Spencer: Microsoft almost abandoned Xbox brand after the Xbox One launch

Today Microsoft celebrates the start of its fourth (or fifth?) generation of video game console hardware with the launch of the Xbox Series X/S. But Microsoft Xbox Chief Phil Spencer says the company's gaming efforts almost didn't make it to this point, and Microsoft was considering abandoning the console space just after the 2013 launch of the Xbox One.

In an extensive interview with Shacknews, Spencer looks back a bit at the tumult within Microsoft in general (and the Xbox division in particular) leading up to the Xbox One rollout. The retirement of Xbox President Don Mattrick in July of 2013, just after the Xbox One's troubled E3 debut, left planning for the Xbox One launch "distributed amongst the company in what I would say is a way that wasn't really feasible for Xbox," Spencer said.

With just months to go before launch when Mattrick left, control of the Xbox brand was splintered across three teams: a platform team headed by Marc Whitten; a first-party games team led by Spencer in "another" part of the company; and a separate marketing team that had been "moved out" from the rest of the Xbox planning. "I don't think it was the best move for stability of our launch," Spencer recalled.

While the splintered team managed to launch the Xbox One "mostly on time" that holiday season, as Spencer put it, that lack of leadership meant that there were "some of the parts of the platform that weren't completely done when we launched."

Former Xbox executives have previously reflected on the problems during the pre-launch period for the Xbox One as well, especially the rollout and subsequent reversal of digital licensing policies that would have let game publishers restrict used sales of physical game discs. "Certainly our messaging was horrible," former Microsoft Director of Product Planning Albert Penello told Ars in an interview at the time. "While the intent was good... we didn’t deliver what our fans wanted," former Microsoft Corporate Vice President for Windows and Devices Yusuf Mehdi said in a LinkedIn post years later.

Do we keep going?

By early 2014, a few months after the Xbox One launch, Whitten had left for Sonos, and Spencer was the one left to pitch the value of the gaming division to newly named Microsoft CEO Satya Nadella. "Then the question is, do we go forward with Xbox?" Spencer said. "Because we're getting really outsold by PlayStation in the market at this point. Do we stay invested in it? Or do we make a different decision?"

While Spencer said he knew he was going to stay in the game business, at the time he thought it was far from clear if there would be space for him to do so at Microsoft. "I think the question was, is the company going to stay in this space?" he said. "And then, if so, you know, what's my role?"

Spencer said that at the time, Nadella "didn't quite understand [the gaming division] yet, not from an intelligence standpoint, but he just hadn't been close to it." Still, Nadella decided to give the division his continuing support, letting Spencer head up a reunified Xbox team. "I think the reason I ended up in the job, frankly, was the other leaders were gone," he said. "I tease myself that I was the last person left at the table, and there's some truth in that. I want to make sure I keep my ego in check."

The full interview contains a lot more details about Spencer's history at Microsoft and the philosophy behind the Series S/X and Microsoft's focus on Game Pass subscription plans for game access. It's well worth a read if you have the time.