Q&A: Microsoft’s Phil Spencer

With Microsoft Game Studios now orbiting European studios closer than over thanks to the opening of a dedicated UK office, we caught up with general manager Phil Spencer to find out what the Xbox and Vista platform holder is looking for from our local teams.

Microsoft already has a long history working with UK and European studios – so why chose to open Microsoft Game Studios in Europe now?

When we look at the European market there are a few aspects that are interesting to Microsoft.

The first is that, you’re right, we’ve had a rich history with European developers. From Lionhead when they were external to now internal, what we’ve done with Rare, our relationship with Bizarre Creations for Project Gotham Racing and what we’ve done with them to build a tremendous racing franchise – right up to something like Crackdown from Realtime Worlds and new games like Alan Wake from Remedy. For us the thing that made sense the most was to give all that work a centre of gravity and get people on the ground in Europe permanently.

Going forward, the big thing for Microsoft is success in Europe. What we would like to do with Xbox 360 is have great European games for all the parts of Europe – certain new games may resonate stronger in Southern Europe, different to new ones that may have fans in Northern Europe. That’s part of our strategy – but the only way to get there is to have people on the ground who understand the market; sitting in Redmond trying to understand those regions is obviously very difficult. I can look at our operation in Tokyo and I can say a game like Blue Dragon shows that us having part of our publishing in Japan means we can build great Japanese games, but at the same time keep an eye on how they will translate for the rest of the world, so we get the best of both worlds.

So when it comes to the kind of games we’re looking for we want something that resonates culturally in the market and also globally on both platforms.

Does that mean more third party publishing deals or will you be acquiring studios in Europe?

For us, the relationship we have with studios is specific to the needs and desires of each studio we work with and each game we make. There are certain studios that will never be acquired – they want to be independent and do their best work because they are independent. We are more than happy to work with them. In fact in a lot of ways it allows them to do exactly what they want to do the way they want to do it, and it allows us as a publisher to work with them in a way that benefits our platforms and portfolio.

We’ll be looking for partnerships – and if someone is looking to be acquired then it might happen, but we’re going to talk with everyone we work with about what’s right for the relationship.

In terms of the games that come out of those relationships working together is secondary to the kind of games that come out of a partnership – Bizarre Creations is a great example of that. It’s a studio we’ve worked with for some time, but I don’t think Project Gotham would be any better if we owned them. Our relationship with them has worked well as it is. They enjoy being third party to us and we enjoy publishing their games.

There’s certainly a feeling amongst independents today that they want to maintain their identity as a studio not become consumed into an acquisition machine – and we’ve seen one or two think about building a game and only looking for distribution rather than a publisher. Are you open to cultivating that kind of approach?

As we know in today’s games the budgets get so high that it’s hard for an independent to completely go it alone. Previously you’ve seen some studios have one or two successes and then there was enough money coming in to start self-funding what they were doing. Today’s world is a little different, I think. The funding requirements to do a Fable 2 or a Crackdown is a little more difficult for some of those partners to get to the point where they might have a nearly finished game and want to just find a distributor.

But if there are studios out there that are going to try that, we’ll be more than happy to talk to them about those games and see how they can leverage us as a publishing partner.
Ultimately for me, however, it comes down to the quality of the game and getting the best games possible on the platform.

Can you see yourself building an internal development team in the UK or Europe the way you have with Turn 10 [the makers of Forza]?

For us we’re looking to chase game ideas rather than the teams. If someone internal has an idea for a game and then a team like Turn 10 builds up around them to make it happen then that can work, but as we know the number of external developers out there coming up with great ideas is growing and growing – it’s where most of the new, good ideas are coming from and is a breath of fresh air.

We have a global inbox full of ideas and we pick and chose from them in terms of what interests us. So our next big game could come from an internal team member, but can also come from an external source. But the weight being what it is, with more people external to our team than inside it, then we’re more likely to find, say, the next Mass Effect [by US independent Bioware] from an independent studio.

You said that you were looking for games that become franchises – is finding a game that has sequel or instant iterative potential the priority for Microsoft Game Studios?

It’s a combination. I’d say we’ve definitely chased new ideas; sometimes the categories we go after are a little less routine than other games.

Sure, some of them may be obvious slam-dunks – Gears of War is a good example, put a gun in someone’s hand and make them run around beautiful worlds built by Epic, then the pedigree is there and you know it has instant potential.

But look at something like Blue Dragon, which although it has a great pedigree of talent behind it such as [Final Fantasy creator Hironobu] Sakaguchi-san, has a curious concept, such as a band of kids whose shadows combine to make a monster – that’s a little different, a little less ordinary.

Now, I hope we have the same success with both of those games – and remember that success for us as a platform holder isn’t just how many units you sell, because there are plenty of obvious ideas out there we could have gone after. Everyone still seems to be making those games that you know just crank out the units – maybe it’s the World War 2 shooter, that’s a cliché these days.

For us success is looking at: how does this game fit on our platform? Is there anything else like this on our platforms? And – if someone likes this game are we going to consider ourselves the best of breed in that category on any platform? That’s what Forza has done for me – I think that’s the ultimate racing simulator on any console. So when Blue Dragon then comes out I want it to be considered the best turn-based RPG with an epic world and a great story.

You mention WW2 games there – a lot of publishers chose those because they want a safe option…
Certainly, and when you look at the rest of the publishers out there, the EAs, the Activisions and the THQs of the world – their games will come and support 360 regardless, so we try to predict what they might be doing and know that there’s just no point trying to compete with something like Madden or FIFA. We know those games are going to be there on our platform so as first party we won’t try and steal share from third parties but use our first party assets to create new experiences that maybe we think third parties won’t naturally go after.
I love it when third parties do chase innovation – Guitar Hero, for instance, is brilliant and I absolutely love it – be them exclusives or time-exclusive or multiplatform, but it’s our job to always look for innovation and make sure we pick the other things that some necessarily might not do.

Even something like Gotham, every year that we sit down and talk about what we’re going to do with the game the first thing we know is that we aren’t going to ship one every year – that approach makes sense for some people who need to monetise that asset and turn one out every year. Gotham was used to launch the first Xbox, Gotham 2 helped drive Live by blurring the single and multiplayer, Gotham 3 was there for the 360 launch and now Gotham 4 will have all kinds of weather effects and lots of new online features. So, in some respects it’s an arcade racer which every publisher has, like Need for Speed, but in other respects it is designed to be best of breed and push the platform.

What about new studios – will you be working with them or are you only looking for the established ones to make sure you get sure-fire hits?

New ideas and new IP and new teams – it’s all part of the vision going forward.

One of the things I’m most proud of on 360 is the depth of new IP we have brought to market. I think a lot of people have expected that MGS will just produce new sequels – another Halo, another Gotham, and that we’d crank through them. Look back and games like Piñata, Kameo, Crackdown, Gears, plus Mass Effect and Too Human which are coming up – these are all new ideas, and a good deal are from new teams or people we’ve never dealt with before. For us, finding the new start up guys who have a great new idea is huge fun – being able to sit down with them and help them build a team is hugely exciting for them and us.

Do all the games you look for have to have an online element?
What I would say is that when we talk to consumers it’s clear that they expect an online element to the games they play. Our challenge then is not to just tack on online functions – it’s a new place where we can come up with further innovations, especially on 360 and this generation right now. So rather than us looking for or demanding online elements we’re asking what online elements can we offer that will be innovative. It’s not prescriptive, and there’s certainly not a feeling that you’ve got to make sure the online check-box is ticked when you pitch a game to MGS, but today’s customer wants rich online experiences in the games they buy.

It’s only been a month or so officially, and some studios knew about the expansion a little before that, but what’s the reaction been like so far to Microsoft Game Studios arriving in Europe?

Everyone has applauded the fact that, for one thing, we are now in the market with European developers and can understand that market a lot better. Understanding the texture of that region, and acknowledging that Europe isn’t just one big territory, it’s a big grouping of many smaller cultures and markets, is a big part for that.

The biggest step for us has been getting the development support team in place in Europe and having them much closer to the games being produced for our platforms, so that we can come in and bridge the gap between an idea and how that might work with, say, Live or Vista.

Sony is famously very active in Europe and has a very busy and established third party publishing and development operation here. How do you see yourselves as competing with them?

Some of Sony’s work in Europe has been great – but when I think about the fact that games like Fable, Crackdown and Project Gotham are built by our partners I don’t think we are behind them.

We’re not the kind of publisher that is going to turn up and try to compete on volume or number of units shipped a year – I expect Sony will always beat us in that regard, but if that’s what a studio is looking for, to be part of 40 or 50 releases a year then, I don’t know, maybe they aren’t the right partner for us.

We are going to go after the best games –and to go back to the response we’ve had so far, it’s clear that is what other studios want as well, they want to be part of the publisher that produces the best games. If you look at our review scores over the past four years and rank the publishers that way – and yes, review scores are very subjective – but it correlates to the growth of MGS from Xbox 1 to what we are able to do now and what our line-up is. It’s clear we’re one of the best publishers out there.

Competing with Sony for great games is fine – but I don’t put that rivalry as a priority. The priority is finding those great games in the first place and closing those deals when we find them.