Obsidian, and why Xbox's acquisition strategy stays out of the way - IGN

Obsidian, and why Xbox’s acquisition strategy stays out of the way – IGN

When Feargus Urquhart entered a 2018 pitch meeting with then-Xbox Senior Director of Business Development Noah Musler, he thought he was pitching Avowed. But what he really pitched was all of Obsidian Entertainment.

They ate breakfast at that year’s E3, just after the Xbox announced that they would acquire Undead Labs, Playground Games, Ninja Theory and Compulsion Games, as well as establish The Initiative. At the time, Urquhart was not even aware of the industry-shaking news. He was, he says, “connected to his own stuff”, focused on making Avowed look as appealing as possible to people like Musler who could potentially help Obsidian get it out in a few years. He entered the field for Avowed. Musler responded by suggesting Urquhart repeat his pitch again … this time in a larger room, with more Xbox people listening.

It was not until the middle of that week that Musler called back to Urquhart and told him that what he was really selling the Xbox on was to acquire the entire Obsidian, the studio he had been leading since 2003.

Obsidian was born out of the ashes of Black Isle Studios, which gained fame through games such as Icewind Dale, Baldur’s Gate, the first two Fallout titles, and Planetscape: Torment. The closure of the Black Isles in 2003 came as a result of financial problems at the parent company Interplay. Obsidian was founded shortly after and continued with 15 years of independent success with games such as Pillars of Eternity, Neverwinter Nights, South Park: The Stick of Truth, Star Wars: Knights of the Old Republic 2 and Fallout: New Vegas. With such a history and no financial need for a parent, why get around at all?

According to Urquhart, the acquisition of a giant like Microsoft was a leap of faith. But what ultimately sold him on the idea were two things. The first was the content of what Xbox presented: they wanted to let their acquired studios “be who they are” and retain their creative freedom and studio culture, largely unaffected by the Xbox mandate.

Creative independence after the acquisition can, however, sound like a high, incredible order. Why would anyone trust a huge corporate parent like Microsoft to stick to that one, two, five or ten years down the road, especially in an industry where smaller companies are devoured daily? But Urquhart says the other component that convinced him was the people who put him: he already knew Matt Booty well, and Musler too – enough to have faith in their promises. And then there was Phil Spencer.

[Phil Spencer’s] reputation was just someone who was authentic and someone who is not BS and loves games.


“I did not know Phil Spencer well at the time, I probably only talked to him once or twice until that point,” he says. “But what’s so interesting about Phil is that he’s this – I do not know. I do not want to say ‘persona’ in the end, because he is Phil Spencer and because he runs all Microsoft games. But now I know him , and even what I knew [about] him then, his reputation was just someone who was authentic and someone who is not BS and loves games. And that was the confidence. “

The three of them together convinced Urquhart that he would bring Obsidian into a kind of “new Microsoft”: one worth trusting.

The “new Microsoft”

Urquhart’s outward impressions were shrewd: he got a first-hand look at a transformation that was going on within the Xbox that, according to Mary McGuane, had lasted much, much longer than the public has been aware of.

McGuane is currently studio manager at Xbox Game Studios for Obsidian, Double Fine and inXile, but she has held a number of roles during her over 20 years at Microsoft. That experience has made it possible for her to see this transformation take place in the first place. In 2018, she served as Chief of Staff for Xbox Game Studios, which earned her a spot on the front row of its acquisition campaign. As she says, the Xbox shift did not begin in 2018, but far back in 2014, with the acquisition of Mojang. That effort was led by Matt Booty, who pushed for a completely different integration strategy.

“Before [Mojang], it was: you’re part of Microsoft, says McGuane. “One day you will be [part] in this studio, the next day you are completely Microsoft. And it had … varying degrees of success, I must say. So with Mojang, we took an approach that we like to call minimal integration, where we looked at the things we really needed to have fully integrated: and it’s like IT stuff and security policy, that kind of thing. But then we really tried to create stability in these studios so as not to make the acquisition something where the whole studio lost focus, where the studio was now trying to come up with this thing called Microsoft. “

A look at Minecraft today is proof of how well it went for the Xbox. McGuane says it was Minecraft’s success that enabled people like Booty and Spencer to advocate that approach broadly and build more confidence in each success. And the gaming giant has taken the same tactics over and over again with its acquisitions since then, encouraging them to focus on creating games with creative independence and using Microsoft’s enormous resources. Studio leadership is encouraged to collaborate with other studio managers and Microsoft executives and compare notes on games, production, people, and culture. This makes the Xbox more focused on established teams with consistent internal cultures, solid merits of games and IP and veteran leadership. After all, giving so much creative freedom to a studio that does not know what to do with it would ultimately be detrimental to the strategy.

However, independence does not mean isolation. McGuane says that in the case of Obsidian, for example, she talks to someone in the studio every few days, and there are connection points in all Xbox-owned studios. It is not, she says, that they close the door and the Xbox knocks once a year to get what it owes.

In return, get Xbox games, of course. But it’s not just after bestsellers. By easing the pressure of having to fight for publishing agreements after publishing agreements, McGuane says that studios like Obsidian can, if they so wish, run smaller projects alongside their larger efforts. Grounded and Pentiment are excellent examples of this, where Xbox’s safety net helped the developer to juggle multiple balls at once. Grounded’s early asset success was significantly enhanced by Game Pass and Xbox marketing, giving Obsidian more time and energy for Pentiment. And both games will help The Outer Worlds 2 and Avowed along the way. For the Xbox, all of this helps fill the Game Pass.

Although Obsidian has been part of the Xbox house for almost four years, its internal project lineup still looks quite similar to what it did when it was first acquired. But it’s OK. McGuane tells me that Xbox is playing the long game with not only Obsidian, but all its acquisitions. She says it is not interested in throwing out a giant game per studio and then throwing them aside. Rather, it’s all part of a bigger picture, to build a sustainable creative infrastructure that will still do new things years from now, built from ideas that have not even been dreamed up yet.

“My hope [five years from now] would be it [our studios] feel as supported as they do today, that they [creatives are] still be able to make the games they love, says McGuane. “Study staff are excited to make these games, to get them in the hands of the player – and that it supports all the strategies we have five years from now, which I think will be some of the strategies we have today. But for me, my hope is that the studio will always feel the same level of support and the same creative freedom. ”

Obsidian, but more

Which brings us back to Urquhart, which has now had four years with the Xbox to see if the company would deliver on its big promises of freedom. While it seems incredible that almost nothing has changed on Obsidian beyond the support networks that McGuane describes, Urquhart insists that Obsidian for the most part is still Obsidian.

There are some changes of course. It has gotten a little bigger since (from about 170 to 240 employees), and covid-19 shook up everyday life as it did for every studio. But, he says, Obsidian has been largely unaffected; down to small details, like its 401k, health insurance and payment system. In fact, the biggest change Urquhart can point to is, he says, a sad one: he had to learn a little more about how the finances of such a large company worked.

In addition, Urquhart has observed a huge improvement in a particular ghost from its own previous relationship with the Xbox: it has lost its previous tendency to force developers to work with certain types of technology that it is trying to operate. Like, say, Kinect.

Pentiment – Xbox and Bethesda Games Showcase 2022

“Kinecten is an example of something that became a requirement, [even for us]”he says.” We made a game for Microsoft back in 2011 [likely its cancelled RPG, Stormlands], and that was when Kinect was incredibly important. And there were many things where they wanted Kinect to be more – Kinect was cool, but how much of it really needed to be a game interface? That was one of the real questions. So it was that feeling of the forced nature of things. I hate to even say this, but I’m just going to say, [it was] one of the things that was on the lists of things we had to [have].

“So we did a role-play and someone had this idea, and you think it was an idea that should have just been removed from the first list. The idea was that you’re playing the game, and you’re not feeling well, but your friend comes and gives you a back massage and it actually gives you more health. We laughed uncomfortably … and then it did not come off the list. “

Of course, Xbox still drives new technology with Microsoft, the most obvious of which is its cloud aspirations. But these efforts are now more suggestions, and generally combined with significant support from the Xbox itself, to implement where and how developers find a fit. Urquhart personally is enthusiastic about the possibilities of the technology, especially the ways in which mobile cloud games can allow Obsidian games to reach people who cannot afford a console or advanced PC. And then there’s the support Obsidian receives from Xbox’s user research team, which helps studios better understand how people play their games and how they can better reach those players in the future.

With Pentiment and Grounded’s complete release imminent, Obsidian turns its attention to The Outer Worlds 2 and Avowed – but also to its long-term future. There is no clear set of bullet points for what makes an Obsidian game, says Urquhart, despite the studio’s penchant for RPG and love of storytelling. But he is particularly excited about the foundation Pentiment and Grounded allowed Obsidian to continuously juggle both large and small projects at the same time. Urquhart will not give a mandate that the studio needs a certain number or type of game at a time, but he likes that his most senior colleagues can take a break from bigger games and stretch their creative muscles if they want. Working with giant RPGs day in and day out can be tiring after all – and Obsidian’s largest team, he says, often learns new things from their smaller, more adventurous projects.

Every time we have to say ‘How do we do it better? How do we put something more in the world?


Although it lacks a specific formula for the future, Urquhart says Obsidian’s plans are somewhat about answering the question: what do RPG players want? And how can Obsidian propel the medium forward?

“Every time we have to say, ‘How do we do better?’ How do we put something more in the world? How do we give [players] that emotional reaction? That where they lost a weekend to something we created? ‘… It’s just always thinking about how to make that RPG experience more for someone, and not just more, but really something that they appreciate more than what they played last time. “

The fact that Xbox not only supports this approach, but actively encourages it, seems to prove that the acquisition experiment works for both parties. With Pentiment and Grounded 1.0 imminent, we are now ready to see what fruit such a collaboration can bring.

Rebekah Valentine is a news reporter for IGN. You can find her on Twitter @duckvalentine.


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