How Microsoft Is Ditching the Video Game Console Wars

Known for the Xbox, Microsoft has been diversifying away from boxy hardware in favor of reaching millions more new gamers.

In mid-2014, Satya Nadella, who had just become the chief executive of Microsoft, ushered the heads of the company’s gaming division into his fifth-floor office in Redmond, Wash. The executives wanted Mr. Nadella to write a $2.5 billion check to buy Mojang, a Swedish company that produced a blocky, pixelated game called Minecraft. Mr. Nadella asked why Microsoft, which was being consistently outsmarted in the console business by Sony, should keep investing in video games. How, he said, did that fit with his vision for a company with a friendlier face that appealed to more consumers? Then Phil Spencer, the new head of Xbox, told Mr. Nadella about Minecraft’s vast world where millions could socialize and where teenagers were encouraged to learn math and science skills. A deal would be the first step of a “a pretty bold vision” to transform Microsoft’s gaming business into one focused on a broader audience, rather than just console gamers, Mr. Spencer said.