Xbox Scarlett At E3 2019: Phil Spencer Talks Disc Drives, Future Generations, And More

"I actually never really need that customer to go buy a new piece of hardware."

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Now Playing: New Xbox At E3: Everything We Learned About Scarlett

Microsoft finally announced its next-generation console platform, Project Scarlett, at E3 2019. We know it's coming in Holiday 2020 with Halo Infinite as a launch title, but there are still a lot of unanswered questions about the console and the wider thinking behind it. Xbox boss Phil Spencer sat down with Ian Sherr of GameSpot sister site CNET where he shared new insights on the upcoming platform.

Starting off, Spencer confirmed that Project Scarlett will have a disc drive. He explained that it was important for Microsoft to respect the physical purchases--of games and media--that people made in the past. "What we know is physical media for many people is still where their library is," he said. "We're obviously leaning into the compatibility across all of our generations in a big way."

The only reason this is news is because Microsoft is experimenting with an all-digital Xbox One S model that features no disc drive. Some people naturally wondered about if the new Project Scarlett will have a disc drive, and now it's confirmed that it does. It's also confirmed that the PlayStation 5 will have a disc drive.

It is undeniable that digital is taking up a bigger and bigger share of the games industry. So for those who no longer use physical media, the all-digital Xbox One S--with its lower price point thanks to its lack of a disc drive--may be an attractive option.

Moving on, Spencer responded to whether or not he thinks the Project Scarlett will be the final console from Microsoft. "Honestly, I don't know. I've been around long enough to know that there have been multiple 'this is the last generation.' That's not a new meme that comes out," he said.

Spencer pointed out that, despite the rise of streaming in music, film, and TV, that hasn't slowed down the acceleration of physical hardware. "The number of compute devices around us hasn't gone down; it's gone up," he said.

"Different people will say different things on this, but the truth of the matter is that the best way for you to play a high-fidelity video game for years is going to be with a local device," he said.

Also in the interview, Spencer said Microsoft hasn't finalized a price for Project Scarlett as of yet. He said there is "still stuff we work through and cogs and everything else" before Microsoft announces a price point.

Spencer also spoke about how Microsoft doesn't necessarily need you to buy Project Scarlett. The real money is made in software and services, Spencer pointed out. So if you're already invested in the Xbox ecosystem, say if you already own any of the Xbox One family of consoles, Microsoft isn't overly concerned about if you upgrade to Scarlett.

"I actually never really need that customer [who already owns an Xbox One] to go buy a new piece of hardware," he said. "The business is around software and service growth. That is the profitable part of the business; selling the hardware is not the profitable part of the business."

Microsoft already has Xbox Live, which generates millions of dollars on a regular basis for Microsoft thanks to its monthly subscription price. The company also has Xbox Game Pass, another subscription service that gives players access to a growing catalog of games. This service recently came to PC, while an Ultimate version that gets you Xbox Live Gold and Game Pass was also recently introduced.

"This is a little bit why we've backed away from the race on how many we can sell or announce the the sales of as many consoles as possible," Spencer said. "Not that that's immaterial; I'm not at all trying to say that. But the real root of the business is how many customers are engaged in your service. How engaged are they? And can you keep that number growing?"

It's been reported that Project Scarlett is the name of Microsoft's next-generation console strategy, instead of a single console. The system Microsoft talked about at E3 is reportedly the high-end model, codenamed Anaconda, while a lower-spec version, Lockhart, is supposedly also in the works. However, Spencer doesn't touch on this speculation in the interview.

Go to CNET to read the full review.

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