In a monumental report covering the state of play for Microsoft and Xbox, Bloomberg dove deep into the impact of the Game Pass subscription service. It’s not everybody’s cup of tea and it has garnered a mixed response from developers over the years, but one staggering statistic in Bloomberg’s write-up reveals just how invested Microsoft is in the platform.
It was said that the tech titan spends $1 billion annually to pull third-party games onto Game Pass, often parting ways with millions of dollars just to put pen to paper and get the deals signed.
‘The Promise of Exposure’
In the gargantuan report written by Bloomberg’s Dina Bass and Cecilia D’Anastasio, everything from the recent clash between Microsoft and the CMA to the potential of a handheld Xbox device was explored.
At one point, the conversation, which was focused majorly on Sarah Bond’s Xbox presidency, turned to Game Pass. In a retrospective, we got a glimpse of how the subscription service surfaced with a humble library and a low price point before becoming a massive effort that weighed heavily on Microsoft’s coffers.
It was a paradigm shift for Microsoft, standing up something that would see value trickle in over time rather than relying on that one supersized launch to rake in a substantial payday. That’s what Sarah Bond alluded to, touching on the alteration in the operating model:
There’s a difference between managing a network effect and maximizing the value of a single game.
Bloomberg then mentioned that Microsoft spends a whopping $1 billion a year bringing third-party games into the Game Pass ecosystem, which has been modelled recently as a ‘Play Anywhere’ system that transcends simple home consoles.
Game Pass was also a major adjustment for publishers. To sweeten the deal, Microsoft now spends $1 billion a year getting third-party games on the subscription service.
The largesse has been more than enough to win over small publishers, to whom it offers flat fees of millions of dollars upfront to include their titles, along with a portion of subscription revenue and the promise of exposure they couldn’t count on getting otherwise.
Owing to inflation, Game Pass has recently increased in price, and the games that take pole position in the library chop and change, but there’s no doubting the power it has as a subscription-based product. That notion is set to improve, too – next month, the first Call of Duty game will grace the service in the form of Black Ops 6.
It already incorporates titles from the Ubisoft Connect and EA Play services, making it a seriously stacked offering for gamers worldwide, and it’s getting better all the time.
Sarah Bond and the rest of the crew at Xbox have immense faith in the product, and with a seeming desire to move away from console gaming, it’s only a matter of time before a seamlessly connected Game Pass experience is the firm’s foremost focus.
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Grant has been gaming for 30+ years and in the industry for 10+. You'll probably find him playing a post-apocalyptic game or an extraction shooter somewhere.
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