6 min read

by Nick Statt


When Phil Spencer thinks about the tech and gaming industries’ newfound obsession with the metaverse, the Xbox chief’s mind goes to Minecraft. It’s a logical leap. The sandbox creation tool, the bestselling video game of all time and one of Spencer’s most crucial acquisitions back in 2014, is in its own way a kind of proto-metaverse.


Inspiring many of gaming’s biggest and most popular modern titles, Minecraft was among the first of its kind to facilitate player creations that take on entire lives of their own, a games-within-a-game approach to design.


“Minecraft is really an open creation tool, where people can go and create things, share them through our community marketplace and sell them to other members of the community. And I think that openness inside of Minecraft is such a critical part in terms of what it's become,” Spencer told Protocol in an interview last week.


Minecraft is unique in both its scope and size and that it permeates almost every platform imaginable, even in virtual places where it cannot be played. 


On YouTube, the game passed a staggering milestone with more than 1 trillion views on the video platform, Microsoft announced last week. “So many of those views — really all of those views — are of creations not that we made as Xbox or Mojang, but really what creators have done inside of Minecraft and shared with the rest of the world. And I just think it shows the power of a social and open creator platform,” Spencer said.


For Spencer, who is among the core group of executives at Microsoft empowered to steer the company forward, the lessons learned from Minecraft’s success are informing where he believes gaming needs to go from here. In particular, the growth of player-created virtual worlds illustrates what ingredients Spencer said are required for the metaverse to shed its dystopian roots and succeed as more than just a buzzword being slapped onto existing products and platforms and used to sell promises about the future.


“I draw some analogies to the web,” Spencer said. “We felt like we had this really open platform for creation and consumption. But frankly, there were some companies that really created and captured some of the control of that web, whether it's the control of the discovery or the monetization or the social, which meant some of what happens on the web today doesn't necessarily feel as open as I think we would all like it to be.”


Spencer pointed to discourse around the metaverse and how it harkens back to ideas the gaming industry has been kicking around for decades. Games like Second Life and influential massively multiplayer online titles like Ultima Online and World of Warcraft helped give form to ideas from science fiction around virtual worlds, digital alter egos and entire social systems mediated through screens and systems. But Spencer said it is Minecraft — and the power and agency that it hands players to become architects of their own online experiences — that provides the most promise.


“We're spending a lot of time as leaders coming together talking about the learnings that we've had and how the technical underpinnings might come together. But more fundamental to me is why Microsoft? Like, why is this metaverse that a lot of people are focusing on, why is it better for players? Why is it better for creators?” Spencer said. “I think it's easy for a lot of tech companies to describe why the metaverse might be better for their company. But we've just learned that if we put the player at the center, to use my gaming vocabulary again, and try to build an ecosystem that works around their needs and creator needs, that the platform dynamic will take off.”


Microsoft, more so than perhaps any other tech or gaming company, already owns and operates many of the pieces that may play an instrumental role inwhatever shape the metaverse takes. The company runs Xbox, a global gaming platform and digital store serving software now on virtually any screen with an internet connection, and it has the HoloLens hardware group and AltspaceVR and Mesh platforms for AR, VR and mixed reality experiences. It has Windows, Office and Teams, its trifecta of productivity and workplace collaboration tools, and the Azure cloud platform powering it all.


It raises the question: What’s stopping Microsoft from building this all itself, connecting it together and doing corporate battle with Meta and Mark Zuckerberg’s grand ambitions to keep his social networking company at the forefront of the attention economy? Spencer said the teams in charge of these various divisions are indeed meeting weekly, to develop for instance new games that make use of the Mesh platform’s 3D digital avatars.


Yet Spencer, who’s worked at Microsoft since he started as an intern 33 years ago, said he sees the metaverse not as another business frontier to conquer, but as an opportunity to avoid replicating the level of locked-down ecosystem control of the internet’s current generation. Instead, he said, companies can and should try and re-create the level of freedom and creativity that gave birth to Web 2.0 in the first place. That will require openness, interoperability and a lack of corporate self-interest that may run counter to Big Tech’s obsessive fixation on growth, profits and ironclad control of digital commerce.


“What we had [with Windows] was a platform where if you had a compiler and an ability to distribute code, you had free access to the other customers that were on the platform,” he said. “There wasn't one store that everybody had to go through in order to distribute what they were doing. There wasn't one social that everybody had to use. It was an open platform.”


Spencer points to Xbox, and how the platform exists now on many devices both as a way to serve first-party games like the newly launched Halo Infinite and third-party titles that are complementary to the Xbox business and, in a traditional view, in competition with some elements of it, too. “We're kind of in a unique position in that people play Minecraft on our platform. They play Roblox on our platform. They play Fortnite on our platform,” Spencer said. “We don't actually view Roblox or Fortnite as competitors to what we're doing. They're critical partners in the progress that we're making as a gaming platform company.”


It sounds familiar, and in many ways it’s a similar pitch to the one Zuckerberg made when, in October, he rebranded Facebook and set his company on a path toward realizing a metaverse driven by virtual and augmented reality. It requires companies working together, creating new standards and opening the door to levels of interoperability that right now feel all but impossible.

But Spencer, and his track record at Microsoft, make him a more convincing steward of such a vision, if only by looking at the turnaround at Xbox over the last decade. Spencer took over in 2014 after the disastrous launch of the Xbox One. In the span of a half-decade, he took the Xbox business from arguably its least relevant phase to an industry leader once more. The company built a bridge between the Xbox platform and Windows 10, gave players the ability to play and purchase software across platforms and launched Xbox Game Pass, a subscription product now counting tens of millions of customers.


Spencer’s reorientation of the Xbox business, away from sales and toward a services-first ecosystem, has forced Microsoft’s prime competitor Sony to start building its own version of Game Pass. Microsoft’s willingness to experiment, created arguably out of necessity after the PlayStation 4 outsold the Xbox One roughly two to one, has also been instrumental in helping break down barriers once considered sacrosanct by the game industry’s biggest corporate titans, like cross-platform play and purchasing across platforms. (Microsoft, unlike most game developers, also owns the primary store it distributes through, meaning it’s not in most cases paying a middleman a 30% cut.) In many ways, these benefits are the necessary precursors to the types of transmedia and cross-platform experiences the metaverse promises.

“I want to be able to experience the things I own on any screen that can render those,” he said. “I want to be able to have the experiences I have anywhere. I want to have them with the people I want to experience them with and it requires a lot of cloud infrastructure to make that happen. It requires, like I said, a real open approach.”


Spencer said this approach will be how Microsoft tackles the metaverse going forward. “We will go at this on the metaverse side with the same sensibilities that we've had in gaming, that people should be able to play the games they want, where they want to play them, with the people they want to play with. Because we've actually thought that in the end that opens up the largest experience for creators and for players," Spencer said.


“Because if it's not better for the players, and the creators, you'll lose,” he added. “You have to start with that as a core principle.”Xbox


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