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[LectureMaster]

Microsoft CEO Stresses That Gaming Is Critical To The Company

"You can't be a gaming publisher without, sort of, first and foremost being focused on that."

www.gamespot.com

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A recent report said Microsoft CEO Satya Nadella was at one point mulling the possibility of shuttering the Xbox division. Before this, Microsoft's own co-founder Paul Allen's investment company called for Microsoft to dump Xbox and spin it off as a separate business. That never happened, and now Nadella is speaking up to express Microsoft's commitment to gaming. He told Dwarkesh Patel that it's not true that Microsoft's investments in gaming is part of some kind of "means to some other end."

Microsoft has a long history of supporting gaming, Nadella pointed out, referencing how Microsoft Flight Simulator was a Microsoft product before the company even made the first version of Windows.

"So, gaming has got a long history at the company, and we want to be in gaming for gaming's sake. I always start by saying I hate to be in businesses where they're means to some other end. They have to be ends unto themselves," he said.

Nadella's comments came in response to a question about if Nadella had some kind of "premonition" about how gaming could help contribute to Microsoft's push into the artificial intelligence space by using games to train its models.

"We are a company where we have to bring all these assets together and be better owners by adding value. For example, cloud gaming is a natural thing for us to invest in because that will just expand the TAM [Total Addressable Market] and expand the ability for people to play games everywhere," he said.

Nadella went on to say that Microsoft's new investments into gaming-focused AI with its Muse technology can be helpful to allow Microsoft's game team to make games faster and more efficiently.

"As the biggest, world's largest publisher, this will be helpful. But at the same time, we've got to produce great-quality games. I mean, you can't be a gaming publisher without, sort of, first and foremost being focused on that," he said.

Microsoft's new Muse technology is what the company claims is the world's first "world and human action model" that is trained right now on Ninja Theory's abandoned game Bleeding Edge. Ninja Theory has said Muse won't be use to make games, but instead to help empower humans to work faster.

"I think about gaming data as perhaps, you know, what YouTube is perhaps to Google, gaming data is to Microsoft. And so therefore I'm excited about that," Nadella said.

AI is a controversial technology within the gaming space and across numerous other businesses. A recent GDC study found that the majority of game studios worldwide use generative AI already, despite concerns about the technology. Microsoft itself has gone on record saying advancements to AI will lead to job losses in the short term but may lead to more opportunities in the long term. Microsoft laid off more than 2,500 people in the past year in gaming roles, though whether or not the reduction had anything to do with AI is unknown. Video game voice actors have also gone on strike due to concerns about AI.

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[LectureMaster]

 

[Sebastian1295]

I legitimately don't understand microsofts vision anymore for their gaming sector. Xbox as a brand just feels like it's lost, and gamepass has completely sunk them. I feel like with gamepass stagnating, PC gamepass being dead essentially to PC gamers, the xbox hardware dying, and first party studios getting destroyed by gamepass because it's killing their sales, they need to do something drastic to turn it around.


I think they should get rid of day 1 games on gamepass or shutter it completely and take the bad press and rage that will come from doing so in stride as they formulate a new plan. Go back to selling games for 70 dollars and advertise gamepass as a subscription service for older exclusives etc if they choose to not get rid of it while focusing on making sales from their vast library of properties. Because the way it is now can't continue and they have to know it when they look at the subscription numbers of gamepass and how stagnant they're compared to the revenue lost from sales of their games.

 

[ProtoByte]

Lies. He was ready to shut it down before, and he will be ready to shut it down again after a few more quarters like the last. He just doesn't want to be blamed for it when that happens, which he would be if he indicated that they were iffy on keeping Xbox around.

 

[ChorizoPicozo]

when your homie Nadella is driving at 80B dollars per second and he starts saying:

"it's not true that Microsoft's investments in gaming is part of some kind of "means to some other end."

"I hate to be in businesses where they're means to some other end. They have to be ends unto themselves"

"We are a company where we have to bring all these assets together and be better owners by adding value"

"Muse technology can be helpful to allow Microsoft's game team to make games faster and more efficiently"

" we've got to produce great-quality games. I mean, you can't be a gaming publisher without, sort of, first and foremost being focused on that,"


and you realize that you haven't released a great quality game for over a decade, that you have failed to implement cloud technology and still haven't released games that were in development since 2018.

 

[DenchDeckard]

when your homie Nadella is driving at 80B dollars per second and he starts saying:

"it's not true that Microsoft's investments in gaming is part of some kind of "means to some other end."

"I hate to be in businesses where they're means to some other end. They have to be ends unto themselves"

"We are a company where we have to bring all these assets together and be better owners by adding value"

"Muse technology can be helpful to allow Microsoft's game team to make games faster and more efficiently"

" we've got to produce great-quality games. I mean, you can't be a gaming publisher without, sort of, first and foremost being focused on that,"


and you realize that you haven't released a great quality game for over a decade, that you have failed to implement cloud technology and still haven't released games that were in development since 2018.

I think they've released some great games. There seems to be a certain section of the community who thinks they haven't but each to their own.

 

[bender]

 

[ChorizoPicozo]

I think they've released some great games. There seems to be a certain section of the community who thinks they haven't but each to their own.

zeitgeist games like
The Last of Us 2013
God Of War 2018
Spider-Man 2018
or Helldivers 2 2024? I don't think so.

and of course there is the ongoing meme of no GOTY winners for a decade too.

 

[Ozriel]

I legitimately don't understand microsofts vision anymore for their gaming sector. Xbox as a brand just feels like it's lost, and gamepass has completely sunk them. I feel like with gamepass stagnating, PC gamepass being dead essentially to PC gamers, the xbox hardware dying, and first party studios getting destroyed by gamepass because it's killing their sales, they need to do something drastic to turn it around.


I think they should get rid of day 1 games on gamepass or shutter it completely and take the bad press and rage that will come from doing so in stride as they formulate a new plan. Go back to selling games for 70 dollars and advertise gamepass as a subscription service for older exclusives etc if they choose to not get rid of it while focusing on making sales from their vast library of properties. Because the way it is now can't continue and they have to know it when they look at the subscription numbers of gamepass and how stagnant they're compared to the revenue lost from sales of their games.

How the fuck did you miss their huge pivot to essentially being a third party publisher?

 

[Sebastian1295]

How the fuck did you miss their huge pivot to essentially being a third party publisher?

They had to go third party cause of gamepass. Gamepass is one of the biggest failures in gaming history and has single handedly sunk a brand to the point it has no choice but to go third party. They need to pivot off of the gamepass fail and save face while they still have a face to save.

 

[Ozriel]

zeitgeist games like
The Last of Us 2013
God Of War 2018
Spider-Man 2018
or Helldivers 2 2024? I don't think so.

and of course there is the ongoing meme of no GOTY winners for a decade too.

“If it isn’t a TGA GOTY winner it isn’t a great quality game” is quite the take indeed.

 

[Ozriel]

They had to go third party cause of gamepass. Gamepass is one of the biggest failures in gaming history and has single handedly sunk a brand to the point it has no choice but to go third party.

So what’s the logic in you shrieking about them needing to do something drastic when they’ve already taken that drastic pivot?

 

[DenchDeckard]

zeitgeist games like
The Last of Us 2013
God Of War 2018
Spider-Man 2018
or Helldivers 2 2024? I don't think so.

and of course there is the ongoing meme of no GOTY winners for a decade too.

I completely agree with you there but they've had some great games.

Sony just have an ability to create so much hype before launch and with their fan bases.

I would say that three of those games you listed are truly excellent games for me. Three are incredible and one is a great spider man game.

Microsoft has probably had forza horizon that is close to that level but they didn't have the user base or support from the fans of the industry to elevate it to a level of zeitgeist. It just performed incredibly well commercially under the radar so to speak.

But good to great games are a plenty from all platforms I think.

 

[Sebastian1295]

So what’s the logic in you shrieking about them needing to do something drastic when they’ve already taken that drastic pivot?

If they're going to continue to sell hardware then they gotta pivot off of gamepass. Who is going to buy a piece of hardware with 0 exclusives and that's only feature is a subscription service 'no one'. They need to pivot and make their next gen hardware compelling or else it's going to tank hard.

 

[alienator]

Those PR photos, always lol ... Lets dress Satya up as a gamer and ironnically dress him in their most mismanaged game ever, also it will look more authentic if u put some random controllers in the background and a xbox on the shelves thats not connected anyways.... and then talk about how serious they are about gaming - who falls for that?

 

[ChorizoPicozo]

“If it isn’t a TGA GOTY winner it isn’t a great quality game” is quite the take indeed.

It's the biggest show and the most important one from a media perspective. It has the most attention and weight from a marketing point of view.

but the point is that Phil and his team (Booty, Bond and Greenberg) are a just a joke

 

[Ozriel]

If they're going to continue to sell hardware then they gotta pivot off of gamepass. Who is going to buy a piece of hardware with 0 exclusives and that's only feature is a subscription service 'no one'. They need to pivot and make their next gen hardware compelling or else it's going to tank hard.

Gamepass is probably one of the remaining positives about buying their hardware. Killing GP does absolutely nothing for hardware, that’s a bizarre argument.

Terminating GP doesn’t change the picture for console exclusives either.

 

[Ozriel]

It's the biggest show and the most important one from a media perspective. It has the most attention and weight from a marketing point of view.

It’s also not the sole determinant on what a great quality game is.

but the point is that Phil and his team (Booty, Bond and Greenberg) are a just a joke

Certainly Phil, Booty and Greenberg are.

 

[ChorizoPicozo]

I completely agree with you there but they've had some great games.

Sony just have an ability to create so much hype before launch and with their fan bases.

I would say that three of those games you listed are truly excellent games for me. Three are incredible and one is a great spider man game.

Microsoft has probably had forza horizon that is close to that level but they didn't have the user base or support from the fans of the industry to elevate it to a level of zeitgeist. It just performed incredibly well commercially under the radar so to speak.

But good to great games are a plenty from all platforms I think.

don't get me wrong. Xbox has great games.

but the point I'm making is that when you look at xbox for the last 10 years, it has been more Ls than Ws

(we don't need to make a list of their fumblings at this point)

But even when we take their better games, their financial performance wouldn't be able to justify to Nadella, keeping Xbox around.

 

[Sgt. Pinback]

Ninja Theory has said Muse won't be use to make games, but instead to help empower humans to work faster.

 

[James Sawyer Ford]

I think they've released some great games. There seems to be a certain section of the community who thinks they haven't but each to their own.

Most of their games range from poor to meh to okay, and sell poorly

Very, very few of them are good to great, either critically or commercially

They need to change that, see: hellblade 2 and avowed as examples of complete duds and a waste of dev resources, time, and money

 

[Digital-Aftertaste]

Just release dx13 and do not elaborate until 5 years after the next Xbox has released... Profit.

 

[DenchDeckard]

Most of their games range from poor to meh to okay, and sell poorly

Very, very few of them are good to great, either critically or commercially

They need to change that, see: hellblade 2 and avowed as examples of complete duds and a waste of dev resources, time, and money

They have plenty of games that score in the 80s.

Not that any of that matters as all reviews are fucked. Let's just say, personally ive played plenty of their games that I have enjoyed easily as much as 80 to 90 percent of games on other platforms.

Like ChorizoPicozo said. They haven't had any games that have truly penitrated the zeitgeist. Which i 100% agree with.

 

[James Sawyer Ford]

They have plenty of games that score in the 80s.

Not that any of that matters. Let's just day ive played plenty of their games that I have enjoyed easily as much as 80 to 90 percent of games on other platforms.

Low 80s at best, most of them were overrated in that range (Starfield, HB2). Avowed will be in the 70s. We all know about Redfall.

These are just dated titles mechanically. Their lineup would be significantly better without all these duds.

They need to elevate to the standard of playground or at the very least machine games with Indy and possibly id if Doom dark ages is good.

 

[ChorizoPicozo]

It’s also not the sole determinant on what a great quality game is.

i don't think you are getting the point at all. forget about the actual quality of such games.

TGA is just the highest profile Marketing event of its kind. An event than has made Xbox the laughing stock of the gaming industry for 10 years straight.

and when they have a win (in all key metrics) they shut down the studio a couple of months afterwards.

so. if Nadella is taking about great quality games and making games faster and more efficiently and you look Xbox's track record
... you will understand why Phil is so scared.


heck, look at Avowed, another lackluster aggressively mediocre game.... coming from the biggest, world's largest publisher.

shit doesn't add up.

Certainly Phil, Booty and Greenberg are.

Sarah's Bloomberg interview was quite a show

 

[Ozzie666]

I have really grown to hate Microsoft these past generations, I really miss the OG Xbox era and 360, until they fucked it all up. Their messaging is so confusing, i wonder if people internally feel the same way or they actually know the 'new' end game. I wonder how share holders feel too about the paint by numbers approache and ever changing tunes. Microsoft always has a long game and vision, I'm not sure what it is, not sure they even know. Does Colt know?

I will say this, if Microsoft can be a true third-party publisher and maintain enough gamepass subs and hardware sales to support that endeavour, it's pretty scarey to think about. It would be the first time anyone has pulled it off. Maybe just hanging on for real viable cloud services? It's a shame Valve is so dam lazy.

Digital is exactly what publishers want to eliminate used game sales.

 

[Loomy]

 

[Killjoy-NL]

They have plenty of games that score in the 80s.

Not that any of that matters as all reviews are fucked. Let's just say, personally ive played plenty of their games that I have enjoyed easily as much as 80 to 90 percent of games on other platforms.

Like ChorizoPicozo said. They haven't had any games that have truly penitrated the zeitgeist. Which i 100% agree with.

Scores become irrelevant if people don't buy said games.

As much as people want to deny this, it's a cold hard fact that's killing Xbox.

 

[kazuyamishima]

They’re going full third party and they’re subtle in trying to get rid of the hardware business.

Sega at least was clear and cut with the BS.

 

[sono]

"want to be in gaming for gaming's sake"

That is the correct positioning.

Indeed, for any brand, focus on your core product.

 

[ToadMan]

All I see is Satya referring to their ambitions as a publisher now.

(Clarkson voice) The biggest game publisher in the World ... Microsoft.

Depressing... but anyway, they bought that title, so it's up to them to fuck it up from where they've bought in. Place your bets.

Since they bought them (and Zeni), they should be at least as successful as ABK were - that would be an overall business failure due to lack of growth, but at least the value of the investment would be maintained. Let's be realistic though, MS won't maintain ABK levels of success, nevermind growth.

If they do spectacularly well as a third party publisher, they may achieve EA levels which would be a limited loss but not apocalyptic.

However, it's MS, so probably Ubisoft (2025) stature within 10 years.

 

[Ozriel]

I have really grown to hate Microsoft these past generations, I really miss the OG Xbox era and 360, until they fucked it all up. Their messaging is so confusing, i wonder if people internally feel the same way or they actually know the 'new' end game. I wonder how share holders feel too about the paint by numbers approache and ever changing tunes. Microsoft always has a long game and vision, I'm not sure what it is, not sure they even know. Does Colt know?

I will say this, if Microsoft can be a true third-party publisher and maintain enough gamepass subs and hardware sales to support that endeavour, it's pretty scarey to think about. It would be the first time anyone has pulled it off. Maybe just hanging on for real viable cloud services? It's a shame Valve is so dam lazy.

Digital is exactly what publishers want to eliminate used game sales.

Unless we’re reading different OP’s, where’s the mixed messaging in this?

It’s just Nadella saying they’re serious about gaming and gaming isn’t being pushed internally at MS as a means to grow other stuff like AI

 

[ZehDon]

Well, you spent USD$80b to become the world's largest video game publisher - I'd sure as shit hope it was to publish some video games!

 

[LazyParrot]

I'm sure MS thought the original always-online-no-used-games iteration of Xbox One was actually really great for gaming too. Anything can be "for gaming's sake" if you put the right spin on it.

 

[Ashamam]

Satya

But at the same time, we've got to produce great-quality games. I mean, you can't be a gaming publisher without, sort of, first and foremost being focused on that,"

Err what, no sort of, that's the whole ball game. Probably just a turn of phrase, but would sound a whole lot better without the 'sort of'.

 

[DryvBy]

I think they've released some great games. There seems to be a certain section of the community who thinks they haven't but each to their own.

Not really. They have put out some good games after buying them in a deal, but once that ends and it's up to MS? Its done.

 

[Skifi28]

I do respect Nutella, he could have very easily shut down an underperforming business at any time, yet he chose to invest nearly 100 billions. Obviously that's not good for the hardware that they're killing, but you gotta make some sacrifices.

 

[LavitzSlambert]

Microsoft has been invested in gaming, Nadella just hates the hardware platform if it's not extorting their customers the way their enterprise business does. It makes perfect sense and better aligns with their core competencies. But as a gamer, I miss the early 360 days - Microsoft was such a great competitor and really drove the industry forward.

 

[Shubh_C63]

Is there no limit or depth to Microsoft posturing.
They may be telling truth because they can't get away with "something else" now being in third position. If they could have, they would have.

 

[PJX]

Microsoft has been invested in gaming, Nadella just hates the hardware platform if it's not extorting their customers the way their enterprise business does. It makes perfect sense and better aligns with their core competencies. But as a gamer, I miss the early 360 days - Microsoft was such a great competitor and really drove the industry forward.

Gamepass was created 3 years after his appointment as CEO. Xbox brand has been going downhill since he was placed in that position. Bobby Kotick told him to his face, he didn't know shit about gaming. Nadella is a DEI appointment just like Sarah Bond.

 

[Walter Matthau]

He has no understanding of the gaming industry. He lacks patience and the constant shift in strategy has alienated the fanbase.

He reminds me of one of those people who buys an NBA team, trades their entire future away for a few aging all stars, watches the team fail for a year or two, and then sells.

 

[Elog]

If that was stated by an indie developer it would make sense. But Microsoft? They need to know who and what they are and base a strategy on that. Not a fluffy powerpoint married to a PR consultant.

 

[Tiago Rodrigues]

“If it isn’t a TGA GOTY winner it isn’t a great quality game” is quite the take indeed.

What he means is...when was the last time MS released a game that was actually talked about for years and had any influence in the industry?

Helldivers 2 took the world by storm out of the blue and went viral. Astrobot was one of the biggest critical acclaimed games from last year as well. This was on Sony's "slow" year supposedly.

 

[Ozriel]

He has no understanding of the gaming industry. He lacks patience and the constant shift in strategy has alienated the fanbase.

He reminds me of one of those people who buys an NBA team, trades their entire future away for a few aging all stars, watches the team fail for a year or two, and then sells.

I don’t think you understand that the role of the CEO is to make money and maximize value for shareholders.
Greenlighting a $70bn acquisition is the exact opposite of ‘lacking patience’. Especially when he’s well known for long plays like Cloud and AI.

You can probably accuse Spencer of strategy shifts. But Nadella’s vision would likely just boil down to “every Business Unit has to be very profitable and generate significant revenue”

Certainly it would be different for companies like Nintendo and Sony where the gaming business is the core of their overall business.

 

[Mr Moose]

CTRL + F Xbox.
He doesn't mention it once.
RIP in peace.

 

[DenchDeckard]

Not really. They have put out some good games after buying them in a deal, but once that ends and it's up to MS? Its done.

You can have your opinion and thats fine but I have very much enjoyed my time with Forza horizon, Gears, Sea of thieves, Sunset Overdrive, Hi Fi Rush, Quantum Break, Ori games, Flight Sim. etc over the last 10 or so years.

 

[DirtyBast8rd]

Never been more sick of a company than Microsoft and especially Microsoft Xbox or Microsoft Gaming or whatever it's called. From recommending and selling at least 8 Xbox 360 to friends and colleagues because they where awesome, to i would rather step in shit than read anything their pr machine puts out.

 

[HeisenbergFX4]

but the point is that Phil and his team (Booty, Bond and Greenberg) are a just a joke

Too many chefs in the kitchen and the head chef (Phil) doesn't have great taste buds to know when he is tasting great food or something merely mid

 

[ChorizoPicozo]

Too many chefs in the kitchen and the head chef (Phil) doesn't have great taste buds to know when he is tasting great food or something merely mid

Perfect timing:


In that Ryan interview, it finally dawned on me how narcissistic Phil really is too

 

[John Wick]

zeitgeist games like
The Last of Us 2013
God Of War 2018
Spider-Man 2018
or Helldivers 2 2024? I don't think so.

and of course there is the ongoing meme of no GOTY winners for a decade too.

The Forza Horizon games have been great all of them. There will be others like Sunset Overdrive etc.