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One of the best bits of games industry scuttlebutt I have been told is about Xbox boss Don Mattrick.
It’s actually about his shrewd hiring and management skills, so it’s effectively a HR anecdote. But bear with me.
A few years ago I was told that when running teams at EA, one of Mattrick’s favoured practices was a process known as ‘upgrading’.
It effectively means comparable staff members end up vying for the same job and are pitted against one other – with often only one employee remaining.
It’s used when two comparable people go for the same promotion, when certain roles get restructured, when building new parts of a business – or, most commonly, when trying to make someone be better at their job, or eliminate them from it.
With each person operating under more pressure from their shadow colleague the outcome is only ever in the employers favour. Employees will either give in and leave, or rise to the challenge and fend off competition. At worst the status quo/hierarchy remains, and an average staff member is replaced by a better one. At best the company is gifted with two talented employees.
I should be clear I only ever really heard the phrase and anecdote one time from a person that worked close to an EA studio.
And I have no idea if Mattrick has ever actually favoured this approach.
But I know this: Xbox One just got ‘upgraded’.
Microsoft has spent the last month effectively pitching Xbox One, revealed in mid-May, against PS4, which was unveiled in February.
Its strategy has been very different to Sony’s. It has planned on being bold and uncompromising, the very definition of innovation by answering huge physical-to-digital shifts in the market with a new approach to game ownership and content.
The market was never going to move towards this model gradually because disruption comes from radical ideas. And the thinking at Microsoft has been that this new approach would effectively improve (or, yes, ‘upgrade’) the console ecosystem.
When Xbox execs said the new strategy was ‘flexible’ I think they really believed it in some way, and thought the idea of having a digital library of games you could get on any device was a perfect a gift for consumers (albeit terribly explained from the off) in exchange for changing the way you own a game.
Mattrick thought this would eventually win. The May 21st launch for Xbox One described it as "the one system for the new generation". To him, it was going to dispel the PS4 shadow, and Xbox would be the only console worth caring about.
But PlayStation put up a good fight last week, and after publicly mocking these strategies on stage at E3 and leading a charge of gamers to vote PS4 over Xbox One, Mattrick backed down.
A lot of people are seeing this as a U-turn, but really it’s just reverting to the status quo – everything is now "just like on Xbox 360".
Has Xbox changed strategy? Or has it decided not to change strategy? I’d argue there’s a subtle difference. And most importantly it’s one that Microsoft has swiftly learned from, and been ‘upgraded’ via in the process.
In a short space of time Xbox has learned just how much gamers cherish physical media, that you just can’t decide to change their rights on a whim, how easy it is to miscommunicate and be misunderstood, and that media pressure and consumer campaigns actually can carry weight.
But I don’t for one minute think there is any long-term change in Microsoft’s thinking here. It’s building a console that in principle has a five year plus life on the market. It’s building a console connected in some tangential way to a wider strategy around cloud content and what that means for Microsoft’s other interests, like Windows and enterprise. It’s also a device still advocating other important changes such as always wanting a camera sensor above your TV.
Who really asked for pre-owned limitations? From what I was told at E3 last week, these bold ideas were never demanded by publishers. Third-parties have issues with second hand games, sure. But they have issues with the sale of grey stock, too. And issues with illegal downloads and piracy. All of them tricky issues that on the one hand fuel brand awareness but on the other mean ‘lost sales’, and none of which publishers expect a platform-holder to solve.
No, every strategic choice here was Microsoft’s, because Mattrick has a reasoned vision about the future of the games console in a fast-moving digital world layered on top of a vanishing physical one.
In fact, Mattrick says it himself: "While we believe that the majority of people will play games online and access the cloud for both games and entertainment, we will give consumers the choice of both physical and digital content. We have listened and we have heard loud and clear from your feedback that you want the best of both worlds."
"Both worlds". This isn’t a U-turn but a new hybrid strategy: keep the current model going, and keep that long-term digital one waiting in the wings.
Mattrick will know that often Xbox makes decisions which at times ultimately set the agenda, such as charging for online multiplayer (as with the first Xbox) or having a digital marketplace on a console (XBLA on Xbox 360).
If Microsoft doesn’t give up on the original plan in totality, the Xbox One successor won’t be the next-next-gen console, but the much-suspected first discless games console, an interim platform between the Xbox One and the one generation after.
The company can easily release a day one patch to remove the original intention behind Xbox One, so it can easily build an Xbox One with where everything is digital, complete with the previous concept for a game licence library, and all the other stuff Microsoft has put on hold for now.
Under that principle, Xbox could migrate to Mattrick’s original plan even quicker. We know that through the variety of digital marketplaces out there that the majority of consumers don’t know enough about their digital rights for the changes to impact their buying habits – a cheaper, ‘convenient’ box will probably serve them. The disc-based machine sticks around for the section of the audience still using discs, which to Mattrick seems like a dying format but which part of his audience wants to keep alive.
Meanwhile, things like cloud computing for consoles won’t go away, and persistent online games like Titanfall or Halo 5 or The Division or The Crew will still bank on an always-connected model, they just won’t be as up front about it from the off.
And under that principle the status quo, which currently has Microsoft as generation leader, remains while an upgraded strategy for the future of the platform works alongside it.
Everyone’s saying that Microsoft has stepped back here. But I can’t help but wonder if this whole move will end up being in its favour.
