Speaker 1: one when I visit there. UH, gaming culture is there
Speaker 1: because the Internet makes any property available, any property possible,
Speaker 1: and is that also talked about before. Anybody can be
Speaker 1: a creator now, whether it's video creation, text creation or
Speaker 1: game creation, and I think it's very, very likely that
Speaker 1: the next big hit games that we're going to see
Speaker 1: are not from the traditional locations, not from the traditional people,
Speaker 1: and I think that's fantastic. So geographic expansion is critical.
Speaker 1: Class what is important to that as we put our
Speaker 1: data centers in places and we can not only distribute
Speaker 1: the games but allow creators to use our cloud development
Speaker 1: platforms to build games without having to have the local
Speaker 1: hardware right there in their house or in their office
Speaker 1: to go build. I think that is important. You know,
Speaker 1: we we look at three billion gamers growing to four.
Speaker 1: We're not there right now. So absolutely we're going to
Speaker 1: continue to invest, continue to build Um and continue to
Speaker 1: partner and even continue to acquire if that's the right
Speaker 1: move for us, because our our ambition is to be
Speaker 1: part of gaming continue to make the progress it's making.
Speaker 1: So we're gonna do a little rapid fire. Okay, what
Speaker 1: video games are you playing now? Cult of the lamb,
Speaker 1: most important meeting you've ever played a game in. You're
Speaker 1: trying to give me in trouble. But Games have you
Speaker 1: just played? A game in a meeting with Sacha. It's
Speaker 1: easier on teams calls because they can't see your screen.
Speaker 1: You're not with people. I have played games. SATIA has
Speaker 1: caught me playing games before. Um, and yeah, I'd say
Speaker 1: a Satia meeting that I plead the fifth. I appreciate
Speaker 1: your I appreciate your your somewhat honesty. Um, what's your
Speaker 1: favorite thing to do when you're not gaming? Of all things?
Speaker 1: SNOWBOARD with my family. My daughter's both snowboard. It's fun.
Speaker 1: I like spending time with the family. It's a good thing.
Speaker 1: Have you ever played games with Sacha? I've watched him play.
Speaker 1: He's not a big player. He likes civilization, which is
Speaker 1: a fantastic game, one of my favorite games. Um, I've
Speaker 1: watched him play Fort said before it's not a big Gamer.
Speaker 1: I think he admits that. You have a lot of
Speaker 1: gaming fans. Who Do you fan over? One of the
Speaker 1: things I love to go do is find a game
Speaker 1: I've never heard of and go spend time with it
Speaker 1: and then talk to the creators about it. I think
Speaker 1: creating something, putting it out there is such a brave
Speaker 1: thing to do. If you could see any band in
Speaker 1: their prime who would it be? Wow, so I'm a
Speaker 1: punk rock fan. Um, so I'd probably go back and
Speaker 1: say the Ramans, if I could go like in their prime.
Speaker 1: What's your favorite TV show? What are you watching now?
Speaker 1: What is your wife watching now that your side watching?
Speaker 1: I don't Really Watch TV. It's such a bad thing. Um,
Speaker 1: historically I've always been a star Trek Fan. Um, it
Speaker 1: goes to my guess, my inner Geekdom. Uh. Kelly is
Speaker 1: my wife. She doesn't really love Star Trek. That's she.
Speaker 1: She'll sit there and watch picard with me because to
Speaker 1: sit together she sounds like a saint. I like her.
Speaker 1: Best piece of advice for your twenties. When I think
Speaker 1: about at least my career, and that's the only Lens
Speaker 1: I have, there have been a number of times when
Speaker 1: others have made bets on me that I probably didn't
Speaker 1: think I was ready for, including the job I'm in now,
Speaker 1: and to listen to the others around you when they
Speaker 1: are making a bet on you, when they're pulling you
Speaker 1: to go do things, at least for me, who was
Speaker 1: probably reticent, maybe a Little Imposter Syndrome kicking in on
Speaker 1: was I really ready for something? But understand that others
Speaker 1: around you when they're encouraging you that at they're probably
Speaker 1: doing it for good reason. They're probably doing it for
Speaker 1: something that they see in you that you might not
Speaker 1: see in yourself, because there were, you know, things that
Speaker 1: I passed on, things I didn't think I was ready
Speaker 1: for because I was insecure and not exactly ready. Um,
Speaker 1: I can't. I love where I am now. So I'm
Speaker 1: not a regrets person that I'd say, okay, I think
Speaker 1: I missed something there, um. But the people around you,
Speaker 1: who you're working with, are just people that influence you
Speaker 1: and you respect. When they're pushing you in a direction
Speaker 1: that might not feel right, UM, they're probably well intentioned
Speaker 1: and they probably see something that you're missing. How do
Speaker 1: you balance work life and play? My little fifteen minute
Speaker 1: commute back and forth is my transition zone of I'm
Speaker 1: now at work, I'm now at home, Um, and it
Speaker 1: didn't work for me to work from home. I don't
Speaker 1: even have a Home Office because when I'm home I'm
Speaker 1: not at work, like it's just always been my my
Speaker 1: thing is that segmentation with my family and what I do.
Speaker 1: It doesn't mean I've never responded to a mail when
Speaker 1: I'm at home, but I I'm very regimented that way
Speaker 1: that I and if it means I stay at work
Speaker 1: a little bit longer until I'm ready for that transition.
Speaker 1: When covid happened, it didn't work and it didn't work emotionally.
Speaker 1: It didn't work output wise, like motivation, and I was
Speaker 1: pretty transparent about that with the people around me and
Speaker 1: how I had to change things. I realized I can
Speaker 1: do that because I'm later in career. There's like a
Speaker 1: privilege in me being able to stand up who I
Speaker 1: am in the company, in the industry and say those things. Um.
Speaker 1: I would encourage anybody to try. Realize there's some naivete
Speaker 1: and that that not everybody feels that they've got that
Speaker 1: same capability to use your voice, Um, in that way.
Speaker 1: The safety, I guess, Um, to go do that, but
Speaker 1: that was that was critically important for me. Does that
Speaker 1: mean you want everyone else to come back back to
Speaker 1: the office now? People have to work in the way
Speaker 1: that works for them and other people are a living
Speaker 1: experience where going into the office is the work worse
Speaker 1: thing for them. Um. And I want to create a
Speaker 1: space where anybody can can do their best. What does
Speaker 1: the gaming industry look like in five years? And what
Speaker 1: does it look like in twenty years? I think the
Speaker 1: power of interactivity, the power of your choice and the
Speaker 1: consequence of that and the learning from those consequences is
Speaker 1: just going to continue to make this medium that I'm
Speaker 1: lucky enough to work in, an interactive entertainment slash video games,
Speaker 1: to just continue to create such an impactful space for
Speaker 1: telling stories through the perspectives of others, whether that's like
Speaker 1: Vr or a r like. Again, I look at technology
Speaker 1: as more of a use for a human output as
Speaker 1: opposed to the other way around. Um, but I think
Speaker 1: this space that we're working in today, the sense of community,
Speaker 1: the sense of democratization of creation, which is an overused term. Uh,
Speaker 1: we're going to see video games really gain their space
Speaker 1: in telling stories that really change people's perspective on others
Speaker 1: lived experience, and I think that's a pretty cool thing.
Speaker 1: All right, thank you, Philip, for joining us. Ye Bloom
Speaker 1: Brook Studio. One pointo is produced by Lauren Ellis and
Speaker 1: edited by Matthew Soto, Joe Medina and Meghan Olsen. I'm
Speaker 1: Emily Chang, your host and executive producer. Thanks for listening.