He copped flak for announcing two different Xbox consoles at E3 and refuses to give into the virtual reality hype. What's up with Xbox head Phil Spencer? Chris Schulz gives him a grilling.

It's a stunning morning in Sydney best taken in from the comfy couches in the penthouse suite of the Shangri-La Hotel, where the views stretch for miles.

The Harbour Bridge is to the left of us, the Opera House on the right, but Xbox head Phil Spencer has something more important on his mind - the secret room behind the mirror on the wall next to him.

"It's like a two-way mirror - it's totally weird," he explains, showing me the way into the luxury suite's panic room from a secret side door. "I don't have that in my room."

No, it's not Spencer's room - it's been hired for a packed day of interviews planned for Spencer on his first trip Downunder. "Everything's new," he quips, gesturing at the view.


It's unlikely Spencer has much to panic about. Since taking over as Xbox head in 2014, Spencer has calmed the stormy waters after Xbox One's troubled launch, reversing anti-gaming initiatives, such as always being online and the lack of backwards compatibility, to make the console more open and user friendly.

"We're putting gamers at the centre of every decision we make," Spencer explains.

That, along with some big exclusive titles planned before the end of the year, seem to be helping: recent sales figures show the Xbox One finally starting to reverse its slide against the dominant Playstation 4.

That's not to say his reign is without controversy. Spencer was criticised at this year's E3 expo for announcing two new Xbox consoles: the Xbox One S, a 4K-capable console that's out now, and Xbox Scorpio, a high-end unit for hardcore gamers that's due out next year.

Why invest in the Xbox One S now, critics ask, when the higher-spec Scorpio is just around the corner?

Once the secret room's been fully explored, Spencer's ready to explain that, and plenty of other things, like why he's reluctant to jump on the virtual reality bandwagon.

NZ Herald: We had the Xbox One in 2013, the Xbox One S this year, and Scorpio is coming next year. That's three Xbox consoles in five years. The Xbox 360 lasted for 10. Is technology moving too fast these days?
Phil Spencer: I expect we will build the Xbox One S console for many years. It's at a great price point, and that entry level price point for many consumers is the most important thing. Other people look at the hardcore features, that's why we're coming out with Scorpio. I do think consoles have to be able to innovate more quickly, but I don't want to do that and sacrifice being able to play the games (anyone) bought last year. Any other device that you have, you expect this. When you go out and buy a new phone, you don't expect that all your apps don't work any more. The console has been the anomaly, this piece of hardware you buy that has content written exclusively for that and doesn't run anywhere else. We're putting the gamer at the centre of the decisions we make. I hope 10 years from now people will still be playing Gears of War, or Halo 5, if they want to.

Are people still playing games from Xbox 360 that are 10 years old? Are you amazed at the games people still play long after their release?
Minecraft launched in 2009, which is seven years - a long time in any other art form. The number of Minecraft players today is as high as it's every been in the history of the game. Red Dead Redemption is another great example. We added it to backwards compatibility in June. It was like this time travel moment for me. I had played it on the Xbox 360 but I hadn't finished it. I sat down to play it (on Xbox One) and it said, "Syncing save game". April 2011 was the last time I had played it, but there's my save game. I'm on a different console, playing the game from five years ago. I went through and finished it finally. It was fantastic.

What are people looking for when they choose a console these days? Is it software, or hardware? What's the tipping point between someone choosing an Xbox One console or a Playstation 4?


It isn't one thing. Customers are different. Two things are at the top level of the decision tree that are really important. What are my friends doing? Console gaming has become much more social than it was in the Nintendo 64, original Xbox, Playstation 2 days. Now it's, 'What do you have? What do I have? What are we going to go play today?' We want to be able to play together. And then obviously, (the second is) exclusive games. Call of Duty, Battlefield, Fifa are on all the consoles. If you love Uncharted ... you're probably going to buy a Playstation. If you love Gears of War, Forza Horizon and Halo then you're probably an Xbox fan. Those are the top level decisions. The other thing is price. Price is so important.

The Xbox One has struggled against the Playstation 4. Xbox is focusing on supporting high definition television and gaming, while Playstation is focusing on virtual reality. Who's making the right decisions?

I've been on this Xbox One journey for the last three years. We didn't have a console that consumers perceived to be the top of the consoles they want. I'm seeing with the Xbox One S and the momentum we have in market now that people are looking at this thing and saying, 'Okay, this is the thing I want to play'. Our choices for the Xbox One S, around both the 4K blu ray and 4k streaming of Netflix, as well as the price point we're at, is turning out to be great. Playstation made different decision around the line-up they were going to do, and I respect their decision-making process.

Those decisions would have been made a long time ago. Did you sweat on them?

Oh every day. Software is malleable very late in the process. Hardware decisions have a lead time that's ridiculous. You have to make bets and lead with what is right for the customers, the gamers. I think gamers bet on technology adoption, and 4K. I could see it on the PC side. They were building games for 4K on PC. I thought that would be something console gamers would want.

How much do announcements from your competitors play into your own decision making for Xbox?

Our big place to announce stuff is at E3. We go first in the line-up. It's us, then Sony, and then Nintendo. So I can't really react to what they do because I don't know what they're going to do. I have to make a bet on what I think (we need to do).

You announced the two Xbox consoles at E3 and caused quite a ruckus. Any regrets?

I totally understand people saying this is the stupidest thing I could have ever done. It's still gotta prove out. I feel good about the decision now. We'll see. In a year we'll ship Scorpio. We had locked on what Scorpio was, we had started to talk to third party developers and I knew word would get out. If I know what the product is and what it's going to do, and what we're designing for, I'd rather be open with our customers about what's coming. Because if someone had an original Xbox One, and we launched Xbox One S, and I knew a year later I was going to have Scorpio, and I didn't talk to them about Scorpio, I was going to feel like I was misleading them. I wanted to be very explicit about what S was, what Scorpio was. The time frames. The decision is different for people.

Where's Scorpio at now? Is there a release date? Is it ready?

No. We've pretty much locked on what it looks like. We're very close. We know the spec of the CPU, GPU, memory bandwidth, amount of memory, those things. There are some decisions we can wait a little bit on as people start bringing games up on it. We are spec complete on what the product is. Early in 2017 we'll be talking more about timelines and what the product line-up looks like.

With all the hype around it, virtual reality must be a part of your Scorpio plan - isn't it?

VR is something I'm watching. I've yet to find a VR experience that grabs me for longer than a few minutes. We designed Scorpio as a great VR console. It's set up for VR. I want to make sure I've got the right content and right partnership. I don't want to just tick a box that says, 'Okay, it has VR capability'. I want to track the market to see where it is. We have time to watch how the market plays out. I hope VR becomes something special, but I don't think it's a given yet. I have really seen the content that drives that deep engagement with console gaming today.

* Chris Schulz travelled to Sydney courtesy of Microsoft.