Frontline Marketing

Xbox Co-Founder Warns Publishers May Vanish

Steve Peterson|

The impending arrival of a new console generation has been eventful, with rapidly changing Xbox One policies after a chilly initial reception from games media and consumers. This swift, responsive change was unlike the Microsoft of old. The [a] list daily sat down with Xbox project co-founder and Microsoft veteran Ed Fries recently to talk about where the game industry is headed, and what he thinks of Microsoft’s swift policy changes.

“I was impressed,” said Fries. “I was concerned that they wouldn’t change, and I was impressed that they did change, and changed quickly. They clearly are responsive to feedback, and I think that’s great.” Just the fact of changing that quickly is a necessary thing in the market these days, Fries believes. “We all make products for customers, and it’s important that we listen to our customers when they have things to say to us. It’s a lot more true than it was in the old days. If you think about games, we used to spend three years making games and stick them in a box, and people liked them or they didn’t like them.”

“Now it’s much more direct feedback from customers,” Fries continued. “We test things a lot, see what’s working and what isn’t working and the launch is the beginning of the process. I’m talking more about free-to-play games now — you’re basically developing it with your customers. We have a much more interactive relationship with our customers. If people aren’t happy they let you know, and they can cause trouble for you. I think it’s important for companies to be customer-focused and be known as companies that listen.”

Fries was surprised that Microsoft is allowing World of Tanks on the Xbox 360 “Yes, and the indie publishing announcement surprised me as well,” Fires acknowledged. “I think, like a lot of people now, I’m waiting to see the details. I gave a talk last year about how the world of games is changing, and how it might be difficult for big parts of the industry to change along with it, for big publishers to change or for developers to change. I talked specifically about this issue, about free-to-play and about the barriers to consoles truly adopting free-to-play. I’m glad they’re heading that way.”

Adopting new business models is hard, and Fries understands the difficulties ahead. “The challenges with technology are often not guessing what the future’s going to be and then building it, it’s being in the right place at the right time with that technology,” Fries pointed out. “It’s very easy to be too early. You describe these as business issues, but maybe cultural is more to the point. It’s hard for these companies to change. You see that all the time — it’s the innovator’s dilemma.”

The future for the games industry is uncertain, and Fries sees the possibility of momentous changes. “Who knows if there’ll be big publishers in the future There don’t have to be,” Fries said. “Maybe the world of the future doesn’t look like that. Maybe it’s just lots of small developers, getting together and then breaking up into little teams all over the world, that’s where great games are going to come from. Big publishers were formed because games were really expensive, there were big distribution issues. Walmart didn’t want to deal with a hundred companies, they wanted to deal with four or five. A lot of those things changed with digital distribution. Maybe what we’ll see in the future isn’t like what we’ve seen in the past. What does that mean There are winners and losers all through that.”

Fries continued, “It’s not necessarily a better future for anyone. If you’re at a publisher, it’s ‘Oh, maybe my future is not so good.’ Even from a developer point of view, it might mean you get a hit and then you don’t get a hit again. Angry Birds this year, next year it’s Supercell, the year after it’s Mojang. It’s random little groups all over the place. Maybe that’s where the most creativity is going to come from. Customers will just pick and choose, as they always do, whatever’s hottest, most fun at that time. That’s a very different world we have to think about. Even as a developer, you invent something great — Call of Duty — you want to make Call of Duty five, six, and seven, you don’t want to have to put lightning in a bottle twice, three times. That may be the future we’re facing. We just have to accept that.”

The value is ultimately in the game, not in the publisher or developer. Fries noted “We’ve always liked to believe there’s developer brand equity — ‘I love Blizzard, everything that Blizzard makes I’m going to buy because I’m a Blizzard fan.’ The reality has always been it’s the game brands we really care about. ‘I like playing Candy Crush‘ and then you find Puzzle & Dragons, and you don’t even know who makes it.”

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