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Why did Microsoft abandon PC gaming?

In 2001, Microsoft irrevocably altered the path of PC gaming. They built a console. Since then, Microsoft have largely abandoned PC gaming. They make very few PC games, and those that they do make are casual or tablet fodder. They invest little in new PC game technology. They make no attempt to push are market PCs as a gaming platform. Their Games for Windows program has largely been abandoned. All that’s left is a few HD ports of old classics, and the occasional Windows 8 exclusive.

What happened? Why did the company that built Windows abandon games? And will they ever come back? 

I spoke to Kevin Bachus, formerly of Microsoft, and the co-creator of the Xbox. Kevin joined Microsoft in 1997 as part of the DirectX team. His goal: to increase the visibility of PC gaming. To make PC gaming bigger and better. “I wanted to create marketing programs that PC games publishers could take advantage of, just like console publishers. When I got there I found that the reason Microsoft are so successful is that they do nothing to market Windows.”

The PC’s prevalence alongside a thriving set of manufacturers and partners meant that Microsoft didn’t have to lift a finger to market their platform. Nor did they have to get involved in promoting games. “PCs are out there and games will be written for them because there are hundreds of millions of PC owners that have an interest in games. So those games would be created regardless of anything we did. We could just sit back and watch and learn.” 

Back then, the DirectX team was working on a common set of APIs and instructions that could be used by developers across the world. At the time, Kevin says, the DirectX team was “the centre of the games industry within Microsoft.” Meanwhile, Sony were making grandiose claims about the power of the Playstation 2. 

“‘Bill came to us and said ‘Is there anything to this?’” recounts Kevin. “Shamelessly we took his request to do an analysis of Playstation 2 and onto the end of it added, ‘You know we can build one of those too and in fact we probably should build a console’.” 

At the time, Kevin could see the audience for games shifting. “The mindshare was going from PC, to console.” As he puts it, “the genesis of Xbox has as much to do with our ability to convince Microsoft that while it thought that it was a major player in a multi-billion dollar industry that it was in fact a major player in one billion dollar industry and not at all in another billion dollar industry. My feeling was that if people were going to jump off the PC bandwagon and start playing games on consoles, I’d rather have them playing on a Microsoft console than on a Sony console or a Nintendo console.” 

There’s the assumption that Microsoft’s Xbox efforts were viewed as a Trojan horse; to enter and own the living room. That’s not entirely true, says Kevin. “The Xbox came about because we felt that we could build a better console than the competition could. That we could build one that was easier to develop for that had better graphics... Maybe at the highest level of the company there was a recognition that if we didn’t want to be Oracle and just build business software then we needed to have something that consumers wanted to buy. There was a place in the home, the living room or bedroom where we couldn’t go because of the form factor of the PC.” 

At first, the project continued under the radar. “For the first year or so where nobody within Microsoft thought we were going to be successful we were largely left alone to do our thing,” explains Kevin. “Everyone thought for sure we’d get shut down by Ballmer.” 

But gradually, the Xbox gathered momentum. First within Microsoft, then with the development community. “After Bill Gates went on stage at the Game Developers Conference and said we’re going to spend a $100 million on marketing. Suddenly I look around and there’s all these guys all there to help.” 

Even though the Xbox received the blessing of Microsoft’s CEO, internally, executives were skeptical. Why should Microsoft be interested in games in the first place? 

“When word started getting out that we were building a games console I had a parade of executives coming through my office,” says Kevin, Inevitably the conversation would be exactly the same: ‘We think it’s ridiculous that the company is wasting all this money on this games console.” 

Games rarely feature in any marketing or advertising efforts for their PC work. Most recently, Microsoft’s ads for Windows 8 and Surface haven’t shown any games. At all. Why? 

“Even though they know what percentage of people play games on PC, Microsoft have this view of the average PC owner being more focused on web browsing and doing email and balancing their checkbook. That’s their perception and that becomes self fulfilling because they don’t promote it.”

It’s a disconnect within Microsoft’s marketing side. “ I think they think that games are still this kind of niche thing on PCs. Even though they are the leader, even though they are the standard bearer I think there are people within marketing in Microsoft who don’t really believe that. They think that games are for other people, not for the average person.” 

There’s also a question of caution: on PC, Microsoft are careful not to offend. “They’re very risk averse in a lot of respects,” says Kevin. “They’re not going to show Minecraft because there’s battles in Minecraft. That might offend someone.”

In 2009, Microsoft closed Ensemble Studios (creators of the Age of Empires games), FASA studios (Mechwarrior) and Aces (Flight Simulator). Kevin doesn’t see this as a symptom of retreat from PC gaming: more a consequence of the economics of gaming. “Every gaming company, I don’t care if it’s Electronic Arts, Activision, anyone, they’re discovering that the business models that they use right now are untenable. As a result they’ve had to make some difficult choices. Microsoft, despite the fact that the company has all these cash reserves, has to operate rationally. If you look at the kinds of games that Ensemble were building and at the market for Flight Sim: you’ll say that what we’re investing in this is not returning what we’d expect it to. Do we continue the bleeding or do we stop it now?” 

And it’s unlikely that any major PC games will be developed at the company for the foreseeable future. “If you have an opportunity at Microsoft to work on a strategy game, or to work on Xbox One, what are you going to choose? Especially those executives who don’t come from the games industry originally; they’re going to be attracted to the sizzle of the console.”

That’s going to be a problem for Microsoft going forward - whether they make Xbox or PC games. 

“They haven’t really left a lot of room in the indie space,” says Kevin. “Where’s the next Ensemble or the next Bungie? All these companies had been indie before they were acquired. Even EA Sports, Don Mattrick’s company was an independent software developer that was acquired by EA. That’s a more interesting question than whether once you’ve made those acquisitions you continue to fund those divisions when their product lines are no longer profitable.”

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Shriven's picture

TY Teem

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subedii's picture

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“Every gaming company, I don’t care if it’s Electronic Arts, Activision, anyone, they’re discovering that the business models that they use right now are untenable. As a result they’ve had to make some difficult choices. Microsoft, despite the fact that the company has all these cash reserves, has to operate rationally. If you look at the kinds of games that Ensemble were building and at the market for Flight Sim: you’ll say that what we’re investing in this is not returning what we’d expect it to. Do we continue the bleeding or do we stop it now?”

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Funny, I'd say that attitude is half-right and fully the problem.

 

The current model isn't working, but that's because it's predicated solely on mega-blockbusters selling ridiculous numbers of units. Which they attempt to do by dumping crazy amounts of money into games and then declaring nutty things like 'Dead Space has to sell 5 million units or it's not viable'.

 

MS Flight Sim is a key case in point. He talks about "bleeding", but last I heard the flight team was making money at the time of its closure. It simply wasn't making mega-HUGE-CallofDUTY! numbers, which is what publishers have been aiming for more and more, and ultimately, suffering for more and more as their catalogues become increasingly focussed on competing for blockbuster status with other mega-brands. There is no acknowledgement, nor acceptance of, low and mid tier games. And I don't mean that in terms of quality, but in budget and scope for sales.

 

It's an attitude that's had more than one major casualty this generation (THQ being the most notable example). In the coming generation, if they keep pushing production values and assuming it's going to lead to corresponding increases in sales, then the coming years are going to be far worse. That kind of model only works for an exceedingly few titles, and as the costs of making those blockbusters goes up, the number of titles that could ever viably sustain them becomes smaller and smaller.

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Tim Edwards's picture

@subedii

 

Yeah, I completely agree. I think it's really hard for a company like Microsoft to make small bets. They have to compare every pound and dollar spent on, say, making Flight Sim XI with spending that pound or dollar on a game with a bigger potential audience, and spend more money reaching that audience via marketing. 

 

It's a go big or go home attitude that is increasingly out of step with how the PC works. 

 

I've spent a lot of time thinking about what Kevin was saying since the interview, (it took place a week or so ago) and I'm still undecided if it makes sense for MS to actually make PC games. Beforehand, I'd always felt a bit aggrieved that Microsoft just don't really care to produce games. That's fallen by the wayside. I don't think it matters as long as the ecosystem is sound. 

 

What I do think is that they should include games in their marketing and advertising for Windows. I think it's disastrous that they don't even figure in how they approach Surface or Windows 8. 

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subedii's picture

@ Tim Edwards:

I genuinely don't mind if MS don't have a horse at the starting lineup when it comes to the PC Games market. The problem is that being the owner of both Windows and the XBox, their moves still have knock on effects. And this is only amplified by their consistently half-hearted attempts to stay in the PC Games market in the first place.

An example is how MS mandates that say, everything from DX11.1 onwards is Windows 8 exclusive. That's a move designed purely designed to leverage their position to push the OS. But like you said, at the same time they've done a terrible job of promoting gaming on the new Windows (heck, there was a bigger push with windows Vista). It's pretty ridiculous.

So when things go bad for Windows, it has an effect on PC Gaming as a whole.

It's also not helped by the fact that MS prioritises the XBox over Windows even though MS ostensibly owns both platforms. So you'll constantly see things like MS pushing for exclusivity (timed or otherwise) for XBox. Not Microsoft platforms, just XBox titles. Which means we get a fair few titles way later purely on MS's say-so. I mean it's fairly rare to find companies that hamstring their own products in that fashion, even if they are trying to do it to support other areas of the business. And I haven't even talked about GFWL, which is its own special category of bad. So imagine if MS decided to use their XBox leverage to 'encourage' developers to make more use of it?

If it's left me with any impression, the past generation has given me this: I really hope that Linux gaming becomes a reality and not just a never-ending pipedream. Because if it doesn't, MS's own moves are only likely to make the PC games market worse. And that's just sad.

If anyone has a shot at it, Valve does, but I don't think it's much of one. Seeing countless Kickstarter and indie projects porting to Linux as a matter of course is encouraging, but it'll take the really big developers to make it a reality.

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subedii's picture

And the comments section just ate my paragraphs, sorry about that. :)

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Guess I can give up wating for MechCommander 3.

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