Why Microsoft knows it needs to beef up its Xbox leadership

Phil Spencer, the head of Xbox, at Microsoft's Halo 5: Guardians preview event.

Image Credit: Dean Takahashi

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Microsoft announced today that Phil Spencer has appointed a new boss of games to handle the role that the executive had previously handled as head of the company’s games business.

Spencer will serve as executive vice president in charge of all things games at Microsoft — including hardware, games, and platforms. But Matt Booty, the former head of the Minecraft business, will now be corporate vice president of games in charge of all of Microsoft’s studios. The various studio executives will report to Booty, who in turn will report to Spencer

I talked with both Spencer and Booty in an interview, as both me explained what the changes will mean for Microsoft’s game business and all of the developers and executives reporting to them. Booty will be focused on making sure that the studios get the resources they need and work together to share knowledge across various development teams. Helen Chiang, Booty’s former lieutenant, will now head the Minecraft business that Booty previously handled.

Their decisions will be important. Sony has a 2-to-1 advantage over Microsoft in consoles sold in this generation. The only way Microsoft can deal with that is to keep making great games. And Booty is now in charge of that.


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Here’s an edited transcript of our interview with Booty and Spencer.

Above: Matt Booty is the corporate vice president in charge of games at Xbox at Microsoft.

Image Credit: Dean Takahashi

GamesBeat: Why are you making some changes?

Phil Spencer: Coming into the new year, we have an organizational change I wanted to get the opportunity to talk to you about. As I know you followed, back in the fall, Satya Nadella, our CEO, made clear — both organizationally as well as far as importance — the role he wants gaming to play inside of Microsoft. Consequently I became a member of the senior leadership team at Microsoft, which has been great. I’m learning a lot, and the conversations we’ve been having at the Microsoft level about the role of gaming have been inspiring.

As part of this, Satya asked us to think end to end about the role of gaming on the planet, the role that we can play with our content and services that we build, and the all-up opportunity that gaming affords Microsoft in the consumer space. He asked us to make sure we’re aligned to do our best work in this place.

As we’ve looked at the different ways we’ve given gamers choice to experience those games, whether that’s services like Mixer, allowing people to view and interact with gameplay that’s happening, or Game Pass, allowing people to subscribe to build their game library, or just a collection of great games from first-party and third-party that have come out, the role of content I don’t think has ever been more important in our history. I wanted to make sure we had the right organization in place to deliver on our content goals.

With that, I made the decision that I wanted to anoint a leader of our Microsoft Studios organization, which if you’ve tracked it, I’ve had the leaders of our individual franchises reporting to me for the last three and a half years. That’s been great in driving our all-up strategy and getting us to the point where Satya was willing and eager to make the investment in gaming that he’s made, but it’s also become very clear to me that we’re going to invest more in content, which we are doing, and that a unified studios leadership organization was going to be critical to our long-term success.

I’ve asked Matt Booty to step up into the role of leading Microsoft Studios. This will mean that Bonnie Ross, Shannon Loftis, Alan Hartman running Turn 10, Rod Ferguson at the Coalition, Craig Duncan at Rare, all the studios work that we’re doing will report in to Matt, who will report in to me. Matt is in charge of our current game content portfolio, but also, as we invest more in content to drive our gaming ambition, he will play the leadership role in driving that growth.

If you don’t know Matt, he’s been in the games industry for the last 25 years. He came to Microsoft from Midway, where he had a long successful career. Inside of Microsoft the thing he’s done most recently, which most people are aware of, is he runs Minecraft for us. He’s done an incredible job nurturing that franchise, both before we acquired Mojang and after, as Minecraft continues to grow. He has a great depth of experience in the console space, but also with games that are reaching customers on multiple devices, which is going to be important to our long-term success.

Just for completeness, I wanted to share that our new head of Minecraft will be Helen Chiang. Helen has been in the Minecraft organization for quite a while. She’s been at Xbox for a long time as a leader in Xbox Live, and also working directly for me as my chief of staff before she went on to run business operations for Matt in Minecraft. She’ll be stepping into Matt’s previous role, and she will be reporting directly to Matt as the head of the Minecraft organization.

I have the utmost trust and respect not only for the work Matt’s capable of doing, but also the way he works. He has a tremendous amount of support from the studio heads, from Rod and Bonnie and Shannon and Alan. He was clearly the person they wanted in this role. They’ve been very positive on this, and I have a ton of confidence in his ability to drive our content strategy forward.

Matt Booty: It goes without saying, but this is an incredible privilege and honor, to step into this role. I really look at it first and foremost as an opportunity to serve and provide a leadership layer to the studio heads, so they can focus even more on making great games. I’ve worked as a peer with Bonnie and Shannon and Rod and Craig, and obviously very closely with Helen as the number two person on the Minecraft franchise in Redmond. It’s a group I have a huge amount of respect for. It’s a world-class group of leaders and a world-class collection of studios. It’s a privilege to get in and help provide a layer of unification and collaboration across the studios, as we go forward helping drive the initiatives Phil talked about, getting behind the company’s vision for gaming.

Above: Phil Spencer at E3 2017.

Image Credit: Microsoft

As we think about the role of Microsoft Studios, and as I think about where to get behind, it really is our job to create games that our players and our fans want to play, across all of our services and all of our devices. Phil mentioned some of the experience we’ve had working across PC, mobile, and console, even on other platforms outside of Xbox, with Minecraft. I was set up well to do some of that with the work I did when I first came to Xbox, working on Windows Phone and being a part of the teams launching games for Windows 8 and Windows 10. I think that will be a place where I’ll be able to add value, as we look at the studios getting behind the big bets we’ve got lined up.

Most important will be to get behind the idea that we live and die by the great games we make. Content is extremely important to our strategy going forward. That’s the approach I have, to come into it as a service role, as an opportunity to provide a layer of leadership and help to the studio heads, so they can focus on making great games.

As Phil mentioned, we’ll be bringing in Helen Chiang. Helen has worked on the Minecraft team driving a lot of our operations, our business decisions, directly managing a lot of our partner relationships, particularly with our merchandising partners – folks like Mattel and Lego. She has been working with the studios in Redmond and in Stockholm to drive a lot of the business decisions and a lot of the underlying relationships with partners like Sony and Nintendo. She knows Minecraft very well. She has great relationships with the folks at Mojang in Stockholm. I know Jonas Mårtensson, who’s the CEO of Mojang, he and Helen have worked together closely, and he’s supportive of this new role for her.

Helen has experience at Xbox going back almost 10 years, working on the operations side of Xbox, working as Phil’s chief of staff. She worked with me when we were looking after the publishing business, before going through the Mojang acquisition. She has quite a depth of experience across a lot of parts of gaming and Xbox. She was the clear choice to lead Minecraft into the next three to five years, the next phase of where that franchise is going.

Overall, there’s a lot of exciting things going on here in gaming and at Xbox. Working in game studios has always felt like home base to me. I’ve been in games my whole career, primarily focused on working inside internal studios, going back to the days at Midway, and then coming here to Xbox. This feels a bit like getting closer to home, an exciting opportunity to get closer to how our games are made, and helping shape the future of where we go with our content teams.

Above: Minecraft EDU is the blockbuster’s educational version.

Image Credit: Mojang

GamesBeat: Matt, are you more on the creative side or the business side, then, historically? What are some of the earlier games you worked on, before Minecraft?

Booty: It’s interesting that I’m sitting here with Phil. The first interview Phil ever asked me was, “Are you business, creative, or technical?” I think my answer was a mixture of a lot of them. My early experience in games was as a straight game developer, writing a lot of game code, low-level code. It’s something I still do a fair amount of today. As the CEO of Midway I got a lot of exposure to the business side of games.

On the creative side, I’ve always had a golden rule, to stay out of the way of game teams as far as where they go with design and the craft of making their games. But at the same time, I think there’s a lot to be gained by supporting them and providing a layer of administrative help, really just a layer of operational help, so they can focus on making the game. My mantra has always been that I think I’m doing a good job inside a studio if the game teams show up to work and the only thing they need to worry about is making the game. When it comes to some of the creative side of things, I mostly try to stay out of the way, but I make sure everyone has the tools and the context they need to go forward.

GamesBeat: It seems like an interesting management challenge, from the way I understand how the organization looks. It seems like Shannon Loftis has quite a bit of variety to what she oversees, whereas it seems like Minecraft is fairly focused. I don’t know if that’s necessarily accurate, but there seems to be a variety of types of studio heads that are reporting in to you.

Booty: It’s a great observation. They’re certainly different. Although I think that variety is definitely one of the strengths of studios. Just in terms of the challenge, before taking on the acquisition of Mojang, I was working with Shannon and running our publishing group. I looked after Xbox Live Arcade for a while in the years leading up, pre-Minecraft. I’ve run that business before and have experience with the publishing teams.

Also, going back to Midway, I was head of product development overseeing studios in Chicago, one here in Seattle, one in Los Angeles, one in Austin. We had a studio in the U.K. Craig Duncan, who leads Rare right now, was the head of Midway’s Newcastle studio at the time, so he and I have worked together. I have experience looking after a pretty diverse group of studios, each with its own culture, each doing slightly different kinds of games.

Shannon does look after a pretty broad portfolio, working with outside developers. She has a great team of producers. Shannon’s team is one of the key pieces we have to maintain diversity and opportunity, to discover and nurture new IP, and also probably the most flexible team we have in terms of chasing after initiatives that support new things we want to do, like Game Pass and Mixer.

Looking after a big franchise like Minecraft—it’s just the one game, but at Minecraft we shipped on 17 different devices. We’re one of the few teams that has publishing relationships with Sony and Nintendo, which adds some complexity. Obviously Minecraft being one of the biggest game communities on the planet, there’s a lot of complexity and layers to it. You can think of Minecraft as having a number of studios that sit underneath the overall franchise umbrella.

Bonnie has run Halo that way for a long time. When you think about all the different games, the different incarnations of Halo, or even what Alan has done with Forza at our Turn 10 studio, with Forza branching out into the Motorsport line of games and then Forza Horizon as more of an adventure-arcade style driving game—all of our studios, to some extent, may have the one franchise umbrella at the top, but there’s a lot of complexity that sits underneath that. I think that’s the case across the board.

You’re right that it will be a leadership challenge, but I think of it more as an opportunity. I start out in this job having the good fortune to have worked with all of these folks as peers for several years now. I look forward to working to add value to what they do already, as opposed to trying to come in on top and change what their studios are about.

Above: The new Xbox One X.

Image Credit: Microsoft

GamesBeat: For Phil, how do you handle the sensitivity of promoting a peer to be the chief, and making sure that all the other people who might have wanted that same job are happy?

Spencer: In any function, in any industry, it’s something you need to think about. The first thing, which starts with me, is the team of our studio heads and how cohesive that organization is. This will sound kind of cheesy, but it’s a team of teamwork. The teams are all pulling together. They don’t view each other as competitors. It’s about how they can help each other. That’s a great starting point.

In discussions with the other leaders—I did actually have discussions with each of them about the structural decision to put a head of studios in place. They were all supportive of that, and frankly looking forward to creating a studio culture where, especially as we’ve been investing more in Xbox games that isn’t as visible yet—they’ve seen the investment happening. They know that culture around content creators coming together to learn from each other and build on each other’s innovations is critical.

So it started by having the discussions, before making a decision about Matt, on the org itself. Matt came back through my discussions with my leaders, like Bonnie and Rod and other people, as the person they wanted. That team voted for Matt even before I voted for Matt formally and made the decision. It doesn’t always happen that way. When it doesn’t, it becomes a challenge. This has probably been the easiest promotion from that level that I’ve had, because all of the leaders have been so supportive of Matt.

That’s really because of the way Matt shows up. He doesn’t need to be the person on stage. He doesn’t aspire to be the person who’s leading all the franchises or being seen as the spokesperson. He’s really about enabling people in the organization to do the best work.

You bring up something, though, that — as a manager and leader in the organization I want to stay close to and make sure I’m supporting all of our studio heads. Luckily, Shannon and Rod and Craig, they’re not shy about giving me feedback on how things are going. Communication will be key. But this was really supported by them, even before we made the final decision.

GamesBeat: Matt, what kind of decisions will float up to you and stop with you? The kind that you’ll need to make, as opposed to decisions Phil might make or a studio head might make.

Booty: I anticipate that they’ll fall into two categories. The first is, there’s a lot of operations material that happens as part of being part of a big company like Microsoft. Everything from budgeting to tracking all the folks that we have working in the studios. Even things that are just very day-to-day, like where do we all sit, and how can we form a culture by being closer to each other?

There have certainly been times over the last three years where the studio heads, working individually, we have these jump balls that have to be taken to Phil to referee, or we all look at each other and wait for someone to blink. This will be an opportunity to get in front of that and be more proactive, so we can solve things as a group. I don’t think that’s because of any lack of skill or desire to do that. It’s just that we haven’t had the luxury of having someone in that role, where that’s their day-to-day job.

Much more important, though, I think there’s a real opportunity well above the reality of running a large business, which is the opportunity for the studios to build some bridges between each other. As Phil pointed out, the studio heads really do get along with each other, spend quite a bit of time meeting together and thinking about how we can support each other, but getting studios together for things like—let’s get all our art directors together. Let’s have some opportunities for studios to visit each other and see what they’re doing in terms of technology.

Those things take time and coordination. They need a dedicated team to make that happen. I’m most excited to think about the opportunity of bringing the studio cultures together, so they can learn from each other, and really being of service to the studio heads so they can go after some things around culture, around operations, and around getting ourselves best positioned behind the overall strategy. It just takes time in the day. We all feel fortunate that the company has a commitment to first-party content, to the extent that we’re willing to dedicate a leader focused on helping studios and moving our first-party content forward.

Above: Phil Spencer at E3 2017

GamesBeat: Do you foresee doing things like managing some centralized services for all the studios?

Booty: We have some things that are centralized, testing and things like that. But to be clear, our studios have unique cultures. The Halo teams inside 343 do things in a unique way that’s best for that game. That’s very different than what happens on the Sea of Thieves team, which is different from what happens on the Minecraft team.

Having followed the industry, I’m sure we could all come up with stories where there have been pushes to get people on common tech, or just to homogenize the culture across studios. That’s not a goal of mine, not something I’ll be focused on from the outside. More to the point, it’s going to be helping expose the studios to what’s unique and innovative in each of our studios. Maybe we can get some cross-pollination and shared learning there. But there’s no push to centralize or get everyone working on the same game engine. I’m a strong believer that with big franchises like this, the studios will optimize for what’s best for their franchise. It makes sense to do what’s best for the individual game.

I can’t stress enough what a privilege it is to walk into a situation with world-class leaders running these studios. I had a chance to look after Turn 10 for a while and work closely with Alan Hartman for a couple of years before moving on to Minecraft. Exposure to that studio and Alan’s leadership team—I just have tremendous respect for what they’ve done with the Forza franchise, how they’ve built and expanded it, how that studio is run. If anything, it’s going to be amplifying and focusing the teamwork we’ve had across the studio heads to date.

GamesBeat: If I were to summarize some of what floats up to you —  I guess it’s things like budgets, number of developers, deadlines, that sort of thing, having a centralized view of all of that?

Booty: I believe that as part of studios, my job will be to look after all the schedules, look after the deadlines, look after the overall group, the plans and tactics of how we execute on content. Phil’s role will be to outline and spell out the strategy for us. I’ll take that as the next step to figure out how studios execute on that. That does include responsibility, top to bottom, for all of the budgets, the headcount, where we’re spending our money, where we’re focusing which developers we’re working with, and how we expand and grow our content lineup growing forward.

Above: Xbox One S Minecraft bundle.

Image Credit: Microsoft

Spencer: I’m not deaf to the meme out there regarding our content and our need to invest more. Definitely, we are at a point where we’re investing more and we’ll continue to do that. When I look at Matt and his responsibility with his team, it’s about charting our future in first-party content. I feel like with each one of the leaders we have, there’s an existing plan, and I feel good about that plan, but we know that the plan all-up for studios is expanding. Having Matt’s leadership there in navigating the expansion, what bets we make, the teams we bet on, the teams we create, is going to be critical.

Some of it is with the existing leaders we have there, and there are always opportunities to do more with the teams we have. But also, as we expand, having a leader in place so new investments can be driven and land in the strategy we have is going to be critical for me. That’s really where I look at Matt’s focus: both the existing franchises, and equally, if not a little more, thinking about our future content and how that growth happens in a thoughtful way, a way that delivers for our fans.

GamesBeat: Phil, could you reiterate what you’ll be focusing on, if Matt’s doing his job?

Spencer: The discussions with the senior leadership team at Microsoft, and Satya Nadella specifically, are really around the gaming opportunity globally for Microsoft, across all aspects of what we do. There are more than a billion gamers on the planet today. We reach a small portion of those with the work we’re doing. We love the work and the console experiences we’re delivering there. That’s the core to our brand and our value, what our customers love us for. But there’s also an opportunity for us to do more, to continue to expand where we reach customers.

In charting the all-up gaming strategy for the company — areas Microsoft has invested that can help us in our growth, new areas we need to go invest in that maybe don’t talk back to traditional Microsoft, but create new opportunity for us — that’s the area that Satya is really asking for us. We’re going to be talking more about this through the spring.

When you think about how we enable game developers everywhere to reach their customers in a deep and thoughtful way that’s beneficial for customers as well as the developer—thinking about different ways of delivering content to gamers wherever they are, the big opportunity that many companies see—gaming is a very important, growing business on a global scale. Some of the biggest companies in the world are investing in it — some of them more openly, some of them maybe without announcements yet. When you think about the Microsoft gaming ambition, it’s to be one of the leading companies in gaming. That’s my job: to build the strategy, build the team, invest in the right leaders, and navigate us to that opportunity.