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Behind the scenes on Microsoft's E3 2018 spending spree - Matt Booty on why the Big M splashed so much cash on its first-party line-up

Behind the scenes on Microsoft's E3 2018 spending spree - Matt Booty on why the Big M splashed so much cash on its first-party line-up

At Microsoft's E3 showcase this year, the company tried to shut down those who criticised the company's, admittedly, less-than-stellar first-party line-up of developers. 

Head of games Phil Spencer announced the purchase of not one, not two, not THREE, but four studios in Ninja Theory, Playground Games, Compulsion and Undead Labs, while also establishing a brand new developer called The Initiative in California's Santa Monica. 

It was a true mic drop moment that comes at the end of a few lacklustre years for Microsoft's own games output - and not long after the closure of Fable maker Lionhead in 2016. 

We caught up with recently-appointed CVP of Microsoft Studios Matt Booty to find out a bit more about these deals. 

What was the thinking behind the wave of acquisitions Microsoft recently announced?

We know the exclusive games from our own studios are what originally turned many gamers into Xbox fans. That’s why we continue to expand the Microsoft Studios franchises players already love, while making an investment in new exclusive games for every player, on every device. It’s with this vision that we welcomed The Initiative, Ninja Theory, Playground Games, Undead Labs and Compulsion Games to the Microsoft Studios family. Our view on studios and partners includes three general categories: long-term partners that we can bring in to the fold and help them grow to their next level, smaller studios built around creative leaders and the ability to explore unique stories and characters, and lastly, starting new projects around proven veteran leaders. Content is central to our relationship with our fans and also with our goal as first-party to support our larger gaming strategies.

Why were these acquisitions made now?

Having a collection of dedicated first-party game development studios is a powerful and unique asset. We are the first to implement new technologies, the first to deliver content for new platforms, the first to explore new business models. It enables us to build a portfolio of exclusive games, and this was the right time to increase that investment. It is also interesting to observe the changes in the industry.

While the industry is growing across the board, there seems to be fewer teams and studios focused on 'mid-tier' games that sit between triple-A blockbusters on one end and smaller indie games on the other. Those are some of the kinds of studios that we're interested in partnering with right now, studios with teams that can make quality, crafted games that sit just between mid-tier and triple-A and by becoming part of our Microsoft Studios family, can focus on craft and innovation and accelerate their creative growth.

What were the criteria by which you decided which companies were worth your time (and money!)?

We didn’t have set criteria. We were looking for teams and talent with a proven track record of delivering differentiated gaming experiences. Collectively, the new studios have the creative power and operational excellence to deliver the next industry game changers. My personal framework for looking at new teams and projects is that we must bet on people, teams and ideas. Each of the studios we are adding to our first-party family is really first and foremost organised around great creative leaders who love the craft of making video games.

Earlier in the year, there were rumours about Microsoft looking into buying big companies such as EA, PUBG Corp and even Valve. That, in itself, isn't all too surprising as all sizeable firms are always on the look for purchases. But why did Microsoft decide to make multiple, smaller acquisitions opposed to one larger one?

We were never focused on the size of a studio or the number of acquisitions. Regardless of size, studios develop unique cultures that fuel their creativity and innovation. For us, it came down to finding the right teams who can not only deliver great games but also fit well with the Microsoft Studios family. We also believe that the diversity of content is valuable. There is value in having studios in different parts of the world as those teams bring unique points of view and unique talents to game development. We are fortunate to have a great line-up of long-running triple-A franchises with Halo, Gears of War, Minecraft, Forza, Age of Empires and so on. Adding smaller teams with a focus on characters and stories helps round out the total portfolio.

What has the reception been like from the industry?

The reception from the industry and fans alike has been positive and motivating. From excitement over the new acquisitions to the recruitment response we’ve seen in Santa Monica after announcing the creation of our new studio The Initiative, there’s great positive energy we can’t wait to harness into producing innovative work for fans.

These acquisitions come not too long after Microsoft announced the closure to Lionhead. Why has Microsoft decided to invest so heavily in its first-party roster of studios after closing one of its most iconic development houses?

These decisions are guided by our continued evaluation of how all the games in our portfolio fit with our long-term vision to make Xbox and Windows 10 the best places to play. It is always an incredibly difficult decision to close a studio or cancel a game, but our first responsibility is bringing the best possible experience to fans.

In addition to buying a series of companies, Microsoft has also set up The Initiative - with some really impressive talent, no less in Darrell Gallagher. How do the objectives of this outfit compare to those of the other companies you have purchased?

Gallagher is an industry veteran and his team is working to create ground-breaking new worlds, characters, and game experiences. The Initiative has the best of both worlds in that they’re given the freedom to explore, try new things and operate like an independent studio, while still having the backing from Microsoft to do something bold and different. Their objectives don’t necessarily differ from the other new teams joining Microsoft Studios. All are focused on creating the next industry game changers. We are going to bet on long-term partners, bet on studios based around creative leaders, and bet on new leaders by building studios around proven industry veterans. The Initiative falls into the last category. It's been great working with Darrell and he's setting up an interesting balance between an indie studio and a studio that has the support and backing of Microsoft.

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.