Microsoft Gaming's CEO says not every video game needs to be a movie

• Phil Spencer, Microsoft Gaming's CEO, said not all IP needs to be adapted into new mediums.
• Adaptations should make sense as creative outlets, rather than something that "has to get done," he told Variety.
• Part of assessing what IP should be adapted is accepting the possibility of failure, he added.

Video games seem like veritable gold mines, given Hollywood's penchant for betting on established IP. Screen adaptations are working with familiar stories and can often count on built-in audiences.

But the CEO of Microsoft Gaming said not every game needs a second life on-screen.

"The video game business is successful by itself. It doesn't need this outlet," Phil Spencer said in an interview with Variety when asked if he thought there was Microsoft gaming IP that shouldn't be adapted.

"You've got to start with a partner who understands our team and the story of that IP and then letting them work through the process," Spencer said. "That's my only barrier: let's never turn this into something where it has to get done, every franchise has to have a game or a movie or a TV show, and it becomes more like licensing. It's got to be about the creative outlet that linear media offers for our franchises."

Adaptations have become increasingly common in the last half decade — the "Sonic" franchise crossed the $1 billion mark, doing well for Sony, the critically acclaimed "The Last of Us" began its second season on HBO Max just a few days ago, and "Until Dawn," tenuously inspired by its horror-game predecessor, is dropping later this month.

Microsoft itself recently scored a big win with the box-office dominating "A Minecraft Movie" — which borrowed its aesthetic, if not necessarily the details of its plot, from the hugely popular sandbox game of the same name.

Microsoft paid $2.5 billion to acquire Mojang Studios, the company behind Minecraft, in 2014. The film adaptation has rocketed up to become the second-highest-grossing game-to-movie adaptation of all time, sitting just beneath "The Super Mario Bros. Movie."

Porting video games to film or TV has met varied success, including among projects that drew from Microsoft-owned IP — "Fallout," which found a home on Amazon, reviewed well and boasted 65 million viewers within the first two weeks of its release, while "Halo," widely disliked by many fans of the first person shooter, petered out after airing on Paramount+ for two seasons.

So, going forward — how exactly does the tech giant plan to calculate what IP is worth the risk? First, Spencer said, comes accepting that the "hit rate" for success isn't going to be "100%."

"So then when you look at this and you say, OK, these kind of opportunities of a place that we're not native as creators, we build video games, I really start from, does the team have a unique point of view around what they want to get done?" he told Variety. "Have they found a partner that really understands the franchise and the core of what these worlds are? And then support them."

Spencer, for his part, said he's glad the gaming industry is being recognized as a medium with strong characters and storylines that can be compelling enough for movie studios to believe they'll resonate with entirely new audiences. The relationship between platforms has changed drastically, he added.

"I think movies went through books, when you think about things like 'Lord of the Rings,' and then they kind of moved into comics with the whole Marvel and 'Batman,' all of this," Spencer told the trade publication. "And you really see that industry turning its view to video games, because they have a large community, and the stories are actually rich and deep enough. And I love that."

And though the change is exciting, and Microsoft certainly plans to continue exploring opportunities in adaption, Spencer said he wants the company's gaming arm to continue prioritizing the medium it was named for.

"Now, we can build worlds that can support these things showing up in traditional media, I think that's awesome," he said. "But I'm really trying to keep us focused on being a great creator of interactive entertainment, video games, and then if these other opportunities show up, great. But we start most IP, almost all of our new IP, with, how is it going to play?"