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Home Technology Ed Fries interview -- From building games for the original Xbox to...

Ed Fries interview — From building games for the original Xbox to investing in gaming startups

Be a part of gaming leaders, alongside GamesBeat and Fb Gaming, for their 2nd Annual GamesBeat & Fb Gaming Summit | GamesBeat: Into the Metaverse 2 this upcoming January 25-27, 2022. Study extra about the occasion. 


With out good games, the original Xbox would have crumbled in defeat earlier than the gaming may of Sony and Nintendo. Whereas Microsoft is a stable contender in sport consoles at the moment with a steady of 25 sport studios and greater than 2,500 sport builders, it appeared sort of puny twenty years in the past.

When the original Xbox launched, the firm had barely 400 folks unfold throughout 10 studios. And whereas it had Age of Empires and Microsoft Flight Simulator for the PC, it had nearly nothing in games. The duty of building a portfolio of console games fell to Ed Fries, who was head of Microsoft Recreation Studios from 1995 to 2004.

Fries was the fifth individual at Microsoft to signal on to create the original 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 compensate for his recollections of these days and his function in greenlighting games akin to Halo, Forza, Venture Gotham Racing, Gears of Conflict, and lots of extra.

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

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The 2nd Annual GamesBeat and Fb Gaming Summit and GamesBeat: Into the Metaverse 2


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Fries and I spoke for practically an hour about the good outdated days at the latest WN Seattle occasion.

Right here’s an edited transcript of our interview.

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

Picture Credit score: Dean Takahashi

GamesBeat: Individuals assume Microsoft’s success in the sport enterprise was preordained. It’s good to have Ed right here to remind us how troublesome it was and the way a lot heavy lifting had to be completed 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 finest response thus far?

Ed Fries: I used to be fearful my spouse was getting extra followers on Instagram than I used to be! However no, why did I hold 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 properly. It appeared like each cabinet I opened or shelf I appeared on, there was one thing associated to Xbox. At this time was the final submit. It was sort of bittersweet. However it was enjoyable to get folks’s reactions. I’ve been a little bit of a collector myself, like with arcade machines. I most likely have a little bit of a collector’s mindset. I do know that collectors have seen the wood Xbox reduce from Japan, they usually’re going to be on the market scouring the world to discover a type of. Anyway, it was only a very enjoyable challenge.

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

Fries: I feel I did 45 or so. I did a bunch. A few of them had been simply, “Right here’s a bunch of shirts.” Some are higher than others, for certain. So far as the finest 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 title, so he simply wrote, “Ed Junior’s First Toy” on that Xbox and signed it. That was a very good one.

GamesBeat: To refresh folks about a few of your profession, I’ll learn some issues right here, however perhaps you possibly can chime in about what a few of this early expertise was like in 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 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 games in highschool. I used to be in highschool beginning in 1979, and we had the first Apple IIs at college. 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 games. I wrote an meeting model of House Conflict, 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 do not know how. All it mentioned was “By E. Fries.” However they tracked it again to me.

It was my dream at the moment to go into games. I labored for them via the finish of highschool and the first couple years of school. I used to be in faculty 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 had to get an actual job, so I went to work at Microsoft. They put me on the first model of Excel for Home windows. I used to be the youngest of seven programmers. We had a extremely troublesome job to struggle Lotus. Lotus 1-2-Three was the largest PC software program product in the world, and Lotus was the largest PC software program firm. They had been larger than Microsoft. It was enjoyable to be this type of rebellious underdog group making an attempt to go towards the huge guys. Which was kind of the theme of my profession.

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

Picture Credit score: Microsoft

I did that for 5 years. I labored my means 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 had 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 go searching the firm and discover one thing that may match.”

They prompt I’m going down to go to PowerPoint, so I went 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 games job. The pinnacle of the games group was leaving. They had been wanting 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 advised me, “Why would you allow Workplace, one among the most essential elements of this firm, to go work on one thing nobody cares about?” That’s what they mentioned about the games enterprise in the mid-’90s.

Thankfully I didn’t hear to them. I caught to it and mentioned, “That is what I actually need to do.”

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

Fries: That they had–I feel they solely had about 60 full-time workers at the time. It was about the similar measurement as the group that I managed on Phrase. However that they had a bunch of contractors, which was a means folks in Microsoft, particularly in that a part of the firm, would get round headcount limits. They did have fairly a couple of contractors. As you alluded, that they had simply acquired BAO Company in Chicago, the makers of Flight Sim. One in all the first issues I did was transfer them out right here and get them settled in Seattle.

GamesBeat: Again in the days when you possibly can transfer builders round the nation.

Fries: We moved Bungie years later, after all.

GamesBeat: You had loads of issues to make investments in. To procure firms like Bungie, Ensemble Studios, Uncommon–

Fries: FASA, many others.

Above: Bungie’s Halo made the original Xbox successful.

Picture Credit score: Microsoft

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

Fries: The primary 12 months, after all I wasn’t ranging from scratch. That they had a gaggle of merchandise in growth, most of which I’m guessing no person right here may title. However games like Shut Fight and Lethal Tide. Hellbender. I used to be a giant Command and Conquer participant, and after 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 had 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 huge hit alongside Flight Simulator. The games press particularly didn’t ever actually give us credit score for Flight Sim as a sport. Age was much more essential in the sense that it gave us some credibility as makers of hardcore games.

GamesBeat: You had been sort of the grownup supervising the games space. You had these 4 renegades–properly, first there was the entire Alex St. John factor. However you had the renegades coming to suggest this Xbox factor. You had been the fifth individual to signal on to it. What was it that made you consider in the plan?

Fries: Now we’ve moved all the means up to 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 bought tougher and tougher to get that subsequent level of share. By then I considered EA as the competitor. We needed to get larger than them some day. We’d tried to purchase Blizzard. We’d tried to purchase Westwood. I believed I had a completed deal to purchase Westwood, went on my honeymoon, and after I got here again the deal fell aside. EA purchased them whereas I used to be gone. Stuff occurs.

I had simply began to take into consideration–perhaps it could be simpler to develop our enterprise in the console aspect of issues. We may take a few of our PC games and transfer them over to console. When these guys from the DirectX workforce needed to meet 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 thought. They had 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’ll stick a PC sport in it and it could quietly set up it in the background then it could run. It could behave like placing in a disc to play a sport. That was the original proposal.

Naively I believed, “Yeah, this may be nice. We now have all these PC games we may simply port to this machine.” Which isn’t in any respect what ended up taking place. However I put my help behind that challenge.

GamesBeat: And also you had been sort of the grownup in the room that gave this challenge extra credibility.

Fries: Nicely, by then I had a workforce of perhaps 400, 500 folks. These guys had been a small group of evangelists on the DirectX workforce. Having a basic supervisor behind them actually helped.

GamesBeat: They had been very hooked up to it as a challenge. They had been placing all of their feelings into it. However out of your stage, how did you see it as properly? Did you’re feeling as invested in it as they had been?

Fries: It’s humorous you ask that. They had been really sort of mad at me. Rick Thompson came visiting. He was the VP in cost of {hardware} at the firm. His group had made mice and keyboards and issues like that. Even controllers. Everyone on that early workforce they had been forming left their job to go. Everybody stop their job however me to give attention to Xbox. I mentioned, “No, I can do my day job and take part in this.” They didn’t really feel like I used to be as invested as they had been. However none of them had a gaggle that huge to take care of both. I used to be positively prepared 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 thought. We had no thought if we had 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 huge magnificence contest. There was the battle with the people from the WebTV aspect, somewhat internecine struggle at Microsoft over which challenge to approve.

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

GamesBeat: Even so, it was attention-grabbing the way you–you bought the help of the entire firm. You bought Invoice and Steve Ballmer approving it. However it nonetheless appeared like a battle in other ways. I keep in mind–that is a lot later in 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 reduce? You’re spending far more on this factor than the rest.”

Fries: That’s leaping means into the future. I’m not prepared to get all the means there but. We must always get via launch earlier than we discuss post-launch.

GamesBeat: However I’m making an attempt to emphasize the problem that was there. This wasn’t a straightforward challenge.

Fries: We had been asking for so much. We had been asking to principally transfer off-campus into a distinct set of buildings the place we might be left alone. As a lot as we had been asking for assist, we had been asking to be left alone, which says one thing about being a part of a giant firm. We wish to construct this factor. Depart us alone so we are able to do it. Give us the assets 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 would like to go into that entire 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 in all the issues I posted was a couple of photos of a deck, after I was posting all these items 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 will 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 permitted in February 2000, we solely gave ourselves–lower than two years to construct a bit of {hardware} from scratch, and all the launch games from scratch. It had to be completed months early again then. You had to construct issues into containers and ship them throughout the world, put them into shops. If we had actually thought it via we’d have realized it was loopy. However we didn’t.

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

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

GamesBeat: It felt fairly actual from the outdoors 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 permitted 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, perhaps, for different folks. The issue in a giant 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 everyone on board with it.” And by the time 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 had to make this yourselves. You couldn’t depend on Michael Dell to make the field work.

Fries: That’s about the time that Rick stop. He put collectively an entire enterprise proposal, how a lot it was going to value, and he began to understand how a lot cash the challenge was going to lose. We couldn’t do it with OEMs, such as you mentioned. I keep in mind him saying, “Guys, I like to work on companies that earn money.” 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 sort of spirit. So we had 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 could have to lose an entire 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 aspect of that was, at the moment in Microsoft, we had been making a lot cash on Workplace, a lot cash on Home windows, that just about nothing else we may suggest made sense to do. Nearly any thought a small group may need to create a brand new enterprise, it simply wasn’t large enough, even when it succeeded wildly, to have an effect on the backside line of the firm. At the least Xbox, yeah, it was gonna be a giant danger, a giant funding, however it was in a extremely huge class, and one which–it supplied 40 % 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 loads 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 need 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 among the hardest issues to do once you’re an organization, discovering one other adjoining enterprise you will 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 weak when you could have only one income supply. Somebody like, say, Apple can assault somebody like Fb by beating up on their skill to accumulate advert income.

GamesBeat: You will have to make a giant wager in order to doubtlessly construct a brand new, fascinating enterprise that sits alongside Excel or no matter. You’ll be able to’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 challenge was large enough that folks may care about it. Or we would depart a giant 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 games and gamer tradition. This was going to develop into one thing extra essential in the world.

Fries: I feel that’s one thing that a few of the evangelists introduced in, folks like Seamus and J Allard. We had been already making an attempt to push that viewpoint as properly inside our sport publishing enterprise. There was loads of pressure, as a result of the Robbie and Mitch aspect, the gross sales and advertising aspect, they stored making an attempt to make the platform–properly, can it’s about greater than games? And I’d say, “You don’t perceive. Games will probably be the largest media in the world, and also you say you need it to be about greater than games?” They’d say, “Yeah, we don’t actually get the sport factor. It looks as if this area of interest factor. Can it play motion pictures? Can it play music?”

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

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

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 must be appreciated, and never essentially handled the means they had been by the huge console firms.

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

Above: All of the games that shipped beneath Ed Fries’ decade of Microsoft Recreation Studios management.

Picture Credit score: Ed Fries

The query for us was, ought to this field be about all the nice issues which might be taking place western sport growth, in PC sport growth? Can we deliver that to the console world? Or does that imply–once we attempt to try this, does that imply we simply don’t perceive the console world? After we talked to the press, particularly the console press, they might say, “Who’s your Mario? Your games look darkish and gritty, not brilliant and colourful like console games.” And what that meant was they didn’t look Japanese. Internally we didn’t actually know whether or not we must always belief our guts as western PC sport builders and check out to deliver the finest content material we knew how to make, or did we have now to change what we had been making in a way as a result of this viewers was one way or the other basically totally different from the folks 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. Actually, it turned what was good about Xbox. We weren’t precisely like one other PlayStation or Gamecube. We represented a distinct philosophy of gaming, a distinct fashion of games. In some methods we represented the place games had 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 just one that mattered?

Fries: Nicely, in case you look–Flight Simulator. Age of Empires. There’s a plaque hanging in my workplace that someone gave me when Age of Empires went over 15 million copies offered. After which Halo. Essential games. However a lot of different games that had been enjoyable too, that perhaps weren’t the largest sellers, however I’m pleased with them. Crimson Skies from the FASA guys is a sport I believed 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 the games on there. It appeared like 112 games.

Fries: There have been already folks this morning after I left–they had been posting, “Hey, they unnoticed this one!” They might have missed a couple of. However Gears of Conflict 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 permitted a few of these games with such excessive potential, you additionally had to reduce so much. There have been occasions when Microsoft had to shave again the variety of builders engaged on games.

Fries: Yeah, that’s after I left.

GamesBeat: That was the battle of–give us larger hits, however do it with fewer folks. You had to watch your prices, otherwise you had been advised to watch 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 alternative at the time. However the largest mistake we made was that the field was by no means 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 elements in their PlayStation, making them smaller to the level the place it’s virtually a PlayStation on a chip.

We couldn’t try this. For one factor, we had a tough drive. Onerous drives don’t get cheaper. They only get larger. They nonetheless value, 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 means we may combine these elements collectively to shrink the machine. So positively on the {hardware} aspect, we had been dropping cash.

In the meantime, on the software program aspect, which was my enterprise, we had been additionally dropping cash. This can be a pressure that occurs even at Sony. Possibly not at Nintendo, as a result of they’re actually good at making games actually cheaply. However once you’re doing first celebration, you possibly can solely promote by yourself console. Are you doing it to earn money, 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 will be my response. However they didn’t like to hear that. I’ve talked to Shu Yoshida at Sony. When he was operating first celebration he confronted loads of the similar conflicts.

Above: Staff Ninja’s thanks to Ed Fries.

Picture Credit score: Ed Fries

It was virtually like a take care of the satan in a means. After we agreed to do the Valentine’s Day Bloodbath, once we agreed to launch this console, after which the entire firm would go away 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. Swiftly, hey, this appeared actually good. It was actually widespread. We had been getting a lot of press. How come you’re not utilizing Web Explorer? How come you’re not operating Home windows? All that stuff got here dashing again in. After which after all there have been the precise prices of the challenge.

You already know this higher than anybody, however that was loads of what dictated why we did Xbox 360, how we did Xbox 360, why we reduce the lifetime of the first 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 center of 360 planning.

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

Fries: I’m laughing as a result of I bought to see Peter Moore final week. I’ve a Peter Moore story, however over the years I’ve began to surprise if it actually occurred, or if I simply imagined. Once I bought to see Peter final week I requested him about it, in a means that may 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 had been going off to meet with Steve Ballmer about Xbox Stay. We had been updating him on Xbox Stay and what was happening there. Ballmer, who’s a really excitable man, was simply getting an increasing number of excited, extra enthused about this Xbox Stay factor. It’s going to be a subscription. All these folks can pay a recurring payment. He’s getting an increasing number of excited sitting there at the desk. He begins to do the math 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 could have in the center 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 one had completed one thing like Xbox Stay. No one knew what the income potential of that was going to be. It actually was one thing that turned issues round for Xbox as a challenge so far as getting cash.

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

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 means in 2004. I used to be turning 40. I’d been at the firm virtually 20 years. I made a decision it was a very good time for me to depart.

I wasn’t certain what I used to be going to do aside from elevate two boys. It was really a good time to depart, as a result of I used to be an enormous Blizzard fan, and that was the summer time World of Warcraft got here out. I bought in a guild with a bunch of my outdated buddies from my group. Numerous them had children. We might 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 bought sucked into an increasing number of stuff. Individuals contacted me and mentioned, “Hey, are you able to come assist us out with this sport firm we’re beginning? We’d like an advisor. We’d like a board member.” I began doing an increasing number of of that. I began this loopy firm to 3D print World of Warcraft characters. That was enjoyable.

I assume to me, what I cherished to do, and I nonetheless love to do, is simply work with sport builders and check out to give them the assets they want to deliver their concepts to life. As a gamer, it’s a means to get extra cool games to come out.

Xbox

Above: Microsoft’s original Xbox.

Picture Credit score: Pc historical past

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

Fries: Yeah, that’s what I’m doing much more so at the moment. Now I’ve, most likely for the first time, a full-time job. Three years in the past I used to be approached by the guys at PUBG Corp in Korea. PUBG was taking off they usually had been methods to get linked with builders in the west. They requested if I’d begin a enterprise fund. I mentioned I’d do it if I may do it my means. They needed to know what that meant.

I proposed making loads of comparatively small investments, $500,000 every, in loads of sport firms, 50 sport firms, with the aim of connecting the founders of all 50 firms collectively to type a neighborhood the place they might all share and assist one another to achieve success. That’s 1Up Ventures. I’m the solely full-time worker. My part-time accomplice is Kelly Wallick, who it’s possible you’ll know runs the Indie Megabooth and has made it attainable for indie builders round the world to get into huge commerce reveals. We’ve been operating the fund formally for two and a half years and made 36 investments thus far. We’re properly on our means to 50. We’re beginning to take into consideration 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 properly, frankly.

GamesBeat: That brings us up to date, largely. Does anyone have questions? For those who 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 speak, so I apologize to the non-VC folks right here. I don’t like the names for levels. I simply use a greenback worth. We like to make investments sub-$20 million valuation. That’s as a result of we solely make investments $500,000. Greater than that, we’d have such a small share of the firm. We by no means lead. We’re at all times coming in with a consortium of different traders.

In fact the key one is the lead investor. At this level we’ve co-invested with each main lead investor in the sport enterprise. We’re notably shut to a couple of of them. Bitkraft, for instance, is a detailed accomplice of ours. However we’ve invested with everyone. Usually I inform people who if they’ll get one among the lead traders , that’s normally the first step to getting us concerned.

Ed Fries

Above: One in all many recollections of Xbox that Ed Fries stored for 20 years.

Picture Credit score: Ed Fries

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

Now the rounds are fairly aggressive, really. Thankfully we’ve been round for some time and we have now a very good repute. Individuals have a look at all the firms in our portfolio which might be a part of this neighborhood and say, “Hey, I need an opportunity to work together with Raph Koster each day.” Or Robin Hunicke or whoever. We centered on variety from the starting. Greater than a 3rd of our firms have girls founders or co-founders. That’s additionally very engaging to startup builders.

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

Fries: Yeah, and that’s not even counting the crypto ones now. Now there’s most likely 100 extra which might be crypto funds making an attempt to make investments in games. That’s an entire different factor.

GamesBeat: A few hundred firms making an attempt to make investments in games.

Fries: There’s some huge cash for sport builders on the market now. A part of it’s that the world is altering. For those who 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, simple to get. Advertising isn’t what it used to be. After we did advertising, loads of it was tied to distribution. It was shopping for endcaps in shops. It was operating advertisements in newspapers and issues like that. Now advertising is getting some streamers to play your sport, one thing like that. It’s essential, however it’s one thing that just about anybody can get to with somewhat assist.

That leaves the last factor, which is financing. Enterprise is stepping in an increasing number of, funding larger and larger sport tasks. I actually suppose it’s going to be an alternate means that merchandise come all the means to market in the future.

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, after I speak to traders, I don’t struggle about it being hit-driven. In a means it’s. Each huge writer is constructed round a couple of franchises which might be tremendous essential to them. However what I say is that the means to strategy that’s with a broad portfolio. Our technique is ready up in order that we are able to make investments throughout the world in any sport firm. For those who’re shopping for into our fund, not to make this sound like an advert, you’re going to get a part of 50 bets in the sport enterprise. Whereas in case you’re a lead investor–I’m glad they’re there. I really want 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’ve to take board seats and issues like that. There are fewer investments they’ll do.

For those who’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 operating a writer or a enterprise fund, to me it’s about variety. Variety of genres, variety of applied sciences, variety of areas, variety of talent ranges. I like working with individuals who have 25 years of expertise, however I like to take a couple of dangers on up and coming new folks too. That’s how I have a look at our portfolio. Making as many alternative sorts of bets as attainable and hoping that one, like Splitgate, will come via for us.

GamesBeat: Do you’re feeling like that is fulfilling, but additionally fulfilling in a distinct means than once you had been at Xbox?

Fries: I get out of it what I bought out of it again then. I get to spend my days speaking to sport builders, speaking about games, which I like, and discovering methods to assist them get the assets that they want to do the work they need 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 games cross your desk. What separates the good ones from the dangerous ones, in your opinion?

Fries: You already know, games are concepts. It’s humorous. I bought 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. However it was a really good electronic mail congratulating me on the 20th anniversary of Xbox, which was final evening. One in all the 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 games greater than absolutely anything.

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

The tasks I’ve seen which might be unhappy are the place the workforce itself doesn’t consider in it. After they don’t consider in it, it’s by no means going to achieve success. I’ll speak to anyone. I like to hear what they need 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 area with a automotive, one thing dumb like that. [Laughs]

GamesBeat: Wasn’t Psychonauts one among the calls you had to make? At this time they bought nominated for the Recreation Awards, sport of the 12 months.

Fries: It’s possible you’ll not keep in mind fairly proper. I used to be a giant fan of Psychonauts. After I left they cancelled it. I went and labored with Tim to attempt to assist get Psychonauts completed. And now, 20 years later, Microsoft and my outdated group went and acquired Double High-quality. They kicked them out and acquired 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’ve to be previous 25 studios now, and who is aware of how many individuals.

Fries: Once I left we had 1,200 folks 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 bought into the enterprise, however then didn’t actually measurement it in addition to it may have been sized. With these 1,200 builders you had, you had been going up once more 2,500 at Sony.

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

GamesBeat: They don’t appear to be beneath that constraint at the moment. They’re shopping for as many as they’ll. It looks as if they’re lastly freed from the notion that in case you add right here, you could have to reduce elsewhere.

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

Above: Commemorating the 20th anniversary of Xbox.

Picture Credit score: Ed Fries

Query: I hoped you possibly can speak extra about the way you assist builders to share info with one another via your fund, serving to them resolve one another’s issues.

Fries: 1Up Ventures is definitely primarily based on one other group that I used to be a part of for about the final dozen years, began by a neighborhood indie developer. I’ve to watch out what I say, as a result of this can be 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 gaggle of 50 sport builders. I bought grandfathered in, I assume, as one among the 50. The group’s been round for greater than a dozen years, began simply as a mailing record. As a result of it was capped at 50 it meant everybody knew everybody else. There weren’t any folks on the mailing record you didn’t know. It centered on folks assembly one another in individual. Each E3 or GDC or occasions like that, no matter subset of the 50 that had been there would get collectively for lunch or dinner. Building private relationships with folks.

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. You will have to have that belief stage first. As soon as the belief is there, then folks open up and wish to assist one another. A number of actually huge sport firms that you just guys know have grown out of that original group, and I hope we’ll give you the chance to say the similar factor for 1Up.

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

Fries: I most likely know extra about games than most of the different enterprise guys that compete towards. I’ve sat via hundreds of pitches since again in the Xbox days. I really feel fairly snug games in growth, once they’re early, and having 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 most likely the factor I’ve greater than something.

I’ve one other accomplice, 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 when it comes to coping with sport builders and making bets on games, I really feel like I’m fairly good at that one.

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