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With out good video games, the unique Xbox would have crumbled in defeat earlier than the gaming would possibly of Sony and Nintendo. Whereas Microsoft is a strong contender in sport consoles at present with a steady of 25 sport studios and greater than 2,500 sport builders, it appeared form of puny 20 years in the past.

When the unique Xbox launched, the corporate had barely 400 individuals unfold throughout 10 studios. And whereas it had Age of Empires and Microsoft Flight Simulator for the PC, it had just about nothing in video games. The duty of constructing a portfolio of console video games fell to Ed Fries, who was head of Microsoft Sport Studios from 1995 to 2004.

Fries was the fifth particular person at Microsoft to signal on to create the unique Xbox greater than 20 years in the past, and he figured prominently in each of my books, Opening the Xbox and The Xbox 360 Uncloaked. We had an opportunity to make amends for his recollections of these days and his function in greenlighting video games comparable to Halo, Forza, Venture Gotham Racing, Gears of Battle, and lots of extra.

Speaking to Fries and different Xbox veterans like Seamus Blackley, I appreciated the challenges of getting to construct the console, assist PC gaming, and purchase console gaming expertise at a time when Microsoft didn’t have the budgets or expertise that the opposite console makers had. Fries finally felt the stress of that not possible process — of beating rivals whereas holding prices low — and he parted methods with Microsoft. And at present, he’s now the founding father of 1Up Ventures, which is investing in sport studios.


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Fries and I spoke for practically an hour in regards to the good outdated days on the current WN Seattle occasion.

Right here’s an edited transcript of our interview.

Above: Dean Takahashi and Ed Fries on the WN Seattle convention.

Picture Credit score: Dean Takahashi

GamesBeat: Individuals assume Microsoft’s success within the sport enterprise was preordained. It’s good to have Ed right here to remind us how tough it was and the way a lot heavy lifting needed to be achieved by so many individuals. You’ve been sharing all this swag on social media about your Xbox days. Why did you retain all of it? What’s gotten the very best response up to now?

Ed Fries: I used to be apprehensive my spouse was getting extra followers on Instagram than I used to be! However no, why did I preserve all of it? I don’t know. I feel Xbox is simply such part of my life that it contaminated each a part of my home as nicely. It appeared like each cabinet I opened or shelf I appeared on, there was one thing associated to Xbox. In the present day was the final submit. It was form of bittersweet. Nevertheless it was enjoyable to get individuals’s reactions. I’ve been a little bit of a collector myself, like with arcade machines. I in all probability have a little bit of a collector’s mindset. I do know that collectors have seen the picket Xbox minimize from Japan, they usually’re going to be on the market scouring the world to seek out a type of. Anyway, it was only a very enjoyable mission.

GamesBeat: You had about 30 days’ price of issues to point out?

Fries: I feel I did 45 or so. I did a bunch. A few of them have been simply, “Right here’s a bunch of shirts.” Some are higher than others, for positive. So far as the very best response, positively the customized Xboxes, and the Japanese Xbox signed by Invoice Gates for my son. The Japanese launch was February 22, 2002, and my first son was born on March 21, 2002. Invoice knew I used to be having a child, however didn’t know his identify, so he simply wrote, “Ed Junior’s First Toy” on that Xbox and signed it. That was an excellent one.

GamesBeat: To refresh individuals about a few of your profession, I’ll learn some issues right here, however possibly you possibly can chime in about what a few of this early expertise was like in video games again then. You joined Microsoft as an intern in 1985 and as an worker in 1986. Labored on Workplace and Excel. Took over the video games division in 1995 when it had 150 builders. Individuals mentioned, “Why are you throwing your profession away?”

Fries: If I can return a bit earlier than that, I began writing video games in highschool. I used to be in highschool beginning in 1979, and we had the primary Apple IIs in school. I used to be fortunate sufficient to get an Atari 800, and I taught myself to program, first in BASIC and meeting. I began writing video games. I wrote an meeting model of Area Battle, after which a model of Frogger known as Froggy. Somebody noticed it at an organization known as Romox down in California. They one way or the other discovered me. I don’t know how. All it mentioned was “By E. Fries.” However they tracked it again to me.

It was my dream at the moment to enter video games. I labored for them by way of the top of highschool and the primary couple years of faculty. I used to be in school in 1984 when the sport trade famously melted down. All these sport firms went out of enterprise, together with the one I labored for. I needed to get an actual job, so I went to work at Microsoft. They put me on the primary model of Excel for Home windows. I used to be the youngest of seven programmers. We had a very tough process to battle Lotus. Lotus 1-2-3 was the largest PC software program product on the earth, and Lotus was the largest PC software program firm. They have been greater than Microsoft. It was enjoyable to be this sort of rebellious underdog group making an attempt to go in opposition to the large guys. Which was form of the theme of my profession.

Above: The unique Xbox prototype proven off at GDC 2000.

Picture Credit score: Microsoft

I did that for 5 years. I labored my manner up from youngest programmer to co-lead programmer. That was known as the technical lead at Microsoft. Then I moved over to run Phrase, the place we have been battling WordPerfect. We tried to do to them what we did to Lotus, which is construct a greater product and beat them. Spent 5 years doing that. Then principally my bosses approached me and mentioned, “The following step for you is to run a enterprise. You must look across the firm and discover one thing that might match.”

They recommended I’m going down to go to PowerPoint, so I went all the way down to California and visited them. There was a job doing a search factor. I checked out this inactive TV factor with Hank Vigil. Anyway, a bunch of stuff. However then I came upon the video games job. The top of the video games group was leaving. They have been searching for somebody to run it. To me that was good. I used to be tremendous enthusiastic about taking that job. I talked to my bosses they usually mentioned–a number of VPs known as me into their workplaces. One mentioned I used to be committing profession suicide. One other instructed me, “Why would you permit Workplace, one of the essential components of this firm, to go work on one thing nobody cares about?” That’s what they mentioned in regards to the video games enterprise within the mid-’90s.

Fortuitously I didn’t take heed to them. I caught to it and mentioned, “That is what I actually wish to do.”

GamesBeat: In 1995 they already had 150 builders, although? That was Flight Simulator?

Fries: They’d–I feel they solely had about 60 full-time workers on the time. It was about the identical dimension because the group that I managed on Phrase. However they’d a bunch of contractors, which was a manner individuals in Microsoft, particularly in that a part of the corporate, would get round headcount limits. They did have fairly a couple of contractors. As you alluded, they’d simply acquired BAO Company in Chicago, the makers of Flight Sim. One of many first issues I did was transfer them out right here and get them settled in Seattle.

GamesBeat: Again within the days when you would transfer builders across the nation.

Fries: We moved Bungie years later, after all.

GamesBeat: You had lots of issues to put money into. You got firms like Bungie, Ensemble Studios, Uncommon–

Fries: FASA, many others.

Above: Bungie’s Halo made the unique Xbox a hit.

Picture Credit score: Microsoft

GamesBeat: It turned out Age of Empires was the ticket into the true sport trade.

Fries: The primary 12 months, after all I wasn’t ranging from scratch. They’d a bunch of merchandise in growth, most of which I’m guessing no one right here might identify. However video games like Shut Fight and Lethal Tide. Hellbender. I used to be an enormous Command and Conquer participant, and once I got here to interview they confirmed me an early model of Ensemble’s Age of Empires. I used to be excited to see they have been doing one thing in realtime technique. Ensemble was nice to work with. The second 12 months I used to be there they launched that sport, and it turned our second large hit alongside Flight Simulator. The video games press particularly didn’t ever actually give us credit score for Flight Sim as a sport. Age was much more essential within the sense that it gave us some credibility as makers of hardcore video games.

GamesBeat: You have been form of the grownup supervising the video games space. You had these 4 renegades–nicely, first there was the entire Alex St. John factor. However you had the renegades coming to suggest this Xbox factor. You have been the fifth particular person to signal on to it. What was it that made you consider within the plan?

Fries: Now we’ve moved all the way in which as much as the late ‘90s. By then we had made extra acquisitions like FASA, MechWarrior, Crimson Skies, issues like that. Our share of the PC gaming enterprise was rising. As our share grew it obtained more durable and more durable to get that subsequent level of share. By then I considered EA because the competitor. We needed to get greater than them some day. We’d tried to purchase Blizzard. We’d tried to purchase Westwood. I assumed I had a achieved deal to purchase Westwood, went on my honeymoon, and once I got here again the deal fell aside. EA purchased them whereas I used to be gone. Stuff occurs.

I had simply began to consider–possibly it might be simpler to develop our enterprise within the console facet of issues. We might take a few of our PC video games and transfer them over to console. When these guys from the DirectX workforce needed to fulfill with me, I knew Seamus Blackley.

GamesBeat: Seamus Blackley, Kevin Bachus, Otto Berkes, and Ted Hase. [The original Xbox instigators].

Fries: They got here to my workplace with this loopy concept. They have been from the DirectX group, and so after all they needed to make this factor known as the DirectX Field, or Xbox for brief. It was very totally different from what we shipped. It was a Home windows PC that was in a field that made it look extra like a console, after which pretended to be a console. You’d stick a PC sport in it and it might quietly set up it within the background then it might run. It might behave like placing in a disc to play a sport. That was the unique proposal.

Naively I assumed, “Yeah, this might be nice. We’ve got all these PC video games we might simply port to this machine.” Which isn’t in any respect what ended up taking place. However I put my assist behind that mission.

GamesBeat: And also you have been form of the grownup within the room that gave this mission extra credibility.

Fries: Properly, by then I had a workforce of possibly 400, 500 individuals. These guys have been a small group of evangelists on the DirectX workforce. Having a normal supervisor behind them actually helped.

GamesBeat: They have been very connected to it as a mission. They have been placing all of their feelings into it. However out of your stage, how did you see it as nicely? Did you’re feeling as invested in it as they have been?

Fries: It’s humorous you ask that. They have been truly form of mad at me. Rick Thompson came visiting. He was the VP in control of {hardware} on the firm. His group had made mice and keyboards and issues like that. Even controllers. All people on that early workforce they have been forming left their job to go. Everybody give up their job however me to deal with Xbox. I mentioned, “No, I can do my day job and take part on this.” They didn’t really feel like I used to be as invested as they have been. However none of them had a bunch that large to take care of both. I used to be positively able to fall again on my PC sport enterprise, to not stroll away from that.

GamesBeat: It didn’t appear, even at this stage, like a foregone conclusion, proper? There was nonetheless some–

Fries: To me it nonetheless appeared like a reasonably wacky concept. We had no concept if we have been going to get approval for it.

Above: Invoice Gates gave Ed Fries an autographed Xbox earlier than Fries’ first son was born.

Picture Credit score: Ed Fries

GamesBeat: There was the large magnificence contest. There was the battle with the parents from the WebTV facet, a bit internecine battle at Microsoft over which mission to approve.

Fries: Proper. They proposed one thing very very like–utterly customized {hardware}, customized software program, successfully a PlayStation. We proposed one thing that was very very like a PC. In the end what shipped was someplace in between.

GamesBeat: Even so, it was attention-grabbing the way you–you bought the assist of the entire firm. You bought Invoice and Steve Ballmer approving it. Nevertheless it nonetheless appeared like a battle in several methods. I keep in mind–that is a lot later within the timeline, however once you purchased Uncommon for $375 million, a few of the suggestions you bought out of your boss was, “Okay, what else are you going to chop? You’re spending far more on this factor than anything.”

Fries: That’s leaping manner into the longer term. I’m not able to get all the way in which there but. We must always get by way of launch earlier than we discuss post-launch.

GamesBeat: However I’m making an attempt to emphasise the problem that was there. This wasn’t a simple mission.

Fries: We have been asking for lots. We have been asking to principally transfer off-campus into a unique set of buildings the place we may very well be left alone. As a lot as we have been asking for assist, we have been asking to be left alone, which says one thing about being a part of an enormous firm. We wish to construct this factor. Depart us alone so we are able to do it. Give us the sources we’d like. That’s what they agreed to on Valentine’s Day. This was February 2000, Valentine’s Day. I don’t suppose we wish to go into that complete story proper now, however in case you watch the Xbox docuseries, you possibly can see that on YouTube subsequent month. That story’s in there.

One of many issues I posted was a couple of footage of a deck, once I was posting all these things on social media. I posted an image of the deck from September 1999. Not that lengthy earlier than the February assembly in 2000. At that time our ship date was nonetheless in 2000. November 2000. Which is simply actually loopy. That may have been a 12 months, just a bit over a 12 months from when that deck was made. That made no sense. It simply reveals how little we understood.

However when the Xbox was accepted in February 2000, we solely gave ourselves–lower than two years to construct a chunk of {hardware} from scratch, and all of the launch video games from scratch. It needed to be achieved months early again then. You needed to construct issues into packing containers and ship them all around the world, put them into shops. If we had actually thought it by way of we might have realized it was loopy. However we didn’t.

GamesBeat: You continue to got here out 20 months after the PlayStation 2 shipped. You might need thought, “We’ve got to return out on the similar time or the sport’s over.” Did you ever really feel such as you have been weighed down an excessive amount of in your decision-making, and you need to have moved quicker?

Fries: That’s in all probability why that unique date was 2000 as a substitute of 2001. Actually, what I keep in mind is being skeptical about whether or not this mission was going to be accepted in any respect, up till very late. The Valentine’s Day Bloodbath actually might have gone both manner. However as soon as it was accepted, there wasn’t actually, from my standpoint, any room for reflection. We’re on this practice from hell to go from right here to November 2001. We’ve got to do every little thing we are able to do to construct the {hardware}, construct the software program, construct the system and video games, and make this launch. That’s what we have been all centered on. We weren’t considering past that.

GamesBeat: It felt fairly actual from the skin when Invoice Gates went on stage at GDC in March 2000 and mentioned, “We’ll construct this.”

Fries: That’s why the Valentine’s Day Bloodbath was when it was. In the event that they accepted it that day he was committing to go on stage at GDC the subsequent month.

GamesBeat: There was a factor at Microsoft known as the technique tax. Right here we get into some classes from Xbox, possibly, for different individuals. The issue in an enormous firm is that you just’re at all times considering, “Okay, let’s decelerate. Let’s take into consideration this. Let’s give you a method. We’ll get all people on board with it.” And by the point you do that you just’ve wasted a lot time that it’s like this technique tax. I consider Rick Thompson going out to all the sport firms and saying, “Can we purchase you?” Going to Nintendo and saying, “Can we purchase you?” Going to EA and saying, “Can we purchase you guys?” And in some unspecified time in the future realizing that you just needed to make this yourselves. You couldn’t depend on Michael Dell to make the field work.

Fries: That’s in regards to the time that Rick give up. He put collectively a complete enterprise proposal, how a lot it was going to price, and he began to comprehend how a lot cash the mission was going to lose. We couldn’t do it with OEMs, such as you mentioned. I keep in mind him saying, “Guys, I wish to work on companies that earn cash.” That’s principally why he left, as I recollect it.

Then my boss, Robbie Bach, stepped in in his place. Robbie didn’t have that form of spirit. So we have been good to go once more.

Clockwise: Robbie Bach, Dean Takahashi, Ed Fries, and Shane Kim.

Above: Clockwise: Robbie Bach, Dean Takahashi, Ed Fries, and Shane Kim reminisce at E3 2021.

Picture Credit score: E3

GamesBeat: It introduces that concept of–you must lose a complete lot of cash as your ante into the competitors. That’s a tough factor for businesspeople to get their heads round.

Fries: It’s, however the flip facet of that was, at the moment in Microsoft, we have been making a lot cash on Workplace, a lot cash on Home windows, that nearly nothing else we might suggest made sense to do. Nearly any concept a small group might need to create a brand new enterprise, it simply wasn’t sufficiently big, even when it succeeded wildly, to have an effect on the underside line of the corporate. At the least Xbox, yeah, it was gonna be an enormous danger, an enormous funding, but it surely was in a very large class, and one which–it supplied 40 p.c of Sony’s revenue. Sony was at peak. Sony was an awesome firm again then. It was going to be costly, but when we received it was going to be worthwhile.

GamesBeat: I assume there are lots of parallels to issues taking place now with–Fb makes a ton of cash in social media. They’ve to determine what to do with that. They don’t wish to miss the subsequent smartphone enterprise, in order that they’re pouring all of it into digital actuality. That’s their wager.

Fries: It’s one of many hardest issues to do once you’re an organization, discovering one other adjoining enterprise you could be profitable in. Microsoft a minimum of had a number of companies at that time. It wasn’t all Workplace or all Home windows. However yeah, you’re susceptible when you may have only one income supply. Somebody like, say, Apple can assault somebody like Fb by beating up on their capability to gather advert income.

GamesBeat: It’s a must to make an enormous wager with the intention to doubtlessly construct a brand new, fascinating enterprise that sits alongside Excel or no matter. You possibly can’t simply transfer right into a small enterprise.

Fries: Once I went over there they mentioned I used to be going to work on one thing nobody cares about. At the least this mission was sufficiently big that folks would possibly care about it. Or we would go away an enormous gap that everybody was mad about. However a minimum of they’d care.

GamesBeat: In some methods it felt like a motion, too. You guys believed in video games and gamer tradition. This was going to develop into one thing extra essential on the earth.

Fries: I feel that’s one thing that a few of the evangelists introduced in, individuals like Seamus and J Allard. We have been already making an attempt to push that standpoint as nicely inside our sport publishing enterprise. There was lots of pressure, as a result of the Robbie and Mitch facet, the gross sales and advertising facet, they saved making an attempt to make the platform–nicely, can it’s about greater than video games? And I might say, “You don’t perceive. Video games would be the largest media on the earth, and also you say you need it to be about greater than video games?” They’d say, “Yeah, we don’t actually get the sport factor. It looks like this area of interest factor. Can it play films? Can it play music?”

GamesBeat: You gave that speech, the introduction to the press, and it did really feel such as you have been one of many believers. You have been speaking about how video games in some unspecified time in the future might take their rightful place on the prime of all leisure.

Fries: Precisely. I’m nonetheless giving that speech, 20 years later. We’re virtually there. Video games have been the fastest-growing media enterprise on the earth for fairly some time now. The pandemic simply made it develop even quicker.

GamesBeat: There was this different ethos behind it, too, of appreciating the creators, the builders. Elevating them to the standing of artists. They’re individuals who needs to be appreciated, and never essentially handled the way in which they have been by the large console firms.

Fries: I gave a speech at Gamestock the place I mentioned we should always try to create not simply leisure, however artwork. The truth was that we have been PC builders, PC sport builders for essentially the most half, making an attempt to know the console enterprise. And the console enterprise, you must keep in mind, was dominated by the Japanese at the moment. They’d managed the console enterprise because the mid-’80s. All the largest firms have been Japanese. The largest franchises have been Japanese. And but within the PC world, the place we got here from, there have been extremely thrilling issues taking place with multiplayer video games, first-person shooters, that form of factor.

Above: The entire video games that shipped below Ed Fries’ decade of Microsoft Sport Studios management.

Picture Credit score: Ed Fries

The query for us was, ought to this field be about all the good issues which might be taking place western sport growth, in PC sport growth? Can we convey that to the console world? Or does that imply–after we strive to try this, does that imply we simply don’t perceive the console world? Once we talked to the press, particularly the console press, they might say, “Who’s your Mario? Your video games look darkish and gritty, not vivid and colourful like console video games.” And what that meant was they didn’t look Japanese. Internally we didn’t actually know whether or not we should always belief our guts as western PC sport builders and attempt to convey the very best content material we knew the right way to make, or did we now have to vary what we have been making indirectly as a result of this viewers was one way or the other basically totally different from the individuals we’d been promoting to earlier than?

We ended up someplace in between. The talk was settled in a short time the day after we launched, when Halo offered and Munch’s Oddysee didn’t. Hey, now we all know.

GamesBeat: Halo left the cartoon world behind.

Fries: It turned okay for us to be totally different. The truth is, it turned what was good about Xbox. We weren’t precisely like one other PlayStation or Gamecube. We represented a unique philosophy of gaming, a unique fashion of video games. In some methods we represented the place video games have been going so far as on-line multiplayer and people sorts of issues.

GamesBeat: You retired from Microsoft in 2004. You’d been there 18 years and also you had 18 million-selling hits. Who would have thought that Halo was the one one which mattered?

Fries: Properly, in case you look–Flight Simulator. Age of Empires. There’s a plaque hanging in my workplace that any individual gave me when Age of Empires went over 15 million copies offered. After which Halo. Essential video games. However numerous different video games that have been enjoyable too, that possibly weren’t the largest sellers, however I’m pleased with them. Crimson Skies from the FASA guys is a sport I assumed was essential in its time. A few of the enjoyable stuff out of Japan like Blinx. Working with Tim Schafer on Psychonauts was a good time.

GamesBeat: You posted the plaque you bought once you retired. It had all of the video games on there. It appeared like 112 video games.

Fries: There have been already individuals this morning once I left–they have been posting, “Hey, they not noted this one!” They could have missed a couple of. However Gears of Battle began whereas I used to be there. Fable, clearly, began whereas I used to be there, and completed not lengthy after I left. Forza Motorsport began whereas I used to be there. I feel we did alright. We created some franchises.

GamesBeat: There was this difficult time of–as a lot as you accepted a few of these video games with such excessive potential, you additionally needed to reduce lots. There have been occasions when Microsoft needed to shave again the variety of builders engaged on video games.

Fries: Yeah, that’s once I left.

GamesBeat: That was the battle of–give us greater hits, however do it with fewer individuals. You needed to watch your prices, otherwise you have been instructed to observe your prices.

Fries: Which available is completely pure. Xbox not solely was dropping cash, however the largest mistake we made, in case you can say that–I don’t suppose we had a selection on the time. However the largest mistake we made was that the field was under no circumstances designed to be cost-reduceable. The primary few years are okay once you’re promoting at a comparatively excessive worth, however in the meantime Sony is integrating the components of their PlayStation, making them smaller to the purpose the place it’s virtually a PlayStation on a chip.

We couldn’t do this. For one factor, we had a tough drive. Arduous drives don’t get cheaper. They simply get greater. They nonetheless price, at the moment, 50 bucks. It’s simply how a lot area you get for that. Worse, we had an Intel half and an Nvidia half. We didn’t personal the IP for the CPU or the GPU. There was no manner we might combine these components collectively to shrink the machine. So positively on the {hardware} facet, we have been dropping cash.

In the meantime, on the software program facet, which was my enterprise, we have been additionally dropping cash. It is a pressure that occurs even at Sony. Possibly not at Nintendo, as a result of they’re actually good at making video games actually cheaply. However once you’re doing first social gathering, you possibly can solely promote by yourself console. Are you doing it to earn cash, or are you doing it to promote the console? Is it a advertising expense to make the subsequent model of Halo? In the event that they actually needed me to make my enterprise worthwhile, I’d put out a PlayStation model of Halo and be worthwhile tomorrow. That may be my response. However they didn’t like to listen to that. I’ve talked to Shu Yoshida at Sony. When he was working first social gathering he confronted lots of the identical conflicts.

Above: Staff Ninja’s because of Ed Fries.

Picture Credit score: Ed Fries

It was virtually like a take care of the satan in a manner. Once we agreed to do the Valentine’s Day Bloodbath, after we agreed to launch this console, after which the entire firm would depart us alone to do it–after we launched, the entire firm got here again. The entire firm needed some stuff. They needed some technique stuff, such as you talked about. Abruptly, hey, this appeared actually good. It was actually widespread. We have been getting numerous press. How come you’re not utilizing Web Explorer? How come you’re not working Home windows? All that stuff got here dashing again in. After which after all there have been the precise prices of the mission.

this higher than anybody, however that was lots of what dictated why we did Xbox 360, how we did Xbox 360, why we minimize the lifetime of the primary Xbox brief and launched Xbox 360 early, why we used the processor that we did, all of that. That’s one other story. However all that occurred whereas I used to be nonetheless there. I left in the course of 360 planning.

GamesBeat: Lengthy story brief, the unique Xbox misplaced someplace round $4 billion over 4 years. And now Microsoft’s making earnings on $3.7 billion in income per quarter. Not unhealthy in the long term. A wager that was price making.

Fries: I’m laughing as a result of I obtained to see Peter Moore final week. I’ve a Peter Moore story, however through the years I’ve began to surprise if it actually occurred, or if I simply imagined. Once I obtained to see Peter final week I requested him about it, in a manner that might give him an opportunity to say what actually occurred.

It was a gathering round that point, 2003 or so. Peter Moore had simply joined the group. We have been going off to fulfill with Steve Ballmer about Xbox Dwell. We have been updating him on Xbox Dwell and what was happening there. Ballmer, who’s a really excitable man, was simply getting increasingly excited, extra enthused about this Xbox Dwell factor. It’s going to be a subscription. All these individuals can pay a recurring charge. He’s getting increasingly excited sitting there on the desk. He begins to do the maths in his head and begins to subconsciously pound on the desk. He’s sitting there pounding the desk and getting midway out his seat, getting actually excited. “That is going to be actually nice!”

He smashes the Polycom phone, the speakerphone there. These three-armed speakerphones you may have in the course of the room. Crash! Smashed it along with his fist as a result of he was so excited. I turned to Peter Moore sitting subsequent to me and mentioned, “Welcome to Microsoft.”

However that was it. No person had achieved one thing like Xbox Dwell. No person knew what the income potential of that was going to be. It actually was one thing that turned issues round for Xbox as a mission so far as getting cash.

GamesBeat: After which there was life after Microsoft. You’ve been performing some attention-grabbing issues. Do you wish to fill us in rapidly?

Fries: I left in 2004. My first son, as we talked about–Xander, he was named after the Xbox. He was born in March of 2002. My second son, Jasper, was on the way in which in 2004. I used to be turning 40. I’d been on the firm virtually 20 years. I made a decision it was an excellent time for me to depart.

I wasn’t positive what I used to be going to do apart from elevate two boys. It was truly a good time to depart, as a result of I used to be an enormous Blizzard fan, and that was the summer season World of Warcraft got here out. I obtained in a guild with a bunch of my outdated buddies from my group. Numerous them had children. We’d be on doing Molten Core raids and somebody would say, “Hey, wait, gotta change a diaper.” We’d have to simply go on with the raid.

I slowly obtained sucked into increasingly stuff. Individuals contacted me and mentioned, “Hey, are you able to come assist us out with this sport firm we’re beginning? We want an advisor. We want a board member.” I began doing increasingly of that. I began this loopy firm to 3D print World of Warcraft characters. That was enjoyable.

I assume to me, what I liked to do, and I nonetheless like to do, is simply work with sport builders and attempt to give them the sources they should convey their concepts to life. As a gamer, it’s a option to get extra cool video games to return out.


Above: Microsoft’s unique Xbox.

Picture Credit score: Laptop historical past

GamesBeat: And also you formalized that with this enterprise fund.

Fries: Yeah, that’s what I’m doing much more so at present. Now I’ve, in all probability for the primary time, a full-time job. Three years in the past I used to be approached by the blokes at PUBG Corp in Korea. PUBG was taking off they usually have been methods to get related with builders within the west. They requested if I might begin a enterprise fund. I mentioned I’d do it if I might do it my manner. They needed to know what that meant.

I proposed making lots of comparatively small investments, $500,000 every, in lots of sport firms, 50 sport firms, with the objective of connecting the founders of all 50 firms collectively to kind a group the place they might all share and assist one another to achieve success. That’s 1Up Ventures. I’m the one full-time worker. My part-time companion is Kelly Wallick, who you could know runs the Indie Megabooth and has made it doable for indie builders all over the world to get into large commerce reveals. We’ve been working the fund formally for 2 and a half years and made 36 investments up to now. We’re nicely on our option to 50. We’re beginning to consider a second fund, as a result of this one has been tremendous enjoyable to be a part of. It’s been good for the traders as nicely, frankly.

GamesBeat: That brings us updated, largely. Does anyone have questions? In the event you do, go forward and lift your hand.

Query: May you share extra about what stage 1Up Ventures is working with firms?

Fries: I’m getting good at speaking VC discuss, so I apologize to the non-VC individuals right here. I don’t just like the names for phases. I simply use a greenback worth. We like to take a position sub-$20 million valuation. That’s as a result of we solely make investments $500,000. Larger than that, we’d have such a small share of the corporate. We by no means lead. We’re at all times coming in with a consortium of different traders.

In fact the important thing one is the lead investor. At this level we’ve co-invested with each main lead investor within the sport enterprise. We’re notably shut to some of them. Bitkraft, for instance, is an in depth companion of ours. However we’ve invested with all people. Usually I inform those who if they’ll get one of many lead traders , that’s normally step one to getting us concerned.

Ed Fries

Above: Certainly one of many recollections of Xbox that Ed Fries saved for 20 years.

Picture Credit score: Ed Fries

Once I began two and a half years in the past, I instructed those who we have been solely going to put money into online game growth firms. They mentioned that was loopy. Why don’t you put money into platforms and instruments and publishers? I wasn’t going to try this. I needed to create this group. I needed everybody in the neighborhood to be doing related issues. However I didn’t know the market was going to return to me. With the pandemic, tons of individuals wish to put money into sport firms. Two and a half years in the past it was seen as a hit-driven enterprise that you just shouldn’t put money into.

Now the rounds are fairly aggressive, truly. Fortuitously we’ve been round for some time and we now have an excellent status. Individuals have a look at all the businesses in our portfolio which might be a part of this group and say, “Hey, I need an opportunity to work together with Raph Koster day-after-day.” Or Robin Hunicke or whoever. We centered on range from the start. Greater than a 3rd of our firms have ladies founders or co-founders. That’s additionally very enticing to startup builders.

GamesBeat: You talked about at one level that there have been greater than 100 game-focused funding funds that you just have been involved with.

Fries: Yeah, and that’s not even counting the crypto ones now. Now there’s in all probability 100 extra which might be crypto funds making an attempt to put money into video games. That’s a complete different factor.

GamesBeat: A few hundred firms making an attempt to put money into video games.

Fries: There’s some huge cash for sport builders on the market now. A part of it’s that the world is altering. In the event you have a look at–I used to run a writer. A writer did three issues. They did the financing of the sport. They did the advertising of the sport. They usually did the distribution. Distribution is free now for anybody, straightforward to get. Advertising and marketing isn’t what it was once. Once we did advertising, lots of it was tied to distribution. It was shopping for endcaps in shops. It was working advertisements in newspapers and issues like that. Now advertising is getting some streamers to play your sport, one thing like that. It’s essential, but it surely’s one thing that just about anybody can get to with a bit assist.

That leaves the ultimate factor, which is financing. Enterprise is stepping in increasingly, funding greater and larger sport initiatives. I actually suppose it’s going to be an alternate manner that merchandise come all the way in which to market sooner or later.

Query: Would you say that it’s not a hit-driven trade anymore, however turning into extra of a genre-driven trade?

Fries: As a result of I come from a publishing background, once I discuss to traders, I don’t battle about it being hit-driven. In a manner it’s. Each large writer is constructed round a couple of franchises which might be tremendous essential to them. However what I say is that the way in which to strategy that’s with a broad portfolio. Our technique is ready up in order that we are able to make investments all around the world in any sport firm. In the event you’re shopping for into our fund, to not make this sound like an advert, you’re going to get a part of 50 bets within the sport enterprise. Whereas in case you’re a lead investor–I’m glad they’re there. I actually need them each time we do a deal. However they’re placing much more in every deal, to allow them to do fewer offers. It’s not only a monetary dedication. Normally they need to take board seats and issues like that. There are fewer investments they’ll do.

In the event you’re going to do the sport enterprise, I like our broad strategy. While you attempt to put a portfolio collectively, whether or not you’re working a writer or a enterprise fund, to me it’s about range. Range of genres, range of applied sciences, range of areas, range of talent ranges. I like working with individuals who have 25 years of expertise, however I wish to take a couple of dangers on up and coming new individuals too. That’s how I have a look at our portfolio. Making as many various sorts of bets as doable and hoping that one, like Splitgate, will come by way of for us.

GamesBeat: Do you’re feeling like that is fulfilling, but additionally fulfilling otherwise than once you have been at Xbox?

Fries: I get out of it what I obtained out of it again then. I get to spend my days speaking to sport builders, speaking about video games, which I like, and discovering methods to assist them get the sources that they should do the work they wish to do. For me it hasn’t actually modified.

Above: One other particular version Xbox.

Picture Credit score: Ed Fries

Query: You’ve clearly had a ton of video games cross your desk. What separates the great ones from the unhealthy ones, in your opinion?

Fries: , video games are concepts. It’s humorous. I obtained mail from J Allard yesterday, which was an out of the blue shock. I don’t hear from him fairly often. Possibly as soon as a decade. Nevertheless it was a really good e mail congratulating me on the twentieth anniversary of Xbox, which was final evening. One of many issues he mentioned there was, “Concepts are low-cost.” This concept of doing a console, it doesn’t actually imply something. It’s the execution that issues. That’s true for video games greater than absolutely anything.

I consider video games as a dangerous factor, a very tough factor. That’s what makes them thrilling to me. They’ve all of the issues that may go fallacious with a chunk of software program mixed with all of the issues that may go fallacious with a chunk of leisure. You set these two issues collectively, it’s a very onerous enterprise we work in. Actually, actually onerous. Expertise issues. Dedication issues. Believing in what you do issues.

The initiatives I’ve seen which might be unhappy are the place the workforce itself doesn’t consider in it. Once they don’t consider in it, it’s by no means going to achieve success. I’ll discuss to anyone. I like to listen to what they wish to do. However I’m considering extra about that stuff than in the event that they’re telling me they’re going to knock a soccer ball round a subject with a automotive, one thing dumb like that. [Laughs]

GamesBeat: Wasn’t Psychonauts one of many calls you needed to make? In the present day they obtained nominated for the Sport Awards, sport of the 12 months.

Fries: You could not keep in mind fairly proper. I used to be an enormous fan of Psychonauts. After I left they cancelled it. I went and labored with Tim to attempt to assist get Psychonauts achieved. And now, 20 years later, Microsoft and my outdated group went and purchased Double Advantageous. They kicked them out and purchased them again. I’m very optimistic about the place Xbox goes. I like that they’re again investing in studios and dealing to beef up their first-party groups. That’s nice.

GamesBeat: While you began with Xbox you had 400 builders and 10 studios, I feel it was? They need to be previous 25 studios now, and who is aware of how many individuals.

Fries: Once I left we had 1,200 individuals on my groups. However yeah, I don’t know the way it went up and down after that.

GamesBeat: I at all times thought it was odd that Microsoft obtained into the enterprise, however then didn’t actually dimension it in addition to it might have been sized. With these 1,200 builders you had, you have been going up once more 2,500 at Sony.

Fries: We appreciated being the underdog. I do know individuals don’t consider Microsoft as an underdog. We at all times had headcount constraints on us. But in addition, we had the power to do acquisitions like Uncommon, if we might make a compelling case for it.

GamesBeat: They don’t appear to be below that constraint at present. They’re shopping for as many as they’ll. It looks like they’re lastly freed from the notion that in case you add right here, you must reduce some place else.

Fries: I don’t know the inner political scenario proper now. I can solely see their actions out there. However they’re on the market shopping for nice builders once more. That’s the fitting factor for them to do.

Above: Commemorating the twentieth anniversary of Xbox.

Picture Credit score: Ed Fries

Query: I hoped you would discuss extra about the way you assist builders to share info with one another by way of your fund, serving to them clear up one another’s issues.

Fries: 1Up Ventures is definitely based mostly on one other group that I used to be a part of for in regards to the final dozen years, began by a neighborhood indie developer. I’ve to watch out what I say, as a result of it is a secret group. I’m not supposed to speak an excessive amount of about it. He began with this concept that he would construct a bunch of fifty sport builders. I obtained grandfathered in, I assume, as one of many 50. The group’s been round for greater than a dozen years, began simply as a mailing listing. As a result of it was capped at 50 it meant everybody knew everybody else. There weren’t any individuals on the mailing listing you didn’t know. It centered on individuals assembly one another in particular person. Each E3 or GDC or occasions like that, no matter subset of the 50 that have been there would get collectively for lunch or dinner. Constructing private relationships with individuals.

After you have private relationships with a restricted set of individuals the place you possibly can know everybody, that’s actually once you begin to get communication and sharing taking place. It’s a must to have that belief stage first. As soon as the belief is there, then individuals open up and wish to assist one another. A number of actually large sport firms that you just guys know have grown out of that unique group, and I hope we’ll be capable to say the identical factor for 1Up.

Query: What expertise from Xbox would you say helps you essentially the most proper now in your enterprise enterprise?

Fries: I in all probability know extra about video games than a lot of the different enterprise guys that compete in opposition to. I’ve sat by way of 1000’s of pitches since again within the Xbox days. I really feel fairly snug video games in growth, after they’re early, and with the ability to see the promise there. I can look past the artwork to what’s actually taking place and why it’s attention-grabbing. That’s in all probability the factor I’ve greater than something.

I’ve one other companion, Chris Wheaton. He handles the finance and authorized stuff. He runs the VC a part of the VC, as a result of I don’t know the way to try this. However in the case of coping with sport builders and making bets on video games, I really feel like I’m fairly good at that one.


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