Xbox has been making plenty of historic moves in the industry over the past couple of years, including the acquisitions of Bethesda and Activision Blizzard, but it's fair to say some people have their concerns with where Xbox might be heading as a result, despite whatever Microsoft or Xbox boss Phil Spencer might have to say.
In a recent wide-ranging interview with Axios's Stephen Totilo, Spencer highlighted that he and his team's responsibility is "to continue to run a good business so this company continues to support us", and he thinks "we've built a strategy that is supportive of players and creators".
However, he knows the skeptics are still out there, using Xbox Game Pass as an example in the discussion:
"[People ask] when is the Game Pass price is going to go up? 'They're buying all these studios. You know, it's inevitable.' Even though it's been what, now, four years we haven't raised it."
"But it's like, 'You know, it's coming', 'When they are number one, they're going to start doing all those exclusive deals that, like, you know, Xbox has history' and all I can do is is make the decisions that are in front of us and try to be explicit about what our goals are."
Spencer's comments follow a passionate rant from American comedian and TV host Adam Conover that went viral recently, with Conover suggesting that Microsoft and Xbox were trying to "use their massive cash advantage to undercut and dominate the entire game industry".
However, we also heard this week that Microsoft is planning to not only keep Activision Blizzard games on PlayStation, but even add franchises such as Call of Duty to Nintendo Switch for the first time in the future.
What are your thoughts on this? Let us know down in the comments section below.
[source twitter.com]
Comments 34
I think the key difference with Game Pass compared to something like Netflix is the subscription fee isn't the only revenue source to be made from the content offered.
The games are still available for purchase. You have DLC for games. You have MTX for games. The list goes on.
So like Phil Spencer hints at, they don't need to increase the subscription fee in order to account for buying all these studios.
Only time will tell.
@blinx01 Exactly this. There is always 'deals' too to purchase games so you can 'keep' them regardless of Subscriptions too.
Game Pass is a 'consistent' income for MS so they don't 'need' to sell the games at all. It wouldn't 'matter' if that game sold nothing because 25m+ people have already paid for its 'development'. By getting more and more people in your 'eco-system', they are spending more time and 'money'. We still have to 'buy' some games - like Far Cry 6, Guardians of the Galaxy etc and word of mouth from those on Game Pass can help sell to those not on Game Pass too...
Call of duty on switch with gyro sounds good to me. At least for a little while
Adam Conover’s rant was ridiculous. I am starting to understand Microsoft’s logic that Xbox, Nintendo, and PlayStation all play a significant role that should be preserved in the face of Meta, Google, Apple, Amazon, etc. Maybe I’m wrong? I don’t know.
If Microsoft was desperate enough to get more revenue they wouldn't have dropped over $76 billion buying Activision and Zenimax. Even by doubling the monthly subscription, it would take decades to make that back, and that's if everyone stayed. Anybody who thinks that's Microsoft's goal clearly doesn't understand business strategy.
If you want to know what their plan is look at the history of Internet Explorer and Netscape. Microsoft was ruthless in their takedown of Netscape and they did it by attacking at them sideways. That's the reason you don't pay for Chrome or Firefox. Companies like Microsoft don't need to raise prices to be competitive and successful.
Well, Xbox fans are also now sending Phil death threats for not making CoD exclusive. 🤦🏻♂️
Sure, and Xbox live's price didn't increase for how many years and they tried to raise it to $120?
@blinx01 So they don't have to increase the price of gamepass, but increase the prices of MTX or make more of them? How is that any better?
there wont be price increase untill microsoft gaming becomes the number one ecosystem for users imo.
U know I was worried about that with all these new huge studios and games, so that’s good to know then again alot of companies say that then randomly say oh no we need a price hike. So we’ll see. Not to mention Xbox tried to sneakily massively upshot the price of regular gold not too long ago so once again we’ll see.
To be fair he is addressing what has been said around the internet and says "the price hasn't gone up in four years" but he didn't dismiss or deny that it won't go up.
This could even be interpreted as a hint that a price increase will happen especially as he addresses the publisher acquisitions. Shareholders will want their investment security.
The price might go up sooner or later but it’s not like they going to double the price, you can bet, when they start increasing the price, it will be gradual, like a dollar or two every few years to match inflation just like Netflix has done.
Even then, they likely won’t until subscription numbers start stalling. As long as game pass base is steadily growing, they are getting increased revenue from the service without having to increase prices.
I mean one reason they could be keeping CoD on PlayStation and expanding to Switch is to help NOT raise the cost of GamePass. Let them pay full price for games to support said games being added to the service.
One thing they need to start getting tighter control on is the amount of microtransactions that are starting to fill a lot of gamepass content. Take the recent crossfire x for example…nobody wants gamepass filled with games that are really designed to be f2p. I’m also tired of seeing older games still have all their dlc locked on gamepass…we should be getting full versions of things like mortal Kombat and the like
@BAMozzy you do know Microsoft have to pay developers to put their games on gamepass
@Benjiyeboy You do realise that 'developers' get a monthly salary and each 'studio' has a 'fixed' wage bill each month. On top of that, you have the 'monthly' cost (Rates, rent, insurance etc) so the 'cost' to keep open that studio, paying the staff to make games is 'funded' by Subscribers.
Lets say you have 20 studio's, each studio has 500 employees involved in making games and each gets $5k a month (well above average),that $250k on wages. So lets say 'each' Studio has a 'running' cost of $500k a month (That's EVERY developer 'paid' their wages, All the Bills and any 'additional' costs) - that would mean the Cost to keep ALL those studio's making games, every developer paid 'every' month, it costs MS $10m (20 studios x $500k = $10m). Therefore, with '20m' Subscribers paying $10 a month which is bringing in $200m a month is more than enough to PAY those developers.
Therefore, Game Pass has paid those developers, kept those studio's open, paid all their bills so essentially by the time the game releases, its already been paid for by Subscribers -it doesn't 'need' to sell a single copy.
In a 'Sales' based model, you have to make a product 'first' which over 3yrs of keeping a Studio open at (lets say for convenience) $500k a month (12x3x500k) means its already 'cost' them 18m that 'has' to be recuperated from Sales.
Point is, the Subscribers have been paying the developers to make their games, as well as all the other games. I'd look at how much a developer gets. The average is around $40k per year and you can pay a LOT of $40k salaries with 3bn (25m subs paying ~$10 a month = 3bn a year)
@Bleachedsmiles This is the very point why the gamepass business model is actually working. The profit is into DLC and MTX. Day one games will never be integrated with additional content.
Would someone please direct me to a single popular digital subscription or service where prices are declining?
Disney Plus raised prices, Amazon Prime is raising prices again, Spotify raised prices, Netflix raised prices. There is not a single popular service EXCEPT GamePass that has raised prices in the past 2 years.
Why is MS being singled out? They have not raised their prices on GamePass once yet. First, MS isn't even dominating gaming. After this acquisition they are still only the third largest gaming company by revenue. Tencent is way larger still, and Sony is above MS still. So, I don't see what the fear is. Also, even if GamePass raised their prices by $5-10 it is still a way better deal then paying the price of games now-a-days. Remember, games went up in price by $10 US about a year and a half ago, yet GamePass price has not changed.
If people think the price of any popular subscription service is going down or staying the same forever, they are just lunatics.
I am not defending MS, I don't want the price of GamePass to go up. But MS is not the bad guy leading the pack, others started raising prices before MS long ago.
You did try to raise the price of Xbox live gold though conveniently left that out I see 😂
@Kamalen who said anything about day1 games having dlc included? Specifically said older titles. Having the ‘ultimate edition’ of 3rd party games rather than the standard.
Also, games that carry the f2p model shouldn’t be part of a subscription service. Ms didn’t stick halo mp on it…yet put something like cross fire x on it. Nobody here should want to see a trend where every game that hits gamepass is riddled with microtransactions and locked content. Of course there’s always going to be morons that will defend it if that does become the norm. But if ms aren’t careful they’re on the road to their being a bit of a quantity over quality issue
@BAMozzy
Your maths is a little off there, when you say "Lets say you have 20 studio's, each studio has 500 employees involved in making games and each gets $5k a month (well above average),that $250k on wages."
500 employees at $5k per month is $2.5million not $250k
@Bleachedsmiles It is already there. No one is defending or wanting this, but it's gonna be the default. DLC is where the profit is to be found.
price of gamepass is stupid to pay fully for.... let your sub end, buy 2 years of xbox gold, then 1 month of gamepass ultimate and your gold will convet at a 1-1 to gamepass ultimate... 2 years of gamepass ultimate for 135$... i just did this again after doing it 2 years ago....
@NeoRatt the only ones that haven’t raised prices are the ones that are failing or still heavily in the user acquisition phase. Once they hit ubiquity like Netflix, Disney, Spotify, Uber, Amazon, Office 365 etc. prices have ALWAYS gone up. This isn’t a new model, only new in gaming.
@blinx01 That is a good and fair point. They’re definitely using GamePass to bring you into the ecosystem and make the money off DLC, MTX and sales as that is where the money is at. But again that is not a new model. I’d suggest they are nearer Services like Amazon Prime and Office 365 that also allow you to buy products or software outright and in the case of office 365 have plenty of additional upgrades to pay for, the subscription is just the start. I get that the point is getting you stuck into their ecosystem. Regardless every single one of those services has raised their prices.
Also remember when they tried to almost double Gold not too long ago?
What about The Last Oricru? That looks interesting. Sure it is European AA game with limited budget, but it looks like it doing some interesting things with branching story based on your decisions and souls like fights https://youtu.be/vMhypxQrbcA
Of course they wont increase the price for ages, they are buying market share with their wealth and its a clearly a long term investment. They make so much cash form the monopolistic windows platform they can afford to buy almost any buisness and their history is full of such investments and buyouts in smaller market segments.
Ultimately their money is giving us all cheap access to a lot of software and we all gain. As long as it doesnt get too anti competitive, im not seeing any reasons to worry.
Im concerned by their stated desire to shift in the direction of mobile gaming and other forms of monetisation those platforms encourage, but if that becomes a problem in the long run, there are other platforms likely to still serve up what im looking for.
Take the freebies while they are here I say!!
@NeoRatt The difference is that Netflix etc cannot 'survive' without their 'Subscribers' where as MS can.
Netflix doesn't have its own platform as such where they can sell their TV/Movies, sell other Publishers work, sell 'ongoing' content for a single IP or even 'sell' if/when content leaves their service. Its pretty much funded entirely by 'Subscribers'
Game Pass, whilst it is still funded by Subscribers, still sells these games to non-subscribers, still sells other games etc not on Game Pass, still selling 'additional' content (DLC, MTX, Season Pass etc), still have their own store etc.
If your only 'source' of income is the Subscription model, then as costs rise, so the Subscription price has to rise to keep the same 'profit' margin. If you have multiple revenue streams and 'growth' in the Subscriber numbers, you have increased profit margin above inflation so can 'keep' prices competitive and still 'grow' the company too
It’s definitely a legit concern that a company can offer a “too good to be true” offer and then years later raise the price after people are invested in the service. MS is a company and like many here have stated, they are soon going to make money off of PlayStation and Nintendo. They don’t need to raise the prices of their service. Phil Spencer pointed out they haven’t raised it in the last four years, but he did state that all he can do is make decisions that are in front of him. Years from now that decision can be to raise the price.
As an Xbox fan, I have gamepass and I love it. I do think those who just bash MS and Xbox should give a service like this a chance, but I can see their concern about the price years from now when they have 100 million users or so. Companies get greedy. They want to make more money. It’s the nature of how things go.
@themightyant
I think the only reason they tried to double the price of Gold was to push those users towards Game Pass Ultimate, since it's obvious they want to eventually scrap Gold, but can't until they supplement that Gold sub revenue with enough Game Pass Ultimate sub revenue.
Thankfully they realized after the outrage what a big mistake that was.
Nice to see Phil being so explicit about criticisms and his position. Of course the price eventually goes up relative to inflation. And I expect a tier will be added at some point. But I don't expect it will go up just to go up for a long time, and increasing competition will force pricing to remain low for a long time.
@BAMozzy
I still don't see how different Netflix is than MS. MS is a public company and has many businesses that make up the value of their share price. Shareholders will devalue companies that don't have all their businesses making money. So, MS is in the same boat as Netflix.
I don't understand why people think MS has a blank cheque to fund gaming. If gaming was not a successful business for MS, then why do they stay in it when they are always third in consoles sales out of three vendors? Gaming is making MS good money. And that's why they stay in it.
@NeoRatt There is significant difference in their Subscription model - for a start, if you watch a TV show/Movie, they don't really offer 'replay' value, don't generate additional 'income' through sales of additional content (DLC, MTX's etc), generate additional income from 'non-subscribers' buying that content on their platform, through their store so get 'retailer' profits, sell their own 'hardware' and 3rd Party software etc. Netflix has to pay other Publishers to put their movies into their Subscription service but Sony, Nintendo, MS charge other Publishers to release games on their Platform etc.
Its not about 'Blank cheques' its about the 'business' model. MS, like Sony and Nintendo have survived because of the 'sales' model on their Platform and having 'great' content that people want to spend their time and money with. Even without Game Pass, the model was profitable.
Game Pass isn't stopping that side of the business - non-subscribers still have to buy on PC/Xbox. All those 'sales' of content, not on Game Pass, is still bringing in revenue like before. Game Pass adds a 'relatively' fixed income every month, every year instead of fluctuating wildly based on what games release that month and how many people on their platform buy it. They are 'willing' to sacrifice 'sales' revenue for a more consistent revenue stream on top.
Netflix is much more 'reliant' on its Subscribers. If people stop subscribing, it greatly impacts on their ability to make great content - with Games, they can still 'sell' on Hardware and 'great' games will sell. Publishers will still pay to release their games on MS's platform and MS will still get the retailer revenue for all digital content bought in their store, still get Publisher, developer, sales revenue from all their games they make.
Its also a lot easier to subscribe to Netflix for a month, binge watch the series/movies you wanted and cancel for a year until there is 'enough' new content to justify another month to binge watch. Games are often very different experiences that can't be 'binged' and offer many 'reasons' to keep playing beyond just the campaign, reason to keep playing 'every' month so more inclined to keep Subscribed too.
Of course there is money to make in gaming - its the biggest 'entertainment' industry today and growing. That's 'evident' in MS's change of attitude in recent years. Xbox/Gaming was always a 'side' project for MS but now its an integral part of the entire company. That's why you are seeing all the 'investment' MS have put in over the past 5yrs despite a 'few years prior' being on the verge of pulling out of gaming entirely.
@NeoRatt There are many ways its a different model - even if at the 'most' basic its very similar from a consumers perspective -both charge a monthly fee for access to their 'content'.
When you 'subscribe' to Netflix, that's the 'only' money they get from you month after month after month (if you remain Subscribed). When you Subscribe to Game Pass, that's not the 'only' money MS get, they get money from ALL non-subscribers buying hardware/software etc, they get 'extra' money from GP subs who buy Software not available on Game Pass (Games, DLC, MTX etc), get money from other Publishers software selling on their platform etc etc
All I said is that Game Pass brings in a 'fixed' monthly income (by fixed, I mean its a pretty consistent and guaranteed income) that can be relied upon for MS to ensure every Studio is paid their wages and all their overheads are taken care of so they can just focus on making games. Without that, then MS would have to rely purely on Sales to ensure their Studio's are paid every month - which maybe more 'difficult' some months if people aren't spending much money on 'new' games but playing games in their 'backlog' where as with 25m+ paying around $10 a month to 'keep' playing some of those 'backlog' games is bringing in $250m a month to cover ALL their studio's wages and overheads or '$3bn' a year regardless of what 'sales' revenues and additional money we spend due to spending more time in the Xbox Ecosystem.
Yes someone could just buy an Xbox, pay their $15 a month for Ultimate to get Gold & EA Play, and never spend another penny on their Games - but the majority will still want to play games like Elden Ring, Dying Light 2 etc so will 'buy' those, may spend more money on MTX/DLC/Season Passes etc as they haven't just spent $70 on the game etc.
That's why its very different. If MS have 'few' Subs, it doesn't matter because they can fall back on the 'Sales' model which maybe fluctuates more every month and if everyone stops 'buying' their games in favour of Subscribing, its still a 'win/win' for MS as they increase their reach and significantly increase their 'guaranteed' minimum monthly income revenue.
but the expert commenters say the price will go up 😜😜
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