Xbox Boss Phil Spencer Talks Future Of Gaming, Including Streaming, Monetization, Consoles, And More

Also in the interview, Spencer spoke about why he enjoys Fortnite, some of his regrets over the years (like moving the Bungie team from Chicago to Washington after the acquisition), and how things have been progressing with all the game studios that Microsoft acquired over the past few years. Spencer also discusses Microsoft’s thinking around business models, including subscription offerings and microtransactions.

Intriguingly, Spencer says he believes creating new models of monetization will help expand the audience for gaming globally.

“I think for us as an industry, we should embrace monetization dexterity, because I think it leads to the best creativity,” Spencer said.

Spencer said he recently visited Africa on a Microsoft trip, and he observed that one popular model for internet-usage in the country is that people might sit in a taxi or a bus and watch an advertisement to earn themselves currency to spend on using the internet. A model like this could work in gaming, Spencer said, where players engage with ads to earn currency to play games.

“Could that be a model that works in games? Absolutely I think it could,” Spencer said, acknowledging that he is not talking about a specific plan but rather a high-level idea that is in no way a concrete idea or plan that may ever come to fruition.

Still, Spencer said the video game industry needs to come up with new monetization methods to help reach new audiences and grow the business overall.

“We need to find new players, and new forms of monetization to open up those those new playerbases and new ways to build games, new creativity; that’s a great path to growth,” he said.

Another interesting topic that came up in the conversation was Xbox Game Pass. As many have been themselves wondering, Price directly asked a question that has occurred to many of the service’s subscribers: how does this model make financial sense?

Spencer said Microsoft is in a unique position as a platform-holder because it has the resources of Microsoft, which recently became one of the world’s first trillion-dollar companies. Overall, more people playing more games and spending more hours gaming is a good thing, Spencer said, but he shied away from directly answering the question about the financial viability of the Game Pass model.

Elsewhere in the interview, Spencer spoke about how he believes the xCloud streaming service will not replace traditional, hardware-based gaming anytime soon. He said he believes playing games on an Xbox (or another console) will be the best way to play games until 2030. The appeal of streaming services like xCloud is for the times when players are away from their main screens and still want to play, Spencer said.

“I think I’m going to have a game console plugged into my television for the next decade-plus. I think it’s going to be the best way for me to play on my television; to have a local device, download the game, and play,” he said.

Looking into the future, Spencer said he sees a future where there are more consoles, not fewer. These could include things like streaming-only consoles or other devices that live under your TV. He said the gaming industry will follow the music business where streaming has taken over and allows for all different types of experiences based on what people want.

He pointed out that in the music world, people listen to music however they want, on any device they want, whether that be relatively lower quality audio on the train to work or at home on a high-fi, surround-sound setup. With gaming, Spencer said he wants to unlock and allow gamers to play whatever they want, wherever they want.

“I think with games, it’s going to go similar. I think what we’re going to find, is as games are able to run in multiple contexts on different devices, you’re going to see a lot of different devices grow up to support different use scenarios,” he said.

One console experience in the home might have the “most capability,” while others on different screens could offer different experiences. Spencer foresees a future where users can beam content at home to any screen they want across a “multitude of different devices.”

This matches up with what Microsoft is rumored to be working on. In addition to Xbox Series X, there may be a lower-power next-gen Xbox, as well as other systems in the future. Going forward, Xbox is the console brand name, with titles like “Series X” and others as the model name.

It’s a fascinating conversation in its own right between two industry veterans, but another layer is the history between the two men. Insomniac worked on the Xbox-exclusive Sunset Overdrive before Sony acquired the developer following the release of its Spider-Man game.

You can listen to the full AIAS Game Maker’s Notebook podcast interview below with the Spotify embed. It’s also available everywhere podcasts are. Note that this interview was conducted during the DICE conference earlier in February, meaning it was recorded before Spencer’s big announcements about the Xbox Series X this week.

The Game Maker’s Notebook is one of the best gaming podcasts around. Some of Price’s previous guests have included Star Wars Jedi: Fallen Order director Stig Asmussen, veteran and prolific voice actor Troy Baker, and Dreams developer Abbie Heppe, among many others.

2020 is a huge year for Xbox, as Microsoft is releasing the Xbox Series X this year with Halo Infinite as a launch title. The Xbox Series X will feature backwards-compatibility for four generations of Xbox games, while it also boasts 12 teraflops of performance. There is also a new “Smart Delivery” cross-buy program that allows players to move between console generations without paying twice.