The Information's TITV
00:15:13 · Bing Gordon
[00:15:13] S2: Well, let's see. I became digital first. You know, I grew up analog first, but there's a generation, two generations younger than me that grew up always digital, And we we just see the always digital generation feels presence in in virtual worlds. You know, I I I grew up reading books. My my metaverse was books when I grew up. But you know, we're in a battle to create this sense of presence through screens. And I do believe we're gonna have two kinds of agents going forward. There's gonna be the if this then that anonymous agents who are ephemeral, come and go, who are basically the equivalent of a light switch in the house. And then there's gonna be agents with personalities and memory, I think probably dedicated to you and me, we're gonna have our own agent, we're gonna have a relationship with them, they're gonna remember everything. And one of the things we found out in games that people like games better when they feel like the game likes them. People like apps better when they feel like the apps like them. We like our e commerce better when we feel that the e commerce system likes us. Right. So we're going to be in the business of tuning personal agents that have affinity with us and we've learned a lot in the history of games about how to create affinity with characters, probably The Sims was the most sophisticated ever and I was delighted to see that the understanding of the affinity and social math in The Sims was highly expert among a gender that some people think don't like math. So the math of social, we had people connected, we could actually see that teamwork and cooperation trumps competition. I don't know if I can use that word anymore. That beats competition. And they can see it, it's personality based. And in the end, I think competition is great for drama and viewing and cooperation is great for building friendships and getting people to come back.
00:17:46 · Akash Pasricha, Bing Gordon
[00:17:46] S0: But what about... Okay, so what about when the friendship, they're going to come back. I hear you. I mean, they're using this agent. They feel like they have a relationship with the agent. When the friendship is with a bot, is that a good thing? [00:18:01] S2: Well, good or bad. I don't know, I've got a bunch of screen names. I grew up hitchhiking and I used back in the days of CB radio. And when a trucker is CB radio and you're finding out if there's a cop two miles ahead or the gas station he's going to is full and somebody else with a made up name, you know, CB buddy tells him something, at that point, does it matter if that's, you know, a human truck driver or an autonomous truck driver? Because in the, you know, in the end, if you've got an ongoing relationship, that, you know, that probably matters. It's really clear that in person that eye contact and you know, you have to be good at this, you've got to do eye contact all day long, but eye contact and body mirroring is pretty important. Maja Matarić at USC could prove that an AI on a screen fires up the brain less effectively than an AI in a three d extension. She started a company called Embodied just because of that. So we do react as humans differently to physical things than flat screen things. [00:19:28] S0: Right. [00:19:29] S2: Which is the fun of robots. So, you know, in the end of my... Are we going to have a robot friend? Absolutely. Right.
00:19:29 · Bing Gordon, Akash Pasricha
[00:19:29] S2: Which is the fun of robots. So, you know, in the end of my... Are we going to have a robot friend? Absolutely. Right. [00:19:37] S0: Right. We can come back to the book and there's... I mean, of these checklist items is worth a conversation, but I want to ask you about the current state of the gaming business. Specifically, I want to ask you about Xbox because they're kind of in an interesting place right now. Microsoft just reported the segment within the company is shrinking. What do you think is going wrong at Xbox right now? [00:20:07] S2: You know, in the history of the games business since the very first generation of console, every six years, we've increased memory in the console by 10x and increased polys per second by 10x. It's been a Moore's law business and we're kind of the end of the Moore's law console business. So we'll see what... I mean, that's the NVIDIA story. It's not Moore's Law. It's a coprocessor. And now we're heading to optics on chip, so Moore's Law has kind of ended. [00:20:42] S0: So they... I content mean, is in the gaming sector is what shrunk, which was surprising.
00:20:42 · Akash Pasricha, Bing Gordon
[00:20:42] S0: So they... I content mean, is in the gaming sector is what shrunk, which was surprising. [00:20:50] S2: Yes. In general, if you're a student of media, you can see that stories are forever and media formats are ephemeral. You know, at Amazon we saw the book business kind of stalled after rapid growth. The TV business is still growing a bit. The music business looked like it was over back in the Napster days and it's come roaring back. But the music business is no longer the prerecorded box music business. You know, I grew up a poetry fan, poetry went away and now it's rock video. So I think gaming, you include gamification is still growing. The game designers are needed almost everywhere else, But these the these AAA games, a little like the movie business, have been over... Overspent and the the minutes are going away from some of the the huge blockbuster games. [00:21:58] S0: Right. Do you think Microsoft should sell off Xbox?
00:21:58 · Akash Pasricha, Bing Gordon
[00:21:58] S0: Right. Do you think Microsoft should sell off Xbox? [00:22:03] S2: Boy, I thought when Satya came in, they were going to sell it right then. I'm a fan of Don Mattrick who ran it for a while and had his ups, huge ups and then a down. And my sense is the only reason Microsoft stayed in the business is because Minecraft was stunning and I think they they believed that Minecraft might be the beginning of virtual worlding heading into VRAR. And you know, it doesn't... The Xbox doesn't exactly fit the core principles of Microsoft. It doesn't exactly sit on Azure. It doesn't exactly save Outlook. And I think Microsoft's never committed to consumers as a whole. I had to talk with Ballmer way back when saying, you should be a, you should reorganize around customers and he went, no, no, we'll never do that, we're a product company And so you end up having product fiefdoms. So it sounds like it [00:23:08] S0: sounds like it sounds like you are seeing a sale coming in sub capacity is is the real redone. [00:23:15] S2: God, the question is who's gonna buy it, you know? [00:23:17] S0: Who do you The [00:23:19] S2: Saudis. I mean, who... You know, if LIV Golf hadn't been crushed, maybe it looked like they had infinite money. I don't know who would buy it. I think probably PE firm would buy it. I think all these things are execution based. Right.
00:23:19 · Bing Gordon, Akash Pasricha
[00:23:19] S2: Saudis. I mean, who... You know, if LIV Golf hadn't been crushed, maybe it looked like they had infinite money. I don't know who would buy it. I think probably PE firm would buy it. I think all these things are execution based. Right. [00:23:40] S0: I mean, so the execution... I mean, this is actually the next thing I wanted to ask you about, is if you look at the execution of these PE companies, certainly there was the EA deal. Now we have the reports that Silver Lake and PIF are looking at. Unity is another report that we've seen come up. So I I guess I'm I'm less curious about whether or not you think these deals are going happen. I'm more curious about what you think these PE firms should do with the gaming businesses to materially change the trajectory that they couldn't have done maybe as a public company, or what would you do?