
The UK CMA's recent report on the whole Xbox ActiBlizz deal contained plenty of standout comments, including one relating to Microsoft admitting that Xbox Game Pass can hurt game sales in the 12 months after titles are added to the service. Following this report, the notion that Xbox Game Pass can 'cannibalise' game sales has started to catch like wildfire, and as a result, Microsoft has made a statement on the matter.
In a company response to Eurogamer, Microsoft has again defended Xbox Game Pass, reiterating that the service is viable for the platform, developers and consumers alike. Here's the statement shared by Eurogamer:
"Xbox Game Pass offers gamers and game creators more choice and opportunity in how they discover, experience, and deliver games [...] For gamers, that means providing another option for them to discover games and play with friends at a great value. For developers, that means creating another option for how they monetise their games.
We're focused on helping game creators of all sizes maximise the total financial value they receive through Game Pass. Each game is unique, so we work closely with creators to build a custom program to reflect what they need, ensure they are compensated financially for their participation in the service, and allow room for creativity and innovation.
As a result, the number of developers interested in working with Game Pass continues to grow."
While the Xbox owner doesn't backtrack on those CMA-related comments about game sales, it does reinforce its own stance that Xbox Game Pass is a net positive and provides another revenue stream for developers.
Whichever way you look at it, it's hardly surprising that such a popular service has the potential to hurt game sales - almost 30 million gamers use Xbox Game Pass and will naturally play a lot of games through the service.
Clearly, any such adverse affect isn't changing Microsoft's strategy - a strategy to grow Game Pass by adding compelling content to its library. Let's hope subscriber numbers keep going in the right direction to help Xbox's cause.
What do you make of this statement? Happy to see Microsoft continue to push on with Game Pass? Let us know in the comments.
[source eurogamer.net]
Comments 49
It’s called DLC and MTXs. There is a reason Redfall has a Dlx “upgrade” path. But of course they want to look “weak” so that kind of stuff isn’t going to be mentioned outright.
At this point I would take any statement (especially ones that paint themselves in a negative light) with a grain of salt given how they been trying very hard to make themselves look weak to increase their chances at getting CMA approval.
From an objective point of view, I can see smaller and lesser-known IPs boosting sales overall as the Game Pass presence increases awareness, while larger IPs with more popular awareness can potentially see a hit.
However, I'm skeptical of this. Both, UBisoft and EA offer similar day-one plans for $15 a month, although exclusively on PC at this time. If they felt the potential cannibalization of sales was not more than offset by the revenue they are getting from UBisoft+ and EA Play Premium respectively, they would not be making these offerings.
Also, the recent quote has some interesting phrasing on it, including how they specifically only talk about "base" game sales. We have heard plenty of times in the past that all games also see an increase in DLC and MTX.
Here are some of the actual claims XBox has made in the past:
-[my personal notes in brackets]
Source 1
Source 2
With headlines elsewhere that Game Pass "cannabilizes" sales it will be interesting to see how Microsoft adapts. Funding or outright buying more indie games for Game Pass? Funding more ports of games that were already released a year or more ago for Game Pass? Allowing developers to lock certain features, eg: multiplayer, out of Game Pass? It's hard to say...
@101Force Sales "cannibalization", if it's actually a thing, is meaningless if the payout from being part of the program is higher than the perceived decrease in sales.
If the contract amount for gamepass outweighs the dip in sales then they win. Plus many games still sell dlc, micro transactions, etc.
There are certain games that struggle with xbox sales so might as well take the guaranteed money from gamepass. Indies and japanese games come to mind as games that do not find a substantial audience on Xbox without GP. Persona would not be on Xbox without gamepass because it would not sell enough but the GP contract made it worth it. This is why Square Enix would never take an Xbox exclusive contract for something like Final Fantasy. Sony gives them money and they know there is a massive audience buying the game there. It would take a ridiculous deal from Xbox to outweigh the money from Sony and the loss of sales on xbox.
@Tharsman some good points. Definitely need to take everything with a pinch of salt anyway, but also during these investigations.
But it's important to note that they won't be lying in either case. It's just that before they would have been trying to SPIN it in as positive a light as possible, now they may not be, or will be doing the opposite. That in itself is interesting, and the truth will likely be somewhere in the middle. Take it ALL with a pinch of salt.
Re: Ubisoft and EA. I think it's a slightly different though. For starters they only release a handful of games onto their services each year, and still charge MORE than Game Pass. Whereas Game Pass has hundreds of games a year for less due to economies of scale. But if EA/Ubi can keep you subscribed for a year, they are almost certainly quids in, that isn't necessarily the same with game pass.
But they all know, as with most subscription services (whether it's the gym, Netflix or Gaming) that a large majority of subscribers won't cancel. Once they've caught you the average user will stay subscribed long after they still use the service.
Lets be honest here - of course if your Game is being 'rented' off of a Subscription service, then its bound to affect 'SALES' over that time - even if the game leaves after a year, a certain percentage, probably high if its only a Single Player and been 'finished' by players, that won't purchase - but they have 'contributed' to the income stream for that title.
However, instead of maybe struggling to 'reach' a few million people, getting them into your 'store' to show what you are actually offering and potential to 'sell' extras to - DLC, MTX etc is significantly LOWER.
Hi-Fi Rush for example may not sell 2m and, in terms of Commercial success like Sony use, it would be considered a 'Flop', but could have a 'Bigger' Launch than Hogwarts Legacy in terms of actual Players it attracted in the first week.
Forza Horizon has 'never' sold more than 5m copies per release over their Lifetime. FH3, the last game to rely on Sales as its 'only' income stream, sold 2.5m in the first 6months, yet FH5 had over 10m players in the first week, and surpassed 20m after 7months - that's 8x more people played this, 8x more people that may buy DLC, may buy MTX etc and overall make them MORE money from 'fewer' sales, the many more players who 'contributed' via their Sub fees and the more DLC/MTX sales those extra people bought.
If you have 5m people playing, that's a MAX of 5m DLC's you can sell, if you have 20m people playing, especially those that haven't forked out $70+ and now can't afford/justify spending more on their game, thats better for developers/publishers who want to 'reach' as many people as they can to get them into their Store...
It may impact games like Plague Tale, Atomic Heart etc on Xbox vs Sony, but whilst Sony could sell 10x more, it could also have 10x less ACTIVE players. Maybe they do sell 100k on Xbox, and 1m on Sony, but because of Game Pass, Xbox has 10m players vs Sony's 1m
It may also 'help' games like Hogwarts Legacy sell 'More' on Xbox because people aren't split between spending their hard earned cash on Hogwarts or Atomic Heart, Hi-Fi Rush, Wo-Long or any 'other' game they can play via Game Pass. I know I couldn't afford to spend money to 'BUY' all the games I want to play so some would not get 'bought' and maybe only bought once they are greatly reduced in cost (sales) so profit margins are significantly lower for Publishers/Devs. Most Ubisoft games are NOT sold at RRP, they drop 'quickly' and often half (or less) within a few months so 'Sales' revenue drops quickly for each individual copy. I bet the majority who bought AC:Valhalla, didn't pay RRP so those 9m+ sales weren't ALL at the $70, didn't bring as much 'revenue' per sale as they did in the first week or so...
@themightyant
Well, the charge the same as Game Pass Ultimate, something that goes back to my constant theory that before we see any sort of price increase on Game Pass, we will simply see them entirely remove base $9.99 Game Pass PC/XBox tiers and only offer the $14.99 tier.
Ubisoft can be sketchy (years like these their biggest titles are a mario game that is switch only and a dancing game that is also not sold on PC ... who would play a dancing game on a pc???) but EA does have a busy calendar every single year with high profile sports games getting yearly releases.
Last year alone they had F1 22, Madden NFL 23, FIFA 23, NHL 23, Need for Speed Unbound and Grid Legends, plus The Sims DLC (I don't think that's part of EA Play Premium.) Its not much for someone with a narrative adventure appetite, but for fans of sports and racing games, it's a very robust yearly library.
i was watching a video about how Microsoft is forcing studios on developing their own engines to make their games which make a heavy border on xbox studios and one of the reasons halo infinite release was delayed and ended up a desaster...and how fable also is facing same issues as forza team is forced to use forza engine which doesn't have enough tools to dev a RPG game......this is desasterous ...is MS this stupid
if you have full confidence in your game, then GP probably doesnt make sense. as doubtful MS paying full price.
but without numbers, what MS pays, what counts as someone playing on GP, we dont fully know.
but yes even hardcore fans cant say it doesnt lower sales. but we dont know if mtx etc makes up for that.
I’d be fine without day one releases for first party. I enjoy it, but I’d be fine waiting. My backlog is huge, I have all three consoles, and I don’t spend much time gaming anymore.
However, I see the value to get someone’s attention and keep it with first party releases and monetizing the DLCs afterwards like FH5 and Deathloop.
If they are playing Xbox they aren’t playing anything else. Which is a same. Sony’s first party line up is insane!
I've said it on Push like 3 times but nobody reads any posts they don't like on this topic, but one KEY differentiator in this equation for MS vs Sony is they have core difference in their business goals. MS is looking to simply maintain a stable, profitable line of business in gaming, the long tail of high volume, low margin, steady transactions is worthwhile to them as one function of their many lines of business. Sony and Nintendo are looking to MAXIMIZE sales revenue from their gaming business. Microsoft is simply not as it's not their primary revenue growth driver as it is for the other two. That's a MASSIVE difference in goals leading to massively different approaches. It gives them tremendous leeway in business models not having to achieve maximum profitability in order to meet stated targets. People keep missing that.
If Sony/Nintendo doesn't make X% more per user this year than they did last year, they fail to meet their goals. Ms doesn't have that particular pressure.
@Tharsman To be fair to naysayers, I'm not sure I'd be looking toward Ubisoft as a good example of a company that knows how to make money. It's the company famous for cutting their prices 50% + within weeks of launch that then announced $70 pricing when everyone knows they'll cut the price.
OTOH the fact that Ubi is as big as their are while running at permanent discounts also reveals a lot about high volume low margin sales vs low volume high margin sales, which is a feather in subscription's cap. Again, kind of the Walmart model.
EA otoh, those guys know how to make money....
@NEStalgia i dont see how MS would be interested in making just a stable income.... while throwing 70billion at it. every company wants to maximise profits. if they didnt believe it would make more $$ then they wouldnt do it.
they are just going a different route about it. as i said above, without numbers its all a guess.
@NEStalgia as @themightyant its not like Ubisoft has a lot of games coming out every year anyways, but I'm sure they would not be offering the service if they perceived it as a loss.
Ubisoft's biggest issue right now, this particular year, is that their biggest profit margin cash cow (Just Dance) is drying up and their Switch exclusive game did not sell well enough. Almost all publishers have one low-effort revenue stream that keeps cash rolling in even if their big budget stuff fails, with EA, its sports games and The Sims expansions, with ABK, its actually everything in the King side, but for Ubisoft, it was Just Dance.
Honestly I'm shocked Just Dance survived this long after the death of both, the Wii/Kinect/Move and the Rockband model.
The only other way they have to keep cash flowing is by constantly devaluating their back catalog in an attempt to stretch/boost their long tail. They been throwing a lot of money at premium service games in an attempt to establish another lifeline, but they keep failing.
Elden Ring has what 17M sales now? It would be a lot lower if it went on Gamepass day 1. I love Gamepass but in the long run i think its going to do more harm then good. Look at Hogwarts that's going to be the biggest game this year so a Day 1 release on Gamepass would harm those sales. Gamepass is a concerning future especially once those Gamepass only games no doubt appear and big price hikes.
@Tharsman Re: EA games list. That may be true but very few people are going to buy ALL those sports games annually, they might buy 1 or 2. The reality for most people is it's a handful of games at MOST every year on those services that they will be interested in BUYING, but the subscription model appeals as it gives them access to more. Same with Ubisoft.
The point is they only have to cover the cost of maybe 1-3 games a year and their subscription model is a success. Not least that people, on the whole, are bad at cancelling subscriptions.
That's a different position to Microsoft who add hundreds of games, including third party releases on Game Pass. They are different economic models. Of course Xbox is also trying to pull you onto the platform in order to sell more games, dlc, mtx and gain a larger market share.
My point is while they may all be Day 1 subscription services, and look vaguely similar to the consumer, in reality on the business end they are too different to compare. What works for one may not work for another.
I'm also not convinced they will ditch Game Pass Ultimate. There is almost always room for a premium tier, that people are willing to pay more for. Almost ALL subscription models do this, they would be missing out on a lucrative revenue stream if they dropped this.
I could perhaps see some of the Ultimate perks e.g. PC and/or cloud gaming join base Game pass (possibly with a price hike) but also boosting Ultimate with other perks. Unlikely they will drop it altogether.
As there are three business models or tiers on consoles:
1) AAA games that are so amazing - stay off game pass and get full price
2) not so amazing - put on game pass and charge for DLC or deluxe versions
3) indie games - beg to get on game pass and hope the sequel does well or update later with DLC
@MayaMousavi
That used to be the same mindset used to criticize Netflix. Over the years data has proven its a lot more likely someone will subscribe, and under-use it, than only subscribe for a single month.
Surely.. just surely everyone who has signed up to put their game on the service knows of the consequences.. I mean, for consumers gamepass is fantastic value, no one can deny that. but if you are a dev, you know you'll be losing sales. (But MS paid you a lump sum) so I suppose it just depends on if the game you have made will make a good chunk of profit, or the MS payment will cover the projected sales. Either way you'll lose money as you can never be spot on. That's the risk you would take.
What about the sales of games that DON'T make it on to game pass? The obvious big hitters might be okay but you see a lot of comments from people saying things along the lines of "I'd play it on game pass" or "I'll wait for it on game pass". With Microsoft intimately having the final say on what is added to game pass it's dangerous territory as they will add their own first party game on to game pass day one and any similar games could then struggle for sales as they do not get offered the same opportunity.
Depends on the game, something like Hogwarts Legacy and Elden Ring wouldn't benefit from gamepass. It would hurt sales, but for something like I am Fish it's probably beneficial. As it wasn't going to sell much in the first place.
For developers, that means creating another option for how they monetise their games.
Yes they are adding another option to get money, but that option also makes the other options bring in less money in which making their overall profit for that game less in the long run. It only makes sense for big third party AAA games to get added 1-2 years later once sales have hit a stop.
Imagine if elden ring was included in gamepass and playstation plus day one, would the upfront payment from Sony and Microsoft be more than the money from the 15+ million copies sold across those consoles? The answer is no.
For indies it's different as they are less popular and these subscriptions help gain some attention, imagine how popular stray would of been without playstation plus or high on life without gamepass. Also multiplayer indies also benefit from subscriptions as their survival counts on high player counts and MTX, something they wouldn't get enough of by just having the game for sale only.
Also just a thought but maybe its better for smaller developers to put their games onto gamepass but not onto playstation plus. We all know that over the last two generations put together playstation have outsold xbox to around 3:1. So for example let's say a developer has around 120 million playstation players to sell to and 40 million xbox players to sell to they would most likely make more money from Microsofts upfront payment as theres less potential buyers, whereas on playstation it would be the complete opposite.
Microsoft treat Day 1 Games Pass like Sony does console exclusivity. They both compensate the studio/publisher accordingly.
Of course it hurts game sales. Ive never bought a single title on xbox and dont expect to throughout its life. I know Im not the only one.
@Microbius couldn't of said it better myself. plus not everyone has the money to just buy a $70 game just to see if you like it or not?!?? And I've lost count of how many games I've played on game pass that I thought I would have absolutely no interest in and then turned out loving the game and playing it all the time. I don't really care what other people think or these multimillion dollar game companies complaining. all I know is I like it and it works for me and that's all that matters to me!!
why do people care if Microsoft are making money out of gamepass?
as long as it makes financial sense for the devs and its a bargain for consumers who cares if if Microsoft doesnt get to put more money in the profit column
Game pass has improved the quality of games in general. All the developers have to put out quality or no one plays it. We have such a large selection we can be picky. If the games is not to my liking it is uninstalled with no regrets.
@uptownsoul Companies already do this. They already monetize FOMO consumers who have to purchase new games at full price are through season passes and deluxe version.
GP has just found a way to monetize the secondary batch of consumers that wait for sales don’t buy that stuff anyway.
In other words, GP isn’t going to cause more MTXs; we’re already there.
As an example, Atlus already had questionable DLCs practices before GP .
@trev666 because some people want Xbox is go away and think if GP is losing money it will die. Others sort of jump on the bandwagon because they think it’s cute.
Still others have legitimate concerns but this group isn’t proned to outlandish behavior, however group an and b weaponize group c concern and do act stupid because of it.
People care of gamepass makes money because Xbox isn’t a charity. I know some on here believe Xbox is some sort of pet project and it can lose money. It can’t. They want it to make money. I want it to sustain. I want gold quality exclusives, I don’t care about “free” games. I’ll happily pay for good games.
On here people want to make anyone that doesn’t like the GPU model an “enemy”…….
I buy about the same amount of games, most of them on Xbox actually. Kinda convenient to have the gamepass titles + all my big third party and indie purchases in one place, though i'll sometimes double dip indies on Switch.
I pretty much only buy exclusives on Switch and PS5 other than that.
@stvevan Not necessarily. Different companies have different internal goals for different divisions for different reasons. Companies want to maximize growth and ROI - to a point. But not all companies benefit from pushing to maximize the short term over a slow and steady long term trend, devoid of volatility. It depends what the investors buckled up for, and to a degree, who's currently the largest investors.
Sony is a VERY volatile entity with wild swings in their results overall. Their investors generally seem to promote maximum ROI, the executives attempt to deliver that by maximizing margin. That approach has not always worked out well for them. Their strategies generally involve high investment, high margin products subject to extreme market volatility.
In MS's position, they don't necessarily have a need to expose themselves to the volatile swings of the market, and their investors may appreciate a steady trending growth projection over the long haul. When you're one of the biggest 3 market caps on earth you get a lot of leeway without needing to "wow" investors with major market movements. There's only one direction to go, so steady and slowly upwards is a much preferred alternative than wildly swinging around and hoping the swings don't open the window for a fall. Office, Windows, Xbox subscriptions, cloud services, hosted solutions.....all very stable, reliable, steady growth channels. No need to go into the consumer product/media upheavals of massive market shifts if they can rely on steady services. As long as investors are pleased by predictable steady gains and don't start demanding massive growth, which is unlikely as investors don't want to get caught up in worse antitrust troubles, everything can hum along.
It's easy to lose sight of the VERY different market dynamics involved and how the two companies and the investors behind them may be looking for very different types of results.
@mousieone Good summary.
I keep finding it funny that some of the faction that says they're worried about MS industry consolidation seems like they'd be perfectly happy turning Sony into a government-regulated monopoly.
@MayaMousavi Fair enough, but nitpick on your bit about Netflix, Netflix originals usually cant be bought any other way, so streaming is the only way to give them money, but Netflix also has a lot of licensed content that can usually be paid for other ways.
Do we hear Sony complain about not being able to sell Breaking Bad DVDs and Blurays because its on Netflix or because it went directly to cable TV?
@NEStalgia People are people. Some people do have legitimate grievances but everything g gets overshadowed by people who just love to fight and throw mud. It’s sad.
@uptownsoul wrong interpretation. Let me be more clear. Whether GP exists or not, more MTXs are coming. Just like MTXs still exist in 70 dollar games. Just like how they’ll be more live service games despite a bunch being canceled over these last few months. Nintendo games have MTXs and the latest Pokémon games show the strains of an “almost annualized” franchise. There are no heroes, just companies that exist to make money.
@uptownsoul we know they're looking into adding ads into games
@uptownsoul I assure companies will use MTXs regardless of platform holders. However, if it was simply a matter of selling less copies why are Nintendo games just as full? Chocobo GX that had heavy monetization in it. And it’s console exclusive that have nothing to do with GP. Also there isn’t really loss of “copies”, MS pays for those copies. From a publisher stand point the copies are just as if they sold them.
GP isn’t the cause of MTXs.
@NEStalgia MS is taking all the risk on GP, plus with 70b extra ontop. investors will want a return. they wont wait. GP has been around a while now. seeing Sony/Nintendo making strong revenue the 'traditional' way wont sit great.... MS gaming was already bringing in stable money.
investors will get nervous, Disney is losing 1.5b (a quarter?!) on streaming. and they have far bigger subs, also MS laid off staff recently, all about the bottom line.
GP is fantastic value for an individual, cant dispute that. but can MS hit the target numbers to sustain GP? is the internet speed/stability (worldwide) there to have 10's millions cloud streaming games?
I don't see what the obsession with sales statistics is all about when they're probably making better money with Gamepass.
@BAMozzy your logic on dlc is flawed. 20m may play it. what % complete it to then need DLC.
you would have to compare completion % on GP to non GP. id wager that there is a higher completion rate on games wher $50 or whatever is spent to that on a sub service. (on either of 3 platforms)
@stvevan What "losses" are Disney reporting though? Compared to estimated sales (opportunity cost estimate) or opex on investment in infrastructure?
I've said it on push, but, the market is going to have to change. Maybe it's subscriptions, maybe it's consolidating, maybe it's half the industry going bankrupt and closing it's doors. Theres a massive oversupply of games and only so much spend to go around in the traditional model. The biggest games get bought. But even there, even looking at Sonys be revenue, the vast majority of their revenue didn't come from selling hardware, or games, or gow no matter how impressive it's unit sales by volume minus cost. Most of the revenue came from services and mtx into the top 5 games. If ps deleted most of its store, and closed most of its studios..... It's revenue wouldn't actually change substantially. Minus the cost of all their studios profits may actually increase. People keep arguing about full price games when that's not even the major revenue stream for platforms anymore. Doesn't really matter if gow sells 25m copies with half at wholesale price, and starfield generates 70m new subscribers. The actual money for both of them comes from freaking Fortnite battle passes.
This is the kind of thing I meant about people misreading statistics. Disney isn't "losing" anything any more than Costco is "losing" money on rotisserie chicken, and buying a ton of farms to cut the costs on chicken production to sell at a loss to increase overall earnings in their stores. It's a expense that converts into revenue. Just like leasing retail space. Just like Sony buying 3rd party exclusives which would cost them far far more if they weren't a pseudo monopoly, and game pass would make tons more if it had PlayStations market. People in discussions on this stuff really just keep thinking this stuff works like the local hardware store. If you sell the screwdriver too cheap you lose money. There's bigger money games at larger scale in the large organizations.
What is "lost" in Disney's digital streaming business? What costs is it compared to? Estimated physical disc sales?
The massive layoff at Ms is tangential though. Most of that was outside game's. In gaming 343 got the culling everyone saw coming after the train wreck of infinite. Bethesda is sadly getting it's publishing culling and no longer needs as much staff working on PS versions and switch versions etc.... At MS proper they hired what 80k people in 2 or 3 years then reduced 10k. I'm not approving of it, because we know it's the veterans they tossed and kept the newbies and everything about that is wrong, wrong, wrong. But it's not the downsizing it appears either but a mass over hiring them screwing with lives to correct. Trying to pin that to game pass is a reach only Internet forums could achieve.
@uptownsoul Gamepass also isn't worth it for big third party AAA games, take Elden Ring which probably sold around 5 million copies on xbox, that's £50-£60 each copy sold physical/digital, that's a revenue of £250 million for elden ring, would Microsoft pay anywhere near that to include them on gamepass? They spend less than that on their own big AAA games like halo etc and there's a reason gamepass gets labelled as indiepass and tbh that will never change apart from Microsofts own games in which even they at some point will start feeling its not worth it and will 100% raise the price after the Activision deal. At first Microsoft wanted the subscription service to be an option and bring in more people, but now it's got to a point where pretty much 80% (if not more) of xbox owners have gamepass they are now getting less from game sales, so they will have to balance that out in some way.
@uptownsoul That's incredibly unlikely as to 'SELL' things like DLC, MTX etc, they need to make sure their game is what people WANT to play. If they release broken, messy, uninteresting or even just shallow games designed purely to sell DLC etc, People will not play them, therefore they won't get the 'sales' of extra content.
People buy MTX, DLC etc for games they are 'enjoying'. If you bought Forza Horizon 5 and enjoyed everything it does, you are more likely to buy the DLC or any MTX to 'expand' your enjoyment. It doesn't matter that you bought it instead of played it on Game Pass - and Game Pass owners, maybe 'more' inclined to buy extras, as they may have a bit more 'cash' to spend on gaming having not had keep buying games up front.
@stvevan No its not. Its the same logic as Sony has with their 'exclusives'. If they have 20m PS5's sold, they can ONLY sell 'up-to' 20m copies of their games, their is a limit to how many games they could 'potentially' sell to - of course they may only sell to 50%, which is 10m copies, but they couldn't sell 25m for example because you 'need' the hardware to play.
DLC, MTX etc is exactly the same. If you sell 5m copies of FH5, then only a 'maximum' of 5m would buy your content, you can't sell to 'more' people than play the game because you need to have the game to access that content. However if you get 25m players, that's 5x more people that could buy. If just 20% buy DLC for example, with 5m copies sold, that's just 1m DLC packs sold, with 25m people playing, that's 5m DLC packs sold - exactly the same uptake, but because you have 'more' people playing, you get 'more' people engaged and more people that 'could' spend money in your 'ecosystem'.
That 'ecosystem' could be a single game selling DLC, MTX etc, or Console Hardware for example. If you don't get 'people' into your 'Game', onto your 'Hardware', then you can't sell to them - whether its a complete game or 'extra' content in those games.
If you don't 'enjoy' playing a Game, then you are NOT going to be spending money on DLC/MTX etc - so they still have to make 'great' games that make people want to play first and foremost to get them in to the 'store' and if, and only if those players are 'enjoying' the Content so much they want 'more', then extra content is sold.
People won't spend money on things they aren't enjoying, don't think brings 'value' anymore etc. If the quality of games in Game Pass dropped, people would not Subscribe, choosing to 'buy' Hardware or Subscribe 'elsewhere' to get the Quality of games they want.
Found a good article from 2020.
Speaking to the Verge Xbox boss Phil Spencer said Microsoft makes all different types of deals with developers, depending on their unique situations.
"Our deals are, I'll say, all over the place. That sounds unmanaged, but it's really based on the developer's need," Spencer explained. "One of the things that's been cool to see is a developer, usually a smaller to mid-sized developer, might be starting a game and say, 'Hey, we're willing to put this in Game Pass on our launch day if you guys will give us X dollars now.' What we can go do is, we'll create a floor for them in terms of the success of their game. They know they're going to get this return."
In some other cases, Microsoft will completely fund the production cost of a game. In this situation, the developer can make money from retail sales, while Microsoft may also allow these games to release on PlayStation, Switch, and PC, with the developers taking in that revenue, too. Microsoft uniquely benefits in these types of situations by having a game launch day-and-date on Xbox Game Pass.
"For them, they've protected themselves from any downside risk. The game is going to get made. Then they have all the retail upside, we have the opportunity for day and date," Spencer said. "That would be a flat fee payment to a developer. Sometimes the developer's more done with the game and it's more just a transaction of, 'Hey, we'll put it in Game Pass if you'll pay us this amount of money."
Other agreements are different. Developers have come to Microsoft asking for deals based on "usage and monetization."
"We're open [to] experimenting with many different partners, because we don't think we have it figured out," Spencer said. "When we started, we had a model that was all based on usage. Most of the partners said, 'Yeah, yeah, we understand that, but we don't believe it, so just give us the money upfront.'"
@Microbius I don't recall anyone lambasting the existence of Blockbuster for reducing game sales for most of console gaming's existence. I almost exclusively rented games for the PS1/N64 and Gamecube/Xbox/PS2 generations. I don't really see Gamepass any differently. Especially because Blockbuster here had a monthly subscription that gave people unlimited game rentals.
@Microbius aye I agree. As most of the PlayStation fans that were complaining about Games Pass are jumping for joy that Horizon: Forbidden West is potentially coming to PS Plus Essentials in March. Others are saying they'll wait a year to play games at the cheaper rate. It just proves what I was thinking earlier that most of the hate is more jealousy that Xbox users get a better choice.
@Microbius indeed. You'd think they'd be screaming from the roof tops acting like there in a middle of an apocalypse because Sony has sacrificed one of its valuable IPs to certain death. RIP Horizon: Forbidden West.
I like Game Pass. If I try a game and enjoy it, I'm going to buy it anyway. So at the end of the day, both Microsoft and the game developers will make money. I look at it as a try before you buy, business model.
@MayaMousavi like game of thrones, rings of power, and basically every single tv show made in recent years that eclipsed the budget of any game going to streaming services day one?
Point being, (editing undead of prolonging the back and forth replies) sales don’t mater so long money is made. Game of thrones didn’t need to sell copies to make money, nor make money from ads. It was purely financed by subscription fess.
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