As a hardcore gamer who’s been following the industry since the days of Pong and Atari, I must say, the recent revelation about Microsoft‘s annual spending on Xbox Game Pass is nothing short of mind-boggling! A cool billion dollars? That’s enough to buy a new game every day for over 2700 years!
A recent disclosure shows the substantial annual amount Microsoft allegedly invests in enticing external game creators and distributors to make their games available on Xbox Game Pass.
According to Bloomberg, Microsoft shells out approximately $1 billion annually to acquire third-party games for their subscription service. As reported, they provide upfront flat fees worth millions to include games from smaller publishers in their Game Pass offering.
In an attempt to gather more information, TopMob reached out to Microsoft. It’s likely that Microsoft would be willing to spend more on a developer to introduce a fresh game onto their Game Pass platform at its launch, as opposed to a licensing agreement for an already-released title.
In 2021, Microsoft Gaming CEO Phil Spencer openly discussed the lack of a set pattern in the agreements they make for Game Pass launches. He explained to The Verge that the deals for Game Pass are diverse, which may seem disorganized to some.
In certain situations, Microsoft may cover the entire production cost of a video game. This allows the studio to market their game on competing platforms such as PlayStation, Steam, or even physically at retail stores. Meanwhile, Microsoft reaps the advantage of having another title for Game Pass. Essentially, they’ve minimized potential losses since the game will be made, and they gain from any sales success (retail upside), while offering a one-time payment to the developers.
In certain instances, a game could be completed and later, Microsoft secures a straightforward financial agreement to make it available on Game Pass. However, other agreements revolve around usage and the amount of revenue a game generates through in-game transactions. To put it simply, this can resemble the unregulated era of the Wild West.
Spencer openly admits that Microsoft doesn’t have all the solutions. Instead, they are open to collaborating with multiple partners because they don’t believe they have everything figured out yet. He explained, “When we initially started, our model was based entirely on usage. However, most of our partners responded, ‘We get what you’re saying, but we’re not convinced, so could you please provide us with the funds upfront.’
As a dedicated gaming enthusiast, I acknowledge the financial incentives Microsoft offers smaller publishers to include their games in Game Pass. However, it’s not uncommon for larger publishers like Take-Two Interactive, known for blockbuster titles such as Grand Theft Auto and Red Dead, to decline or hesitate when it comes to placing their major games on Game Pass at launch. In an interview with Bloomberg, Strauss Zelnick, the CEO of Take-Two, stated that this strategy doesn’t align with their current business strategy, making it utterly illogical for them at the moment.
For quite some time now, I’ve been echoing Zelnick’s sentiments. Interestingly enough, Take-Two has selectively introduced some of its classic games to the Game Pass library, such as Grand Theft Auto V and Red Dead Redemption II, albeit temporarily due to their rotation out of the catalog. More recently, Zelnick commented on Microsoft’s strategy to release Call of Duty: Black Ops 6 on Game Pass at launch, stating that it will boost Game Pass subscriptions, but only for a limited duration.
It’s been debated whether it’s financially viable to release fresh games on platforms like Game Pass, and this is partially why Sony chooses not to introduce new PlayStation games through PlayStation Plus.
In additional Game Pass updates, a fresh Standard level of the subscription has been introduced, boasting unique features that set it apart from the existing ones. Dive into TopMob’s comprehensive analysis for an in-depth look at each tier level.
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2024-09-20 19:09