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Microsoft VP Phil Spencer Talks Scarlett, Game Pass, Cloud Streaming

A sea change is coming: A transformative moment in video games that at its inception may seem insignificant, but is destined to reshape the way games are played and made.

For more than a year now Microsoft VP of Gaming Phil Spencer has been talking about the democratization of gaming — the idea of tearing down barriers; barriers between platforms, barriers of cost, barriers of technology.

And it’s at this year’s E3 where that vision is starting to come into focus, a long play that’s starting with baby steps.

The growing success of Game Pass, a subscription service that delivers access to a growing library of titles for a set monthly fee, is one of those steps. Another is Project xCloud, a tech that will eventually allow a person to access a virtual Xbox on nearly any device with a screen to play graphically lush, computationally intense games. A final step would be the ability for games to hopscotch across platforms, finding players no matter what systems they own.

The result of these advances, even as they just begin to roll out, is an inevitable change in the way people find and play games.

Game Pass

“One of the really interesting things that we’re seeing play out now as Game Pass continues to grow is that Game Pass is becoming a kind of a community unto itself, because you have millions of people who have a shared library of a hundred-plus games that we can all go play,” Spencer said.

What’s happened — what Microsoft is seeing happen — is that play habits are changing.

It used to be, Spencer said, that when two friends wanted to play a game together, there was always this sort of necessary conversation first.

“There’s usually been, ‘What do you own? What do I own? What’s co-op?’  But when you look at something like Game Pass — and sure it sounds like a sales pitch, but I’m being honest with you — it’s almost like a community feature itself since there’s so many games that people want to experience and play together, and now you’ve got the shared library of games.”

And thanks to the library of games all accessible through a subscription — that one day could be nearly instantly accessed through a streaming service, for instance — the willingness to try new games increases dramatically.

“It’s a really interesting discovery thing for creators,” he said. “Now it’s like the first time you’ve had that shared library that’s as large as it is. And now when we bring it to PC — the library is not a complete one-to-one because there are games that are only on PC that aren’t on console — the overlap is going to be higher than it’s ever been. And you’ve got Xbox Live across both, so you can actually stay connected to all of your friends. And I’m really intrigued by what that can mean on both the creative side and the player side.”

And as that approach continues to expand, that can only be good for the industry, Spencer said.

“It’s a little almost cliche at this point when you’re looking at a market of over 2 billion people who play. The artificial barriers that we create for ourselves in the industry of ‘This format doesn’t work with that format,’ or ‘This community can’t talk to that community.’ It might feel good if you’re just looking inside and you’re saying, ‘OK, in the fixed mindset of the size of the business it is today, how do we kind of create enough elbow room for ourselves?’ But if you look at it as an industry where the number of players is tripled in the last two decades, it should really be about removing barriers and friction so that, as new people are coming into gaming, they find it easy to play with their friend across the street, or to find a new friend on another continent that they’ve never spoken to, using a game that’s created by someone they’ve never heard of.”

Project xCloud

Spencer spent relatively little time talking about Microsoft’s take on game streaming technology during its E3 press conference. He basically said a beta was coming, which would eventually be able to use players’ own Xbox One for away-from-home streaming of games they own, or a virtual Xbox One — there are literally Xbox One motherboards sitting in Azure datacenters awaiting someone to virtually sign into one, Spencer said —  for streaming.

But there was no deep dive into the technology, demonstrations, or further discussion.

That’s because, Spencer said, he’s sort of tired of talking about it; he’d rather just have people try it for themselves and listen to what they think.

“I had a line in the script that I scrubbed,” he said. “You know, we talked about it last E3. We put out our video kind of showing our point of view last October, we’ve done some dev blogs over this winter, and in the spring talked about what people are doing. And I had this line that I don’t want to talk about it anymore. I just want you to try it. We have a live demonstration here, and I want to listen.

“The most important thing is that you can come onto our show floor — the booth here. You can put an Android phone in your hand with the controller and go play a game. That’s running in a datacenter that’s hundreds and hundreds of miles from here. And you’ll feel what playing Xbox on the go feels like. And I just didn’t like standing on stage and saying that. Just come play.“

After my chat with Spencer, I spent some time checking out Project xCloud at the demo stations. The setup was using Galaxy S9 phones — connected to Xbox One controllers — with a slew of different games: “Halo 5,” “Hellblade,” “Halo Wars 2,” and “Gears of War 4.”  The games were streaming from a datacenter hundreds of miles away in the Bay Area.

There was no perceptible lag during my time trying all of the games. The graphics looked console quality, and I never experienced any sort of loading or disconnect issues during my 15 or so minutes testing the games.

It’s impressive tech for a still-relatively-limited use case. It requires a solid, fast connection at all times, so using the tech when I would most want to — on a train or in a plane — is unlikely. But it’s an impressive first step for a technology that is sure to become ubiquitous with time, and importantly, Microsoft is planting its flag in the tech now, knowing that it’s something they’ll have to grow with.

And Microsoft, of course, isn’t the only company working on the ability to stream games from cloud-based hardware to a screen.

Google’s Stadia, which will sell full-priced games that can then be streamed to just about any screen, plans to have a limited launch of their own service later this year and then roll it out more fully in 2020.

But there are major differences between the two companies’ approaches to the emerging tech.

“I’d say maybe the biggest Delta for us is, I’m not trying to tell you that Project xCloud makes your console obsolete today or makes your gaming PC obsolete today,” Spencer said. “The best way to play the 60 games that were on our stage — ‘best’ being highest fidelity — is going to be on a local piece of hardware connected to a screen, whether it’s a PC screen or a console screen.

“I don’t need to try to convince you to stop doing what you’re doing today. We look at xCloud as a way for you to take the community experience and the content experience you have with you at home today with you when you’re away from home. It’s a convenience feature. It’s a choice feature for you. So I’d say for us, the biggest thing that we hinge on is giving you, as a gamer, choice on where you want to go play.”

Rolling out the service slowly now is also a great way for Microsoft to learn a ton about how people are using the service, Spencer added.

“We’ve learned, this generation of Xbox, to listen to our customers and not try to tell them what we need them to do,” he said. “We’re supposed to be the ones providing things that they want and need. So that’s our focus.”

What that means in the short term is that the thousands of games already in development for the Xbox are going to work in the cloud and that thousands of games already work in the cloud.

“We don’t have to go tell the developer to port to a different platform,” Spencer said. “It literally is an Xbox in the cloud that’s running.

“We feel really good about our tech that we’re putting in place for both latency and bandwidth. But I will come back to say the same thing: that we see streaming as a longterm way for us to reach the billions and billions of people on this planet that want to play. We see it as a great feature for people who have the experience they have in-home, and when they’re away from home they want to play it. I am not telling you that the best way for you to go play games that you saw on our stage is through an internet connection tomorrow for many reasons — not just kind of latency, speed-of-light issues, data-cap issues. This will take a long time to play out. And I’m glad that we’re starting. I’m glad, as Microsoft, we’ve got the Azure infrastructure and all the money that the company’s invested in datacenters.”


Microsoft this week announced what many suspected: that the next Xbox — codenamed Scarlett — is coming in 2020. But he didn’t say much more about the console. We know that it will have a much more powerful CPU, but Spencer told Variety that, more important, the company is ensuring that there is a more balanced CPU-GPU combination.

“So not only does the game look amazing, but it feels amazing through frame rates, variable refresh rate, low latency input, all of these things that we’re spending a lot of time on,” he said. “And it does mean it’s going to be interesting as people like yourself are trying to do the ‘How much more is this than that?’ Because there’s going to be multiple things at play: memory, bandwidth, both SSD speed and bandwidth, GPU, CPU. So I think it’s going to be a challenge for us to come up with the, ‘It’s X more than the current console,’ and feel that it’s a compelling number. I think it’s really going to be about the overall experience.”

Spencer noted that the solid-state drive isn’t an off-the-shelf SSD. An evolved SSD is a major element of Sony’s PlayStation as well. The idea being that the time it takes to access stored games is creating a bottleneck for game experiences.

But along with improving the SSD access speeds, the new device will need to make sure everything is moving that data around faster too.

“It’s a ton of just sheer data that’s moving around,” Spencer said.

And cloud streaming tied in deeply with Scarlett.

“Scarlett is the future of our foundation in console and the formation of our future in cloud, because as we designed project Scarlett, we thought about that case of the same hardware, the same silicon being used in both places.

“We’re doing Project Scarlett for a reason. We’re doing Project Scarlett because we believe that in 2020 we’re going to be able to have a fantastic way for you to play games in your home, and if you choose to buy and go play, we’re going to make sure that’s fantastic. That experience will travel with you with Project xCloud, but not to try to exclude you from going to buy a console or going to play on your PC. I’m going to let you decide what’s best for you.”

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