I think the real problem is businesses have to grow. If most big companies weren’t publicly traded then just being profitable would be enough.
Imagine making enough money to pay you and everyone else in your company a great wage one year, but it being bad because it wasn’t more profit than last year.
I actually can’t believe this is coming from a high level employee at a corporation.
Like we all know this is true, but isn’t it big to hear one of them talking about the insanity of the system.
It’s PR. Anti-capitalist sentiments score well in focus groups.
lol the difference of course being that Phil Spencer is not living on the income of a standup comedian.
Wouldn’t these sentiments lead to expectations and then actual changes in policies?
As long as the policy changes lead to even more profits, then sure.
I like it. I prefer the honesty.
Nobody forced this guy to be a soulless capitalist. He chose his career path. Oh woe is you, Phil. Must be so hard for you. /s
He’s speaking for the rest of the industry that also makes product that tangentally pays his bills. Not all assholes have to be brazen 24/7.
I thought companies made money by selling a product to customers? Hmm, seems like there is some kind of contradiction here, perhaps Phil should look into that.
No. Modern capitalism is about increasing value for shareholders. Customers, quality, morality, etc. aren’t relevant.
Profit, selling games, and maximizing value for shareholders are all fully correlated, to the point of being the same thing at different stages of the process.
Modern capitalism moves away from all three by focusing instead on current-quarter profit.
The perception of profit is a more powerful force than actual profit.
Markets select for profit by simply trimming away the things that don’t make profit.
Boards of directors select for the perception of profit by firing CEOs who don’t provide them with that perception.
These systems are both operating. The companies that don’t make a profit will still die. It’s just that under this system, a company that’s on track to making profit can be redirected by a Board onto a path where they aren’t, because of that second mechanism.
I dunno, maybe stop going public and just sell a decent game?
Phil Spencer, you have the luxury to quit if you don’t like the things you’re being forced to do for money.
Or, you could use your influence to try and push things in a different direction.
But Phil Spencer, you will do neither. You’ll shut up and keep dribbling.
Seriously. Everyone gets the luxury of not having to run a profitable growing business. You didn’t “have” to run that business at all.
And I get that the business maybe “has” to be run that way, because of the way it exists in the economic system it exists in, but I’m definitely taking issue with the language he’s employed here. He’s not a prisoner being forced to run things this way.
You can grow without being hostile and negative. Start your own studios, make innovative games, compete with quality not acquisitions.
Not everybody is suited to management.
you get a lot of publicly traded companies that are in the industry that have to show their investors growth—because why else does somebody own a share of someone’s stock if it’s not going to grow?
I thought the way it was supposed to work was, a company starts out investing in its growth and during this period shareholders get gains from the price of the stock going up, and then when it has maxed out just switch to shoveling the profits into dividends instead? If the industry has stopped growing, I don’t see why there isn’t a path to acknowledging that to investors, what am I missing?
Growth is more valuable than dividends, and there’s always more room for growth in the eyes of investors.
Growth is more valuable than dividends
Shouldn’t that depend on the dollar amounts? Why would $X of dividends be worse than $X of stock growth? And if growth just isn’t in the cards anymore, it would be in reality a worse bet as the companies pour resources into a black hole of false hope and self sabotage seeking something that isn’t actually going to happen.
You don’t pay tax on growth, you do on dividends. For large shareholders a high dividend can be a problem. Even for me, a very small time retail investor, I have to keep a balance of growth (like Apple) and dividend (I tend to use a dividend ETF so I can fairly reliably estimate my dividends) so I can avoid paying tax on the dividends.
That makes a lot of sense. Seems like the way taxes are set up is creating perverse incentives here.
Growth stocks rise more because they carry more risk than steady dividend payouts. In a perfect dividend world, dividends would match growth, but because there is inherent risk in growth stocks there is a larger upswing
There are competing schools of thought in the investment world, and Growth has solidly beaten Dividend investing. Even better, going for a market-weighted global index fund is best.
Sounds like skill issue.
phil spencer explains market discipline
Oh yeah I’m sure the lack of a profit motive would just make games amazing 🙄
Profit isn’t the issue, it’s having to continually show outsized profit growth rates to keep shareholders happy that’s the problem. Look at private companies like Valve for comparison.
Exactly
That’s not what capitalism means, dawg.
