As one of the three well-known console giants, Microsoft has always been a strong competitor in the game industry, and it has also been actively exploring business in the fields of gaming and cloud technology.
When Satya Nadella took the helm of Microsoft in 2014, some wall Street analysts suggested that it sell its gaming business, but Satya Nadella did the opposite, doubling down on its investments and driving Microsoft's gaming ecosystem together through investments in cloud games, Game Pass subscription services, and cross-platform games.
In 2020, Microsoft established the Game Ecosystem Organization (GEO) to meet the needs of game developers for all of Microsoft's software and services, including Xbox, Azure, and Microsoft 365. Recently, Sarah Bond, head of GEO and vice president of Microsoft Game Creator Experience, shared in an interview the idea of building Microsoft's game ecosystem and how the digital ecosystem construction of the game industry can empower other industries.
Here's the full content of the GameLook compilation:
Q: Let's start with "playing", why is it important to play the game and the game itself?
Sarah Bond: The essence behind "playing" is actually "people". If you can experience something through the game, you will have an emotional connection, which is the basis of our human nature. Hide-and-seek or labeling games, for example, are the most basic games, but they have been with humans since ancient times.
The gaming industry is unique because it's the only entertainment medium in the world that can connect with people you've never met: you may have different languages, different time zones, different abilities — but you can still work together to achieve certain goals and achieve some achievements.
What's more, the technical power needed to achieve such a connection actually tests the extent to which human technology can go. You have to have the ability to render a world that's real enough, have the ability to host billions of events in real time at the same time, connect people, and adapt to different workloads.
Arguably, gaming is an incredible social force that allows for the sharing of achievements – not personal achievements or sharing and celebrating with friends around them. This social experience is associated with the power of technology that sets it apart.
Q: Is that why Microsoft is paying more and more attention to gaming?
Sarah Bond: There are several reasons why Microsoft is so valued and invested in games.
First, Microsoft's mission is to make everyone and organization in the world more successful. Games are the most popular and fastest growing form of medium in the world. It's the only form of medium that allows you to "empathize" from a virtual perspective — to experience something from the perspective of someone else (the character). For Microsoft, getting involved in the game is a huge opportunity to both have a social impact on the world and grow in the business activities associated with it.
Another reason is that the future of gaming is tied to cloud technology. Games are incredibly complex and heavy, and although most people don't think so, they just think, "It's just a game." But technical failures have a real impact. If the video doesn't load quickly, you'll need to restart, and in the game, you may lose all your progress as a result.
Games drive the development of machine computing power, and games are interactive and endlessly variable. It takes years to build a truly engaging game, and as a game developer, the release of a game doesn't mean the end, it's a starting point. You need to constantly update, adjust, and add new content. At Microsoft, this is technically beneficial to us, because as we continue to develop technologies that meet the high demands of game developers, we can expand them to other areas. Because, if you're willing to break through technical difficulties for the sake of the game, you can push the technical ceiling for almost anything.
Q: What field are you referring to?
Sarah Bond: For example, when people are playing games and interacting in games, we need to think about how to operate in the long run. We look at people's gaming behavior: what they do, how long it takes, whether they're willing to buy, and then we're constantly optimizing the game.
This in-game technology can also be applied on a realistic level: for example, when you are playing in an amusement park, you have an app on your phone that helps you customize the schedule of the ride in real time (such as Disney's mobile app). So, by borrowing from the technology we've built for games, we can help people get another, better, more authentic entertainment experience.
Q: Can you talk about the structure of the game ecosystem?
Sarah Bond: The game industry is essentially a two-sided business: on the one hand, the developers and creators of the game, and on the other hand, the huge player base.
Developers create games and publish them in the world, players interact with them, on this basis, developers will continue to update and iterate on the game, players can also share some things in the game, which derives another level of interactive cycle ecology. It can be said that this is an ecosystem that develops by the self-reinforcement of the system.
Q: Will there be any other players in the ecosystem?
Sarah Bond: Let me explain briefly. First of all, there are developers, from indie developers to really large-scale, what we often call the creative team of AAA games.
When the game is finished, it will be released, and with the release of the game we will come to the promotion level, the game will be released and promoted in the digital world and the real world, and there may be related physical stores, but there will be more digitalization in the future.
Consoles are Xbox, PlayStation, Nintendo, and more, but there are also PC distribution platforms like windows store, Steam, or Epic, and of course, iOS and Android players. This is the chain of game production.
Q: How does Microsoft define its role in the gaming ecosystem? Or does Microsoft have a grander vision for the entire ecosystem?
Sarah Bond: Our vision for the gaming industry is that everyone can play whenever, wherever and on any device. But this is not how the industry works today, the current game industry is divided by different platforms, game types are also divided, and can not achieve a truly cross-platform seamless connection.
This seems to be a tradition that the gaming industry has always had. But now, especially with the advent of cloud technology and integrated tools like game engines, the gaming industry can also break through this "tradition." But we also know that to achieve an idealized ecology, we have to change the way games are developed. This is also where Microsoft wants to continue to exert its strength.
In order for people to play any game on any device, developers need tools to create games that can be played on any device. To that end, we also have a comprehensive understanding of all the current game creation tools and engines on the side.
Q: Are you testing whether your existing collection of game tools can enable cross-platform gameplay?
Sarah Bond: Yes. For example, some online games can realize the vision that I may start playing on the PC now, and then I may have to go out, so I can play it on the phone, and my game data also needs to be transferred across devices. At this time, we need cloud technology API, which can be run locally on the PC side, and can also be streamed to mobile devices with cloud rendering technology, and the UI interface needs to be adjusted according to different screen sizes.
But the tools currently used by game developers are not enough to realize this vision, so for Microsoft, our future goal is to enable game creators to build games anytime, anywhere in this way, unleashing their creativity.
Q: Microsoft offers a platform that is at the heart of this vision, right?
Sarah Bond: Bill Gates once said that everyone who uses the platform earns more from the platform than the platform holder himself. I think about this question every day: How can we create more value for the world about our gaming platform? The first task is to make it easier for game creators to create.
Game development is very difficult. For an AAA game, it takes three years to be pretty good, and it often happens to spend six years. So, if we can reduce their development costs and operating costs, it will undoubtedly be of great value to developers.
Then, it's just as important to make sure their game can be played anywhere. There are 3 billion gamers in the world today, of which only about 200 million own consoles and more than 1 billion play on PC. If a distribution mechanism could be developed that would allow developers to reach all potential 3 billion players with one game, their development costs would fall as coverage increased.
Q: The Game Stack platform does support game creators, but what about players? Do you also think of Game Pass as a platform?
Sarah Bond: Xbox Game Pass is a subscription-based game library with over 100 games. It can run on hosts, PCs, Android, and now on IOS through a browser.
When we created Game Pass, we saw it as a product, but to be honest, players would prefer to have a library of games, wanting a library of games to be accessible. So, we built Game Pass with this idea in mind, and we quickly discovered that it was actually a platform.
But Game Pass doesn't just represent the player, it also represents the game developer. It will also drive an accelerating virtuous circle, and when developers put games on Game Pass, more players will play those games, and developers will earn revenue and make more games, and this cycle will continue.
Q: You create something that you think is a product, and it turns out to be a platform.
Sarah Bond: It's important to recognize game Pass as a platform. Luckily, we're already running the Xbox platform, and we also have experience running Windows and Azure. So we know exactly how we should operate. Fundamentally, Microsoft is a platform company, and Xbox has always been a platform. Game Pass is an acceleration initiative that we built on – a platform within a platform.
Q: So the game platform and the Azure platform become complementary.
Sarah Bond: That's not true, but there's a huge synergy between what Microsoft is doing in the cloud and what we're doing in gaming. What we've really done with Xbox Cloud Gaming — we've put both Xbox Series X and S into Azure — allows players to play fully rendered games through Azure, on any device, regardless of how the device performs.
The implementation of this functionality requires the use of the platform we provide, which can transcend the shackles of hardware and can be carried out anywhere, which greatly accelerates the coverage of the game. It's valuable to players — it lets you play games anywhere, and for developers, they can create games like this with this tool.
Q: It also helps Microsoft get the most out of Azure's cloud technology, right?
Sarah Bond: Exactly. What many people don't know is that if you want to play from the cloud, it's very different from those services that offer pure cloud rendering, because the game requires two-way data transfer — it sends you a stream of data, but you have to send the data stream back along with the actions performed, so the distance between the player and the server, which determines latency and game responsiveness, is even far more important than traditional back-end enterprise processes or even streaming video. However, Microsoft has data centers around the world, so we can guarantee the realization of this technological experience.
Q: What organizational changes need to be made to make this happen?
Sarah Bond: We have only one team in Xbox dedicated to creators, and it's been about a year now, and it's been called the "Game Ecosystem Organization, which has about 600 people and employees all over the world. We focus on the relationship between Microsoft and the creators of the game products under our umbrella, not only developing and providing development tools for creators to use, but also seeing creators as important customers for us.
Q: So you're expanding the concept of the customer.
Sarah Bond: Yes, we have to think about who our real customers are. For us, because we're creating a platform product, thinking about how to incorporate them into this gaming ecosystem and create a virtuous circle is a major shift in thinking about treating game creators as customers.
However, our second realization is that this group of game creators is very unique, they are digital natives, and most game creators are very "geeky". Therefore, to help them and meet their needs, it requires considerable focus and dedication, not just to meet the needs of less technical industries or individuals.
The attitude of game creators is very straightforward: if you don't have the tools they need, they'll type the code themselves. So, in order to meet and communicate with developers around the world and build what they need, we have to keep an eye on this creative community. Once we do that, we can take a lot of inspiration and learning from their development process and pass it on to everyone at Microsoft, not just the game creators.
Q: Are there any further moves besides forming a GEO?
Sarah Bond: We also need to reinvent our culture. If you're going to create products for everyone in the world, you need to represent everyone in the world. Therefore, we need to have a diverse team and do business in our target region, including developers and people who connect with developers in that region.
This is the focus of our constant evolution. Even our leadership team is constantly changing its membership — from a team that works primarily on games within Xbox to a group with more diverse experiences. For example, I'm from T-Mobile, and some of my colleagues are from Facebook, Netflix, Amazon, and so on, and they all combine different business models and experiences to really create a global platform.
Q: You mentioned your previous job, what made you enter the gaming industry?
Sarah Bond: Actually, a lot of people ask me why I'm in the gaming industry because it's not an industry that's known for being diverse and inclusive, and that's why I'm involved in it. Gaming is arguably the most popular form of medium, with 70% of people under the age of 25 saying they would rather play games than watch videos.
The gaming industry doesn't fully represent all the voices of the world today, but if I work at Xbox and Microsoft, which has a global gaming platform, I have a chance to change that. As our development tools become more and more "democratized," we can give everyone the opportunity to speak their voice and tell their own story. In the process of working like this, in turn, we change the way we see the world.
Q: Last question, what can other industries learn from the game industry?
Sarah Bond: There are two aspects.
The first is about making money, which should be to provide attractive works first and then consider making money, rather than increasing user participation by collecting money. You have to create something new that drives players crazy, so that players are willing to pay for you, rather than setting up obstacles in front of people and saying something like, "Want to play?" You'll have to give me $70 first. "Although this is also a business model, in my opinion, the most successful business model must be fully attractive in itself.
The second point is how to have the power to inspire anyone to create something. Think about the world of UGC right now, and look at the things minecraft players do, and while a large company or a big team with a lot of capital can always create something, it can't empower other people and spark the creativity of different people.
So, what fascinates me most about the gaming industry is that almost every year a game emerges from a relatively less well-known gaming team and leaps to become one of the largest in the world. Therefore, you need to learn how to spot these future flashpoints and build the right business model for them.
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