Microsoft’s finance chief has cautioned employees against creating extravagant products during a company meeting in 2018, according to recent federal court hearings related to the planned Activision Blizzard acquisition. This comment, reminiscent of the debunked claim that former President Donald Trump owned a solid gold toilet, serves as a reminder that highly valued technology companies may prioritize building products simply because they can, without considering the potential lack of resonance with consumers.
In a February 2019 email to Phil Spencer, the CEO of gaming at Microsoft, vice president Catherine Gluckstein referenced the earlier meeting and reiterated the advice of not “building a gold toilet.” Gluckstein, who focuses on advertising and the cloud-based game-streaming service, emphasized the importance of avoiding the mistake of developing features without first addressing the core questions about their purpose and fit within the company’s go-to-market strategy.
Spencer responded to Gluckstein, highlighting that mobile gamers may not necessarily desire to play intense games like Halo on their phones while using an Xbox controller over Bluetooth. He expressed that investing in such a feature would not contribute to the company’s growth, likening it to building a gold seat for an existing target audience.
Considering alternative strategies, Spencer suggested that Microsoft could explore acquiring intellectual property or a mobile game publisher like Nexon, while Gluckstein proposed the idea of conducting multiple smaller-scale experiments instead of pursuing one perfect experiment. She questioned whether this approach would facilitate a faster learning process about customer preferences.
The Challenges of Xbox Cloud Gaming and the Pursuit of Growth
Despite the initial doubts expressed during the meeting, Microsoft proceeded with beta testing for xCloud, now known as Xbox Cloud Gaming, in late 2019. However, during court hearings in June, Microsoft executives revealed that the platform had not successfully established itself as a viable alternative to PCs or Microsoft’s Xbox consoles, which allow games to run locally.
While Microsoft remains committed to cloud gaming, the company has also recognized the value of growth through strategic deals. In 2020, Microsoft announced its intention to acquire Activision Blizzard, the developer behind the popular mobile game Candy Crush Saga, for a staggering $68.7 billion. The transaction’s approval now lies in the hands of a federal judge, despite objections from the Federal Trade Commission, and British regulators have also attempted to block the deal.
In summary, Microsoft’s finance chief’s advice to avoid building extravagant products serves as a cautionary reminder for highly valued technology companies. The discussions among Microsoft executives highlight the challenges faced by Xbox Cloud Gaming and the company’s pursuit of growth through strategic acquisitions. As the future unfolds, Microsoft will continue to navigate the evolving landscape of technology and gaming.
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