Xbox boss Phil Spencer has inadvertently shared his opinion on the issues modern AAA games are dealing with - revealing he thinks publishers are "milking" their successful IPs and "struggling" to find new ones.
In a 2020 email (released as part of the Xbox FTC leaks), Spencer shared his analysis of what issues AAA video game publishers are currently facing with fellow Microsoft execs - including CEO Satya Nadella, CFO Amy Hood, former executive business VP Peggy Johnson, and head of marking Chris Capossela. According to Kotaku, the email exchange was sent ahead of a feedback meeting with Grand Theft Auto publisher Take-Two Interactive.
"In terms of subscriptions and the impact on larger publishers," Spencer's email said, "I realized that I haven’t really done a good job sharing our view on the disruption AAA publishers potentially see and how their role in the industry will likely change with the growth in subscription platforms like Xbox Game Pass."
"The creation of digital storefronts like Steam, Xbox Store, and PlayStation Store eventually democratized access for creators breaking physical retail’s lock on game distribution," he continued. "Publishers were slow to react to this disruption. The AAA publishers did not find a way to leverage the moat that physical retail created in the digital realm in a way that had them continue their dominance of the game marketplace."
Later in the email, Spencer addresses the fact that not all companies can afford to spend what the likes of Activision or Take-Two do to get their games on the shelf. "These AAA publishers have, mostly, used this production scale to keep their top franchises in the top-selling games each year," the head of Xbox Gaming explains. "The issue these publishers have run into is these same production scale/cost approach hurts their ability to create new IP."
Spencer then goes on to say there's been a rise in AAA publishers using "rented IP" (name-checking EA/Star Wars, Sony/Spider-Man, and Ubisoft/Avatar as an example) as it's less risky than releasing new IP due to the high production levels. This same trend can be seen in Hollywood and with Netflix, Spencer adds, who also appear to prioritize familiar IP over developing brand-new content.
"Games like Fortnite, Roblox, Minecraft, Candy Crush, Clash Royale, DOTA2 etc. were all created by independent studios with full access to distribution," the Xbox exec says, before adding that in his opinion, this is a "good thing for the industry" but does put AAA publishers in a "precarious spot" moving forward. "AAA publishers are milking their top franchises but struggling to refill their portfolio of hit franchises, most AAA publishers are riding the success of franchises created 10+ years ago."
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