← Building One with Tomer Cohen
Building One with Tomer Cohen
Building Xbox with Phil Spencer: A Bold Portfolio Today for Breakout Success Tomorrow
00:55:42
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- [00:01]
Phil Spencer
LinkedIn news innovation ultimately is solving problems.
- [00:09]
Tomer Cohen
It came back to my own personal pain point.
- [00:12]
Phil Spencer
It just takes a while to build that trust. The problem that I was trying to solve, it was all I was thinking about.
- [00:17]
Tomer Cohen
You have to be obsessed with the human condition. I'm Tomer Coyne, Chief product officer of LinkedIn, and this is building one.
- [00:26]
Phil Spencer
I'd rather not be looking at Excel and PowerPoint business presentations. I'd rather be sitting with the teams with a controller in hand.
- [00:33]
Tomer Cohen
That's Phil Spencer, the CEO of Microsoft Gaming and Xbox. He's talking to me about how he leads one of the largest gaming platforms on Earth. We're going to get into that and so much more. So stick around.
- [00:49]
Phil Spencer
From LinkedIn News, I'm Jessi Hempel, host of the hello Monday Podcast. Start your week with the hello Monday Podcast. We'll navigate career pivots. We'll learn where happiness fits in. Listen to hello Monday with me, Jesse Hempel on the LinkedIn podcast network or wherever you get your podcasts.
- [01:11]
Tomer Cohen
Gaming has always been there. Single player games, multiplayer games, arcade games, PC games, console games. You name it, I've played it some. I played so much I even frequently dreamt about them. Having fun was a big part of gaming for me, but it wasn't just that. It was about achievement, adventure, and also hanging out with friends. I slowed down playing games when I had kids, but now they're getting old enough and I'm excited to play with them. There is so much to the craft of building a great game and I'm eager for them to enjoy it as well. That's why I'm super excited to talk to Phil Spencer, the CEO of Microsoft Gaming, A massive enterprise it's not just Xbox. Phil oversees over 20 gaming studios and a sprawling portfolio of games including Call of Duty, Halo, Minecraft, and even Candy Crush. Under Phil's tenure, gaming has moved beyond the console. Players can now play many of their games on the cloud and across multiple devices, even on competitor consoles. It's all part of the push to remove friction for customers and make gaming as accessible as possible. Phil started as an intern at Microsoft before joining the team that would create the first Xbox. And even though he's climbed to the top, he's still very much a gamer at heart, one that is known for remaining accessible to the gaming industry and fans alike. And as you'll see in this interview, that passion really shows. There's so much to learn from Phil, including understanding the mindset of a gamer and the deep emotional connection they have with the platform why it's so hard to come up with a formula for a winning game. How to orchestrate an incredible, incredibly multifaceted platform from hardware to studios to distribution. Why Phil is looking for success beyond the consoles and how aspiring game developers can get a head start in this industry and so much more. So let's get into it. So you've been a gamer for most of your life. Your gaming journey started as a kid in arcades, and today you lead one of the largest gaming ecosystems in the world, which sounds like a childhood dream. Was it? Or your career kind of turned out different than what you actually thought about.
- [03:27]
Phil Spencer
Starting at Microsoft as an intern. We weren't really a gaming company. We had a couple things like flight simulator and some early PC things. But I joined really because I was a programmer. I was at the University of Washington, which is just across the lake here. And I got the opportunity to come over and be an internal and learn, learn from some of the best programmers I had ever been around. It was really when Xbox kind of started and I saw real momentum in the company and some friends of mine started in that organization where the question of could I make my kind of childhood and adult passion into a career? I've never been overly career focused, but it worked out well. It's definitely a dream job for me.
- [04:15]
Tomer Cohen
When you look back at those childhood days, what appealed to you back then in games? Has those dynamics kind of stayed the same since then or have they changed?
- [04:24]
Phil Spencer
I think it's evolved. So I was a child of the 70s and I remember I was camping with my family and there was another family there, and there was an older kid and he knew how to play D and D. He kind of did it all in paper. We didn't have any of the books or anything. This is kind of pretty what Dungeons and Dragons turned into later. But it really opened my mind to this idea of role playing and escapism. I was always a reader of science fiction and fantasy. When video games came along, this escape opportunity, you know, what would it be like to be a knight, to be a ranger, to be on a spaceship? That was the thing that got me early on playing like early Ultima games, games that if you go back and look at the screenshots, you were doing a lot of imagination in your head. There was quite a gap. Less so today. I think the evolution that happened to me, and this is where the arcades come in a little bit, was the community aspect because it started me in my house playing video games and kind of living through books and Comics and the interactive capability of games to really seeing what gaming is today, which is a place for me where I stay connected with some of my best friends. And that evolution, I think has paralleled what's gone on in the industry.
- [05:46]
Tomer Cohen
Yeah. And I think we'll see that theme of feel connected throughout. But you know, for me, like when I go to the park and I still see people playing with the costumes of D and D and you see the swords larping and you see them from far right, they kind of all camp together. And then you get like, oh, this is gonna be fun. It's gonna be fun to watch and it's gonna be fun to play. And it's still remarkable how it's holding throughout all these years.
- [06:07]
Phil Spencer
Yeah. And I think for me, I grew up as kind of the nerdy kid. I wasn't a big sports kid. I was fairly introverted. Still am. So gaming for me was a place where at first my mind kind of gave me connection to things that resonated, like, were exciting to me. And then like you say, you kind of found other people with similar sensibilities, similar interests. And it's cool to see where that's gone, whether it's like real life action playing or cosplay or the gaming community and how it's grown. But I think for a lot of us, at least for me, as I was growing up, it was the place where I kind of felt at home.
- [06:48]
Tomer Cohen
It's awesome. When I think about the needs of gamers, you could make the, in a way, superficial comparison to movies. And at the time you can say there's studios, publishers, distributions, franchises and so on, but gamers aren't passive viewers. They're active participants. They can develop and showcase their skills. They play as a community. So the comparison actually doesn't fare well when you think about the needs of players. I'm curious, what is the core problem or experience you're solving here? When I think about entertainment, like movies, they're kind of competing with boredom. But when I think about games, yes, boredom is there, but there's really a sense of connection that you don't have in other entertainment industries. There's a sense of achievement, which I think is really important for gamers, at least for me. It was like a big deal to try and like always score higher or compete with others. And then there's that community building. Even in the arcade there was a notion of community building.
- [07:41]
Phil Spencer
Absolutely. It's interesting you bring up what I call the Hollywood or kind of traditional entertainment connection because the more I spend time with movie creators, TV creators, to some extent, even books and music. You see those art forms growing their community connection. I mean, if you think about movies like Barbie, like Barbie was as much a connection with childhood memories and the culture around Barbie injected with kind of the sensibilities of today. You think about shows like Wicked where the audience is singing during the movie. And I think you find more. The traditional media is having to grow its community capability as well. Because whether it's a Marvel movie, whether it's a movie or show based on a video game ip, the consumer and the viewer's connection wants to stay connected beyond just the two hour show. I actually think that's a good thing. And it's definitely true in gaming. It's kind of native to it, especially for things that are cooperative or competitive. But also just I'm playing through Indiana Jones right now, a game from one of our studios. And it's such an interesting interactive realization of obviously something that started in video form while it's not a multiplayer game. The ability to talk with other people about how they solved the puzzles, what locations they liked and how the game kind of vibe with them is a ton of fun and creates more depth to the experience. But I do see that more. I see, like I said, I think music's had it for a long time. You have fans of a band and they want to go see the buy all the albums and the gear and go to the concerts. And gaming has had this community aspect. But I don't actually think you can be successful in TV and movies today if you're not also thinking about that connection with your community that will last longer than just the viewing of the actual show that you put out.
- [09:43]
Tomer Cohen
You know, you mentioned that you obviously play a lot today and I love talking to builders who are passionate users of their own products or actually other people's products as well. And I'm curious, how is your identity and experience as a gamer today inform? The way you make decisions is this. People come back and you're like, hey, I want to play the game so I can sense it for myself. I know you run 20 studios, so that's not. I don't think that's doable. But how do you think about your own experience embedded into the decisions you make.
- [10:13]
Phil Spencer
This organization, Xbox, should not be my fancy, right? It should not be a manifestation of the things that I like because my tastes like any person are subjective and based on how I'm feeling at the time. You know, one of the things I thought about early on when the gaming career was taking hold and I was getting more responsibility is I didn't want my career to damage my love of playing video games. You know, I didn't want to go home at night and not want to play or somehow feel like I couldn't play or because I was carrying all this context of work. And there have been times where that's an issue. I like to pretend I know it's not totally true that when I go home and I play at night that I'm just P3, which is my gamertag and I'm not anything other than somebody else playing a video game having a good time.
- [11:09]
Tomer Cohen
So you're not in debug mode. You're not like, oh, this could be better. Taking notes the whole time.
- [11:13]
Phil Spencer
Well, I would like to claim I'm not. There was a time where after we had shipped a game, all I saw were the features that we cut or the bugs that we left in and we didn't fix. It was a struggle for me to go and jump right into a game that we'd spent three or four years working on. Not that I was just tired of it, but as a builder you kind of see all the what could have beens. I think I've matured. I'm also a little further from the day to day development of most games, but it has been a challenge on the platform it's a little bit easier because I consider myself a user of Windows, a user of Xbox, a user of our online services. I feel emboldened by my feedback on platform features with the team. So I'm probably a little more active there than on the studios. And touch wood, I've been able to not let what I do impact my love of playing.
- [12:10]
Tomer Cohen
I think next we can interview the team to see how their answer matches yours.
- [12:13]
Phil Spencer
That's very smart. Very smart. They might have a completely different perspective.
- [12:18]
Tomer Cohen
What do you mean? He sends feedback all the time. Like he stands at 2am when he plays the game.
- [12:22]
Phil Spencer
I'll tell you, one of the things I really love is on the third party side non Microsoft studios that are building games for our platform. So think other publishers like in Electronic Arts, a Capcom from software, these teams and when I travel to third parties I get to play with the studios. I've kind of built that reputation. I'd rather not be looking at Excel and PowerPoint business presentations. I'd rather be sitting with the teams with controller in hand. And I've had some of the best times with the teams at Ubisoft because I'm A big Assassin's Creed fan. There's a little bit of nervousness of like, okay, you got 20 people around watching you play a game you never played that's not finished. But I love that, right. I love talking to creators, whether it's big studios or indie creators who will send me codes to go play and giving them a perspective, just a perspective, right. Of somebody who loves playing games. But even my platform team, they set up monthly wallows for us where I get to go through a bunch of different platform features.
- [13:24]
Tomer Cohen
And wallow is a session where they.
- [13:27]
Phil Spencer
Will send me notes ahead of time. I say wallow because I tend, as you can tell from this discussion, not to be kind of a linear thinker or speaker. I roam a bit. So we set up time, couple hours, and they say, here's two or three topics that we want to go through. And I love that. I love doing it with the teams. When I get to travel to the studios, it's definitely the most rewarding part of the job, is spending times with creators. I often say shipping a product is one of the most vulnerable things a team can do, because you put so much effort, so much love into what we're building, and then you launch it out to the world. Whether it's a video game, a service in LinkedIn or a hardware product, the discourse around it will inevitably be positive and negative, constructive and deconstructive. And yet it's an inanimate object. It can't defend itself. Probably the last thing we want to do as creators is go jump on the social graph and try to defend it through our voice, because nobody really care so much about why different things turned out the way they did. And yet we continue to do it as creators. We continue to put our heart into the products and features and ship them out there, a hope of doing good and seeing some success. We get some of that and we get some of the other. But I. That vulnerability that a team has in coming together to ship something into the real world is something that I just. I have such respect for.
- [14:51]
Tomer Cohen
Yeah. And I can only imagine when it comes to games, you know, when we ship features at LinkedIn, in many ways they become iterative and we learn as we go, and there's vulnerability there. But you ship a complete product out there. Yeah, you can always iterate, but the iteration cycles are not as fast as. As could be for other companies. So I'm curious, you know, if I want to see an active community. I just go online and look for gaming communities, some of the most active communities, and that's true. They're. They're as passionate as it gets. Right. Like, and I thought about it even, like the comparison to Hollywood, Right. When I was playing games, I was playing one for probably multiple months straight, just that game. So. And then I developed, like a sense of connection with that game. It was almost like a farewell party as I moved to the next game.
- [15:34]
Phil Spencer
Yeah, Yeah.
- [15:35]
Tomer Cohen
I became more than just a player. I became a fan, like a devoted kind of user of that. And I would not be surprised if you engage differently with your user base, unlike other CEOs. Like, I'm not be surprised if your intimacy there is just much bigger. So I'm curious, what did you learn from your vast experience catering to this audience?
- [15:54]
Phil Spencer
Yeah, I mean, feedback, it truly is a gift, even if at the time it might not always feel like it. You started the question, I think, from a place that resonates with me. Like, my academic background is in human centered design and engineering. So I start with the human condition. And you mentioned the emotional journey that you go through as a player, spending time with these characters. They become part of your history, part in some ways of your makeup.
- [16:23]
Tomer Cohen
They come to your dreams. They kind of.
- [16:26]
Phil Spencer
That's right now, you kind of see that with things like the Mario movie and the Fallout television show. But that emotional connection you have through the interactivity that you play in the games and the success and failure with your character as you kind of tromp through the mushroom forest or wherever you are, it sticks with you. And so when I'm trying to listen to feedback, which I do, and take it, you know, my gamertag is public. My direct messages on Xbox are very loud and very full. Same thing with Twitter Blue sky, different places I am. And sometimes it's hard to read at the moment because in gaming, it's not only the games but also the platforms, they build this emotional connection. Like, people have Xbox tattoos, they've met their spouse on Xbox. So I start trying to internalize the feedback as it comes from an emotional connection and trying to parse through, like, why a person has the feedback they have. Their feedback might be specific, it might be about a feature, how it works, ease of use. But in so many cases, it's actually more based in kind of a human need or a human desire. And I think when people get disappointed with me as a leader of Xbox or with things that we do, I take it as really from a place of wanting us to do better, wanting us to kind of live up to the expectations that our customers have.
- [17:49]
Tomer Cohen
This resonates so much. And I think for you, the level of intensity is far greater. But for me, ultimately, even if the feedback is, you know, this CPO should be fired. And that happens. And I'm like, okay, that feels personal. But it was back to like, they really care about the product. This is like, obviously they care. And I would rather have people who care a lot than people who think the product is, meh.
- [18:14]
Phil Spencer
Totally.
- [18:14]
Tomer Cohen
They're indifferent to it.
- [18:15]
Phil Spencer
I mean, for you and I, apathy is really the enemy, right?
- [18:19]
Tomer Cohen
100%, I'd say.
- [18:20]
Phil Spencer
And I'm sure you see this. The real feedback, which we get way more now than we did, say, a decade ago, is just what's happening on the platform, because there are millions of people every day who don't give you feedback directly, but give you feedback through what they choose to do, either what they play or. And I love the analytics that we get to see on what are people playing? How are they playing those games? How many hours are people spending on the platform playing video games, presumably doing something that they love? That's such an interesting input for me. And just as the platform expands, our team has expanded and we have such a reach now. When you literally have hundreds of millions of people playing the games and platforms that you put out every month, it's. It's kind of crazy to internalize.
- [19:09]
Tomer Cohen
Yeah. When we give people control and the more interactivity you give in their hands, especially in gaming, all this interactivity, beyond the capability for them, is also pieces of feedback. You see how they use it, how they engage with it. And the idea of thinking of features as feedback elements back to the team is really powerful. There's so many aspects of building the game. There's the studios who build it, the publishers who take it to market, the platforms that the games run on top of, from consoles to cloud to services. The kind of. The development chain is extremely comprehensive. You oversee all of it, including over 20 gaming studios. How do you guide the different parts of the ecosystem? Do you actively think about, okay, there's roadmaps across, they're mutually exclusive, and then I'm going to converge them. Are you starting from a point of like, hey, here's some principles everybody's starting with, and then you know they're going to converge because of those principles. How do you think about this incredible development chain that ultimately comes into one family called Xbox?
- [20:09]
Phil Spencer
I just love the topic because it's changed. Like it used to be. Our longest timelines were hardware. You would start with a hardware roadmap of when's the Next console coming out and are you doing a refresh of that console? A pro version, whatever, an X version. When's the next generation of a console coming? And that was your long pole. As a person who grew up as a software engineer, it would kind of infuriate me how long hardware timelines were. But we've grown into now kind of big AAA video games. I don't really love the term aaa, but I'll use it here. You know, can be five, six, seven year endeavors on their own. So the timelines for the creation of video games have almost grown past our hardware timelines, which creates some real complexity. When a team starts on a new game, you have no idea what the hardware ecosystem might look like when that game comes out, which has never been the case.
- [21:10]
Tomer Cohen
And that cycle is five years you.
- [21:11]
Phil Spencer
Mentioned today for a video game, five, six years. Especially if you're trying to ramp up a team at the same time. So if you're starting a new studio, we've got a new idea, we've got a team called the Initiative, they're down in Santa Monica, they're working on a game called Perfect Dark, a new Perfect Dark game. But we started that studio fresh, like just we hired the leadership team, we went to go hire a team, found the game and you know that's going to be, that's a five, six, seven year project. And when you think about hardware generations are now kind of six, seven years. You're, you're running up against how do you go build these teams and get them in place to do big video games when the timelines are so long on both hardware and the big AAA games that we build. So to your point, I start kind of with our overall roadmap of what teams do we have in play. Not trying to lock them on a ship date, but at least to know what's in the pipeline, what are our platform beats. Some of those will be hardware, some of those will be software driven and service driven like xCloud. And then I think it's important for me to try help define success. I think about all of the people that now work on Xbox, all of the studios, all the platforms that we build for. What does success look like for us? So at least I can have some North Star that teams look like. The industry likes to look at revenue. I think about revenue as the output of success, not the input. Like you know, writing down that I want to make X number of dollars is almost the certain way to not make that much money. So when I think about what is the kind of precious success metric that we look at now. I really do think about hours. How do we make sure that our hours continue to build as we're finding more customers, pleasing the customers that we have and if they're spending more time, not necessarily more time in one game, that's definitely not true. But time on our platform through the collection of games, the ease to get into those games, to move from one genre to another, one game to the next where I can access the games and then going to our creative studio teams where I think the canvas is a little more fluid and fresh because you're coming up with kind of game ideas and how do they fit in to that space. I try to give the studio teams a ton of freedom because I find that the passion behind a project manifests itself in the game that they build. But helping align them on what does success look like. The theory of the organization, why are we all here? Is one of the things I think about in terms of this role. And then I'd say the other thing is really where are the people spending the time? The kind of resource allocation of do we have the right people on the right things? Is our mix between what's always worked and what might work right. Those are decisions that are in my camp. So set a North Star set of metrics, hopefully a small set that we know where we're going, a line on a roadmap that's gotta be fluid but also stable enough to support these multi year development initiatives. And then resource allocation and then it's just enable. Like how do I enable teams to both have success and also be okay when we don't have success? That's also one that's kind of tough to tune in and I don't think I always get that right, but I think it's important.
- [24:38]
Tomer Cohen
We're going to take a quick break, but don't go anywhere. When we come back, Phil is going to tell us why he's wary of trying to apply a formula for success in games.
- [24:47]
Phil Spencer
What that leads you to do is cutting everything that shows any amount of risk. Part of that risk is the delta between a baseline, which can mean the breakout success.
- [25:00]
Leah Smart
From LinkedIn News, I'm Leah Smart, host of Everyday Better, an award winning weekly podcast dedicated to personal development. Whether you're looking for ways to shift your mindset or or seeking more fulfillment in your life, we've got you covered.
- [25:12]
Phil Spencer
You can build internal resources.
- [25:14]
Tomer Cohen
That's what the study of psychology is about.
- [25:16]
Phil Spencer
Building internal resources turning towards is one of the most important elements of successful relationships, no matter what kind of relationship it is. The thing that underpins all of this productivity stuff is finding a way to make the journey itself enjoyable. The journey is the destination. The beauty of uncertainty is is infinite possibility. When you don't know what's next, you don't know what's next. And thus anything can be next.
- [25:43]
Leah Smart
Join me as we dive into captivating stories and research backed ideas that have empowered me and others to lead lives with more clarity and intention everyday making growth an everyday practice. Listen to Everyday better on the LinkedIn podcast network, Apple Podcasts, or wherever you get your podcasts.
- [26:04]
Tomer Cohen
All right, we're back and I'm speaking with Phil Spencer, the CEO of Microsoft Gaming. Phil, you touched on this topic, but it used to be about the consoles kind of dictating the roadmap. But now you said the principle, it's the title that drives the roadmap. Like if the title is really strong, it could carry for decades.
- [26:21]
Phil Spencer
That's right. When I started in this industry, oh so long ago, the biggest things were the platform. There were more users of PlayStation or Nintendo or PC or Xbox. Mobile really wasn't a big thing at the time than there were of any individual game. But now when you look at the world's biggest games like a Minecraft or a Call of Duty, our third party partners like a Fortnite or a Roblox, they're bigger than any one of the individual gaming platforms. They're not larger than say the mobile platforms, but these games span so many different devices. And I think this is a good thing because we're the games industry, not the plastic industry industry. Like it's not about the piece of plastic somebody uses to play a game. My view is really that we're an industry that should be in service of making sure the best games get built and that as many players that want to experience what these games are can find them. And I think we've done a good job as an industry there. If you look at whether it's GTA or a Call of Duty or a Fortnite, like these games are now multi year. They've been around for so long, they continue to thrive and grow and innovate. And as platforms, our job should be to help reduce complexity for those creators because the games industry should be about innovative video games that more people can play and giving creators confidence that they can try and frankly have feedback. So the platforms are the best canvas for them.
- [27:47]
Tomer Cohen
So I might be oversimplifying this, but it sounds like first and foremost have a great title Once you have a great title, just make sure you can maximize reach and convenience so folks can play across.
- [28:00]
Phil Spencer
Yeah, for us, I'm not going to say that's every platform holder's vision, but for us it is about games and being a great platform for games. Most of the creators that I know want as many people to be able to experience the thing they've spent their passion building as they can. One of the stats I love looking at are how many people are playing our games via cloud, where they don't own a dedicated hardware gaming device, or maybe they have a PC, but the PC is an old PC without a ray tracing enabled GPU and they're streaming that game to device and it's millions of people that are doing that. And I think it's awesome that the team at Machine Games and Bethesda spent all this time building Indiana Jones with the team at LucasArts games and now so many people get to play it. So we have different business models around that. But yeah, for us it's how do we make Xbox accessible to as many people as possible, regardless of what hardware they own?
- [28:58]
Tomer Cohen
And this in many ways explains the kind of shift and really innovation because it's not easy to do where you're shifting to multi platform, where the game can be played on multiple gaming platforms, to cross play when you can play with somebody else, a friend that plays on a different platform, to cross save, which I know is a big deal. Like the idea that I can stop and I can continue on my mobile phone, I can go back to my PC, go back to the console, play on cloud. But for a gamer, that continuity, reducing friction along the way makes all the difference in their experience.
- [29:29]
Phil Spencer
It does. We're big proponents of crossplay and cross save. I was playing Indiana Jones here this morning on my gaming PC and I was playing last night on my console in my basement. So the fact that I can just seamlessly pick up and play, be right where I was, regardless of where I am is awesome. But I will say, going back to that emotional point, if you're a fan of Xbox and the console part of our business business, the emotion has been I own an Xbox because this is the only place to play Halo. It's the only place to play Gears of War or Fable or these other exclusive games. And there's fear, and I get it, there's fear in, in the community that you lose an identity if it goes from one game on one platform on one piece of hardware to a game on multiple hardware devices through one platform. Like what does Xbox mean in our case, if it's available on your phone and on your smart TV and streamed and also on the console, is our community going to lose some of what's special about our kind of more vertically oriented platform when something goes more horizontal? And I understand that. I think for you the thought that LinkedIn wouldn't be the same on my phone or my PC is. That doesn't make any sense. Of course, LinkedIn is LinkedIn. Regardless of where I interact, games come from this legacy of exclusivity. But the end result is exactly what you said of I just want more people to be able to play and that my experience across all the endpoints should be continuous so that I am who I am, my friends are available on any screen that I want to play on. My progress carries forward and frankly, if I bought a game, I don't have to rebuy it on every end platform. That's a vision we have at Xbox and I think we're making good progress. More work to do though. Definitely.
- [31:21]
Tomer Cohen
Phil, I think in many ways the empathy you have for the gamers to your audiences just comes across super strong. Even like you said the word fear because the identity is so tied into Xbox. Different people actually tattooing Xbox. It's not just the console, it's the community. It's been there throughout my life. In many ways. I think that what makes you as a builder really unique because you can't actually build for that audience if you don't have that level of empathy with what they're going through. When you make a decision, even if it's the right decision for them in the long term, but you're in a way challenging how they think about their identity right now.
- [31:56]
Phil Spencer
Yeah, like I said, some of it's my human centered focus of how I just learned design of starting with the human condition and what motivates us. I have such respect for creators who have built gaming franchises that have driven that love and that commitment. One of the things early on in me becoming head of Xbox was our acquisition of Minecraft. And Minecraft's such a special product. And in many ways you don't really own Minecraft. The community owns Minecraft. You hope to curate it and grow it, but the content is really from the creators. Again, LinkedIn's the same way. You guys build the scaffolding for LinkedIn, but really what LinkedIn is what your community brings and your members bring and their sense of ownership. I've learned a ton from the, what, 11 years that we've had Minecraft and other things that we've built. I get it. And I still in many ways remember myself as the 10 year old kid, you know, falling in love with these games, finding my place in the world, playing video games when maybe some of the other places seem foreign or uncomfortable to me. It's something that sticks with me. Does it make me the best at what I do? I don't know. Like I can only be who I am and surround myself with people who hopefully have similar empathy for what our customers and creators are going through.
- [33:25]
Tomer Cohen
Phil, I'm still stuck on the idea that a game takes five to seven years. And I'm curious, how do you think about sourcing new games? Is there a formula for identifying a hit? Obviously sequels, maybe this is where there's a parallel to Hollywood. Sequels generally work well. Like Call of Duty. They have the community. There's a storyline that you're trying to build over time. Halo as well, obviously there's a lot of work that goes into those, but those feels like there's a track. How do you think about a completely brand new game? Is there some formulaic ingredients you've seen? Obviously, except from a great story.
- [33:59]
Phil Spencer
I'm going to be a contrarian here. I hope not.
- [34:02]
Tomer Cohen
Okay.
- [34:03]
Phil Spencer
I still view video games as an art form. Not everybody does. Many people see them as a business or kind of a compulsion loop. But I always start with the team. A team with a vision and a vision that they connect with because of their beliefs and desires, not because of what Excel tells them or, you know, what today's hits tell you in the timelines that we're talking about. It's obvious, right? Today's hits are going to be irrelevant by the time the new game that you just start comes out. And this is actually tough. You and I can talk about this being inside a big tech company like Microsoft, where my business is a portfolio business. If you're in books, movies, television, your hit rates usually 25, 30%, right? It's not 70, 80%. And you have to accept that as part of the business. Because when you don't accept that, what that leads you to do is cutting everything that shows any amount of risk. But also part of that risk is the kind of delta between a baseline, which can mean the breakout success. Like who would have greenlit Minecraft way back in the day? And yet we bought the thing for $2 billion after it was successful this year. It's not an ad, but I'm just thinking through the portfolio. We have a couple games. South of Midnight is one I'M excited about a brand new franchise, new lead character set in the deep south of the United States and not a setting that you've seen a lot of video games takes on a lot of the lore of our deep south. I loved both the risk of it of let's go try build a new ip. Let's go try to set in a place and tell some stories that haven't been told before with a new lead character. And I want us to have a healthy mix of the Call of Duties, Minecrafts, Diablos, World of Warcrafts, the games that are more perpetual or sequelized because I think that's important as well in terms of feeding and growing those communities. But I never want to lose the ability to go and try new things. Excel, if I use that as the like. Do you have a formula for success? In most cases will tell us that you shouldn't go do new things, but until someone else does it, and then you ask yourself, well, why didn't we do that new thing? So I try to protect that part of the portfolio inside a tech company like Microsoft. Not that I get much interference. Most of the games that we launch probably won't hit the exact target that we had. This industry is really built around the games that exceed those targets fairly dramatically. Not about the safety of the portfolio. You know, that's always a good conversation internally.
- [36:44]
Tomer Cohen
The analogy that comes to me is a little bit like venture, like investing in startups. Almost like every game is a startup and you have a series A, Series B. Some of them went IPO and now they become sick roles.
- [36:54]
Phil Spencer
There's a lot of parallels. In fact, it's interesting because many times when I'm talking to the finance part of our organization, they will look at our portfolio based on investment, like the biggest investments and the smallest, like just how much we've invested in one of our games. I many times get the feedback of, hey, we really need this game to pay off because maybe it's the game we spent the most on. And I push back on that just like a VC would. It's not actually about return on the line item invested capital, right? It's the portfolio. It might be that your breakout success was the one that you spent the least amount on. But as long as the overall portfolio is profitable and growing, which we are, then you feel great about it. It's obviously nice if the things you're investing in do well, but you know, it's about the portfolio paying off in the kind of the multiple. If you want to use the VC terms of it. And for us, that's totally it. You can't fall in love with the budget of a game and make that the hurdle. The hurdle is as a publisher of games, as a portfolio of games, are we hitting our marks across that portfolio? And that's a different mindset than a lot of big companies run internally, where you want to see most of the big things you're doing really have success.
- [38:09]
Tomer Cohen
For any finance folks listening right now and saying, but can he tell ahead of time what will work? No, he cannot. He cannot. That's the whole idea of the portfolio.
- [38:18]
Phil Spencer
That's so true. I mean, if you do and you've seen publishers do this, you just end up cutting everything. That's not the one thing that's working today.
- [38:24]
Tomer Cohen
Exactly.
- [38:25]
Phil Spencer
And inevitably things will reach their summit and take a breather and then reinflate or even start a slow decline or even flatline. In a publicly traded company, flatting is not good either. So you always have to have what I call a certain part of our portfolio, which is the promising part of it. Like the stuff that has a very high beta. Like from success to failure, you've got to protect that part of it. Otherwise you just sit back and just do what you did yesterday. Like I said, until someone else does something else, then you have envy.
- [38:57]
Tomer Cohen
My recollection of Indiana Jones is more the game than the movie as a kid. So I was more entrenched with the game. And great games have always been rooted in compelling stories. I always felt like that was the first ingredient when I started. It was a single player narrative, has a very emphasized storytelling. And then I transitioned to multiplayer games, which was also incredibly fun, but they were less focused on the story. Back to that portfolio thing, is there like a deliberate decision to say, hey, we're going to have a few kind of game startups that are going to be really rooted in storytelling, but some were going to really bet on just amazing multiplayer experience.
- [39:34]
Phil Spencer
Yeah. And a lot of it goes back to what the capabilities and passions are of the team. And you see some teams that do an amazing job at both. I mean, the Call of Duty team, I think the Black Ops 6 line launch that we had in October has one of the best Call of Duty campaigns they've launched in a very long time. I think it's a really good campaign and storytelling. And yet there's also very cool multiplayer modes. And when our portfolio, then I want to have teams that have capability to do really interesting competitive multiplayer. I'm a big fan of cooperative multiplayer, where last night I was playing Diablo 4 with my two daughters who are now in their 20s. But you know, it's fun just to be able to hang out, have kind of family discussions while we're running through Sanctuary and doing.
- [40:21]
Tomer Cohen
You're all in different rooms or in different places. Or are they.
- [40:23]
Phil Spencer
They're in their 20s in their own homes. But it's. I noticed they were on sometimes we play Sea of Thieves. We play different cooperative games together. But some teams are very good at narrative. We have a team Double Fine down in San Francisco. Tim Schaefer is like an amazing writer. They used to do great somewhat humorous narrative driven games. Other things that are maybe more serious as a story. It's why the diversity of where our teams are and the lived experiences of our teams is important. Geographically we have teams in so many different places because I think as storytellers we are somewhat a collection of our lived experiences, whether that comes through conscious or subconsciously and what we create. You can't just take a team that's great at doing single player narrative driven games and tell them to add multiplayer. Very rarely does that work or vice versa. Our biggest game from just online play is probably Candy Crush, Candy Crush from King and asking that team, hey, can you go do a deep narrative review? Probably. It's not where their key DNA is. So making sure you know the capabilities of the team. But then as you talked about when we sit back and look at the portfolio, I want to make sure we have a healthy mix of teams that are good at cooperative, good at deep storytelling, good at competitive multiplayer. Matt Boody runs our studio organization directly and he and I spend a lot of time just thinking about the portfolio of teams that we have and do we have unique capabilities there.
- [41:57]
Tomer Cohen
Awesome. Phil. To kind of wrap things up, I usually love to ask about the future. When you think about the biggest changes coming to games, how do you see the current wave of AI playing into that or beyond that doesn't have to be AI specific.
- [42:10]
Phil Spencer
Yeah. The thing I see growing more and more are how games are being used and experienced for both the gameplay, but also as a platform for community and social and creation themselves. If you think about Fortnite, my friends at Epic Games, Tim Sweeney and the teams do an amazing job but you have concerts taking place, you have game shows, you kind of have these environments set up. I don't think this is true for all games, but I see more and more of the large scale games that are available everywhere are a platform for more than just the gameplay. In a way, gameplay is the thing that Brings the community together, but the longevity of it is your player base coming together and finding that the game world itself is a place that they want to experience more fully and more continuously. And I see a lot of innovation happening there where teams are very much focused on how the community can play not only a player role, but a creator role in the experience that they have. That's such a great place for us to focus. I will also say there was a time where the stories we had envy of the other medium of the kind of depth of storytelling. But if you look at a story like the Last of Us, or like I said, Indiana Jones or things like these are stories that could hold up in any medium. And I think that will continue for us in video games. I truly believe in the power of the interactive art form that is video games. And it has some real strength over a purely linear and passive consumption of content that will continue to grow on the AI side itself. The area that we're focused probably the most right now is just the safety and security of the services. It's not lost on me the responsibility that we have as Xbox for the millions of children that are on our platform and ensuring that the right content and the right experiences and interactions that they have are on the platform. And it's an area just because of the sheer scale of the interactions that we have. That AI and just the kind of compute capability can be really, really helpful because I think about how many kids have their first experience in Minecraft in the back of mom's car with their phone. Whenever you bring together millions of people, there's some bad actors. I'm really proud of the way the team continues to lean in and using technology to ensure that our platform is as safe and secure as it can be. It's a responsibility that we have that's critically important.
- [44:56]
Tomer Cohen
The responsibility that comes with that power is key.
- [44:58]
Phil Spencer
Yeah, we want that experience for everybody to be great. Because the positive outcomes of bringing people to together from different geographies, different demographics, different religions, genders, whatever, you want to pick people together in a community of video games just has real positive impact. It builds bridges between people who might never run into each other in the real world. And to really realize that, I think having a safe and secure platform where anybody feels they can come on, have interactions and then meet other people in a safe is important.
- [45:32]
Tomer Cohen
I love that. Let's end on a quick, rapid fire kind of round. Curious. If you can turn any book or movie into a game, what would that be?
- [45:41]
Phil Spencer
Wow, I'm a big comic. Guy. There's a comic miniseries I love, I recommend to people. Punk Rock Jesus. It's also probably because I'm a fan of punk rock. The premise is they found the Shroud of Turin and they find some DNA and they clone Jesus. He comes out and I think the people are expecting him to be one way and he turns into a lead singer of a punk rock band. Like this is a personal one. The kind of serendipity of punk Rock Jesus, like the just twist on fate all up. It's kind of a cool realized world in the comic space. Like an obscure reference, but it maps a lot to who I am.
- [46:22]
Tomer Cohen
This is for all the game designers out there listening to Phil right now wanting to pick this up. You're welcome to and then lastly, Phil, I'm sure many are listening right now saying this is an incredible job mission and they would love to have a career in gaming. Actually. It's hard to listen to you and not say, hey, I kind of want to work in gaming for a bit. Obviously outside of the passion for gaming, is there something you think they should go and learn or get experience at to kind of develop a career in gaming?
- [46:53]
Phil Spencer
It's a little bit different than the direct answer, but one of the things I tell people is go find an indie studio physically near you and ask them what they need. Because teams are always running on a shoestring budget. There's always more to do than there are people. The nice thing about video games today is you can be a musician in video games, you can be an artist in video games. Obviously programming skills are key. For me personally, I wish we had more people that understood that product making ethos, starting from the compulsions and motivations that we have as people. That's where I would start if I was just fresh canvas on my own. Try to truly learn about human centered design. I think that can apply outside of gaming, but definitely in the end games are risk reward loops, whether it's at 3 seconds, 30 minutes or 3 hours. And the best games kind of have all of those loops going at the same time and really understanding what motivates us people to spend time and emotion and energy on things. I'm the biggest fan of designers in our industry that have really mastered those loops. It's a real skill.
- [48:02]
Tomer Cohen
It's a wonderful note to end on. Thank you so much for the time. I deeply enjoyed my conversation with Phil and there's so much to learn from him. Here's just a few of my favorite takeaways. First, for Phil, this is a Dream job. Gaming is his lifelong passion. But for Microsoft gaming, Phil is also a dream fit for this role. I've seen this again and again. It's not enough to be a great builder. You have to be deeply passionate about what you're trying to build in order to make a dent. And yet, even Phil recognizes the need to draw boundaries. He actually intentionally separates his work from the joy of gaming, saying, I didn't.
- [48:44]
Phil Spencer
Want my career to damage my love of playing video games.
- [48:50]
Tomer Cohen
Second, to truly appreciate the gamer experience, you have to understand the deep emotional connections players have, not just with the game, but also with the platform. Like Xbox, gamers are not passive users. They come to compete, to collaborate, to build communities. And that level of engagement leads to a lot of feedback. Some of it could be positive, a lot of it could be negative, and it could be very specific. Phil is keenly aware that the key to parsing this feedback is understanding that it's coming from an emotional connection. As he puts it, feedback.
- [49:24]
Phil Spencer
It truly is a gift, even if at the time it might not always feel like it.
- [49:28]
Tomer Cohen
The real danger isn't criticism, it's apathy. Third, Phil sees video games as an art form, not a formula. Unlike some industries, where past successes can predict future hits, gaming defies rigid frameworks. This makes gaming inherently more risky, which can raise eyebrows inside of a big company where finance teams naturally want predictable returns. But Phil treats new game development more like venture investing. Success isn't about individual line items. It's about the overall portfolio. Some games will fail, but others will break out in ways no spreadsheet could have predicted. To drive true innovation, Phil has to actively protect risk taking, balancing major franchises like Call of Duty with fresh experimental titles like south of Midnight. The real danger is actually playing it too safe and cutting anything that feels uncertain. Fourth, everything starts with great games. A platform's success isn't about locking players into a single device. It's about creating experiences so compelling that people want to come back. Once you have a great title, the next step is to maximize reach and convenience, ensuring that as many people as possible can play, no matter what device they own. That's why Xbox is moving beyond a console first approach, focusing on making games more accessible across platforms. Phil's key metric? It's ours. The more time players spend in games and on the platform, the stronger the ecosystem. And for developers, Xbox's role is to reduce complexity, making it easier to build and scale games across devices. In the end, it's not the hardware that matters now. It's about the games and the people who play them. Fifth, in an industry as multifaceted as gaming, creativity thrives when developers have the ability to bring their vision to life. A great game team isn't just a set of features. It's a manifestation of the team's passion and their perspective. And that's why Field prioritizes freedom, allowing developers to shape their projects in ways that feel authentic to them. Yet they're all anchored by clear goals and criteria that balance creative independence within a structured vision ensures that teams can push boundaries while still delivering games that fit into the broader Xbox ecosystem. Lastly, I love Phil's advice for aspiring game developers. Go find an indie studio. There's always a need for great talent. Gaming isn't just for programmers. Artists, composers, designers. They all have something to contribute. Just get started.
- [52:09]
Jenna Johnson
We'll be back in two weeks with Jenna Johnson, the president of Patagonia. If you liked this episode, don't forget to rate and review us on Apple Podcasts. It'll help people discover the show. Building one is a production of LinkedIn News. Our host is Tomer Cohen, LinkedIn's chief product officer. This episode was produced by Max Miller. Our associate producer is Rachel Karp. We're engineered and mixed by Asaf Gadron, and we get additional production support from Alicia Mann at LinkedIn News. Sarah Storm is senior producer and Enrique Montalvo is our executive producer. Dave Pond is headline of productions and Creative operations. Maya Pope Chappelle is director of content and audience development. Courtney Coop is head of original programming. Dan Roth is the editor in chief of LinkedIn. If you know a product leader we can all learn from, send us a line at pitches@LinkedIn.com.