Phil Spencer blames capitalism for games industry woes: 'I don't get [the] luxury of not having to run a profitable growing business'

You know who will give you money? Customers if you stop treating them like piñatas.

Valve is an excellent example of a company that is privately owned, so they don't have to satisfy shareholders with constant growth for growth's sake. And yet they're still growing and making a profit, because they make a good product.

Phil and Xbox don't have that luxury because their masters sold out decades ago.
- Valve is also a good example of platform monopoly. People need to stop treating valve like they aren't also a big problem with the modern games industry. They are PC gaming's landlord taking a 30% cut of every sale. You have to be smoking crack if you think that doesn't hurt game developers.
Yeah but they give you so little money compared to investors and shareholders. 😅

I think the real problem is businesses have to grow. If most big companies weren't publicly traded then just being profitable would be enough.

Imagine making enough money to pay you and everyone else in your company a great wage one year, but it being bad because it wasn't more profit than last year.

I've seen companies phrase 8% growth as a negative because they missed their 10% growth target that they just pulled out of their own ass.
Infinite growth in an obviously finite world is such a moronic concept, yet the driving force of capitalism

I actually can’t believe this is coming from a high level employee at a corporation.

Like we all know this is true, but isn’t it big to hear one of them talking about the insanity of the system.

It's PR. Anti-capitalist sentiments score well in focus groups.
- Wouldn't these sentiments lead to expectations and then actual changes in policies?
- https://www.youtube.com/watch?v=tHEOGrkhDp0#t=1m19s
- If nothing else, it keeps an anticapitalist narrative in the public discourse
I like it. I prefer the honesty.

Nobody forced this guy to be a soulless capitalist. He chose his career path. Oh woe is you, Phil. Must be so hard for you. /s

He's speaking for the rest of the industry that also makes product that tangentally pays his bills. Not all assholes have to be brazen 24/7.

I can see why that would be a bummer. In my mind, the perfect video game-ceo position would be for a company that makes enough profit to pay its employees well and self sustains the business to keep making more games. Having to constantly report a higher user base and profitability growth year after year on a global scale would be a total drag.

Steam is a prime example of this. Not privately run it would have been bloated to extinction years ago.

Shareholders are leechers to quality. Dividends are not enough, the underlying asset must grow no matter what.

When Gabe croaks it Steam is fucked. It will go public.
- You dont think Gabe has surrounded himself with like-minded people?
  
  He will pass it off to someone else and Valve will carry on as it has.
- Yeah, Gabe's son is entirely focused on his own business, not related to gaming at all. Once Gabe is gone, his son will probably just sell it for an acceptable price and Steam will go public fairly soon after.
Do you have any idea at all how sus your username is?
- Mine?
So just don’t take your video game company public.

One thing Ayn Rand’s characters were definitely too selfish to do was allow a committee to take over their work.
So Valve if Valve still made games?
- That's the thing, Valve is in this position because they have the Steam cash cow. Other video games company can't do the same.

I thought companies made money by selling a product to customers? Hmm, seems like there is some kind of contradiction here, perhaps Phil should look into that.

Investors don’t care about that anymore. Line must go up more and right now. If not, they will replace you with someone who promises to do that.

The best ways to raise stock prices include downsizing, jacking up prices, and cutting product quality to save cost. None of these are even remotely beneficial to the customers.
- It’s like trying to win a rally by removing the brakes from the rally car.
You make money by both selling more and spending less.

Think about it, you can have none money left over at the end of the month by working extra hours at your job or by spending less money on something - but what if you can't work extra hours because there's none available? And what if you need that extra cash at the end of the month? The only thing you can do is spend less.

Phil is kind of saying the same thing you're saying here, but it's not easy to just "sell more", not when everyone else is struggling to have that extra cash to spend.

The games industry right now, as a whole, isn't growing. That means companies are selling less. Phil end everyone else would love to sell more, by all means if you've got some solid ideas on how to do that then every games industry veteran out there will happily listen to you, but the sad and shitty reality is that sales are down and when you're a business, if you can't increase sales you've got to cut costs.

And that means job losses. It fucking sucks and we can have debates all day long about the merits of capitalism and all that, but that's the reality of today. That's the game. Phil is being honest and up front here, it's a shitty game but he's playing it and if he wasn't playing it, someone else would.
The perception of profit is a more powerful force than actual profit.

Markets select for profit by simply trimming away the things that don’t make profit.

Boards of directors select for the perception of profit by firing CEOs who don’t provide them with that perception.

These systems are both operating. The companies that don’t make a profit will still die. It’s just that under this system, a company that’s on track to making profit can be redirected by a Board onto a path where they aren’t, because of that second mechanism.

You can grow without being hostile and negative. Start your own studios, make innovative games, compete with quality not acquisitions.

Yes, but can you roll a platform of the distribution, breadth, depth and persistence over good and bad cycles of the scale of Xbox or PlayStation while being a private company? A few have tried.
- No, but do you have to? You can still be a profitable company without aiming for world domination.
the best and the only answer. git gud. 💪
Not everybody is suited to management.

Phil Spencer, you have the luxury to quit if you don’t like the things you’re being forced to do for money.

Or, you could use your influence to try and push things in a different direction.

But Phil Spencer, you will do neither. You’ll shut up and keep dribbling.

Seriously. Everyone gets the luxury of not having to run a profitable growing business. You didn't "have" to run that business at all.
- And I get that the business maybe "has" to be run that way, because of the way it exists in the economic system it exists in, but I'm definitely taking issue with the language he's employed here. He's not a prisoner being forced to run things this way.

you get a lot of publicly traded companies that are in the industry that have to show their investors growth—because why else does somebody own a share of someone’s stock if it’s not going to grow?

I thought the way it was supposed to work was, a company starts out investing in its growth and during this period shareholders get gains from the price of the stock going up, and then when it has maxed out just switch to shoveling the profits into dividends instead? If the industry has stopped growing, I don't see why there isn't a path to acknowledging that to investors, what am I missing?

Growth is more valuable than dividends, and there's always more room for growth in the eyes of investors.
- Growth is more valuable than dividends
  
  Shouldn't that depend on the dollar amounts? Why would $X of dividends be worse than $X of stock growth? And if growth just isn't in the cards anymore, it would be in reality a worse bet as the companies pour resources into a black hole of false hope and self sabotage seeking something that isn't actually going to happen.

I get the feeling the part of capitalism Phil Spencer hates is the part where consumers can take their business elsewhere if they don't like the product.

I'm glad he can see the issue but then part way through the interview he loses it, and jumps to feeding the capitalist system

I dunno, maybe stop going public and just sell a decent game?

Sounds like skill issue.

phil spencer explains market discipline

Comrade?

Cry more rich boy, your tears are delicious.

I genuinely believe he just wants to make cool and fun games.

He's had all the time, money, and resources to do that and hasn't.
I don't think that :/ I think his statements and the games he chooses to back sort of prove that ultimately profit is what he is interested in. I don't blame him for that. But don't make him out to be what he isn't. He is a CEO first, being a fan of games falls lower on the list.
- They aren't exclusionary.

That's not what capitalism means, dawg.

Oh yeah I’m sure the lack of a profit motive would just make games amazing 🙄

Profit isn't the issue, it's having to continually show outsized profit growth rates to keep shareholders happy that's the problem. Look at private companies like Valve for comparison.
- Exactly
Great art was never created for its own sake /s.
- And people never spend money on things based on how good they are /s
Do you exclusively play sports game [current year]?
- Nope. Thank god there’s a free market and therefore I have options.