New Zynga Chief Leaves Hole at Microsoft Ahead of Xbox One Launch Don Mattrick's abrupt departure and a possible impending reorganization are among the challenges facing Microsoft's entertainment division.
By Brian Patrick Eha •
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Microsoft's head of interactive entertainment, Don Mattrick, has left the software company to take the top job at social games maker Zynga, leaving his former division potentially vulnerable in the months before a major new product launch.
As we reported Monday, Mattrick was named to replace Zynga's co-founder Mark Pincus as chief executive starting July 8. For the time being, Microsoft chief executive Steve Ballmer will oversee the entertainment division, but the company is expected to look for a new division chief ahead of the November release of its next-generation gaming console, the Xbox One.
Mattrick brought success to Microsoft's video-game business, helping the Xbox Live network of players grow from 6 million to 50 million active members. He joined Microsoft in 2007 after many years at Electronic Arts, the company that in 1991 bought his video-game startup, Distinctive Software, for $11 million. Mattrick founded the startup when he was only 17 years old.
While Mattrick's combination of business vision and passion for games is hard to beat, it won't be difficult for Microsoft "to attract somebody who knows how to manage a fairly mature gaming business," says Van Baker, an analyst who covers Microsoft for research firm Gartner. "But, obviously, it needs to be done fairly quickly."
Related: Zynga Layoffs: What Happens When Startups Grow Too Fast
A bigger threat to a successful Xbox One launch is a major reorganization of Microsoft's departments, rumored to happen sometime this year. These speculations are looking more and more substantial, Baker says. It appears that the gaming division, which has always had a great deal of autonomy, may be folded into a larger devices division that will include any hardware Microsoft produces or sells. "With the rumors being as rampant as they are, and with Microsoft's challenges in the mobile space, it's more likely to happen sooner rather than later," says Baker.
If Microsoft moves forward with the reorganization, then it could make finding a competent replacement for Mattrick more challenging. "Nobody's going to want to come into that situation, where they become just a piece of a bigger business unit," Baker says. Mattrick's departure comes at a bad time for Microsoft, as it's currently trying to placate gamers dissatisfied with its new product. When the company announced at the Electronic Entertainment Expo that the Xbox One would require an internet connection to work and that it would be "always on," gamers were outraged. Last month, the company was forced to drop the feature, as well as digital rights management technology that would have prevented players from sharing or reselling their used games.
"There are a lot of questions around how committed Microsoft is to this [gaming] business, how well do they understand it," Baker says of the company's remaining senior management. Under Mattrick's leadership, Microsoft's most recent gaming platform, the Xbox 360, became the top seller of its generation of consoles, which includes the Sony PlayStation 3.
Still, because the Xbox has such a large user base and the transition from one generation of console to another happens slowly, Microsoft has time to correct any problems that might drag its new system down, Baker says. "I don't think they've created any problems with the [Xbox One] that aren't easily fixable," he says. If gamers complain, Microsoft "can easily point a finger at Mattrick and say, 'He did it, and now we're fixing it.'"
