FH5: Hot Wheels DLC -- Why isn't Xbox releasing DLCs on Gamepass day one?

[Heisenberg007]

Xbox recently released the Forza Horizon 5: Hot Wheels DLC, but it's unavailable on Gamepass. Instead, it's being sold as usual at $19.99. Gamepass subscribers only get a nominal discount of $2 if they buy the DLC.

That is a confusing business decision for me.

My question (and the point of discussion) is: Why doesn't Xbox release all DLCs on Gamepass? After all, that's their entire new business model -- that growing a subscription service is more important and a better business model than selling games at retail. That's why all their games are released on Gamepass day one.

If the argument is:

• "Because Xbox needs to make money by selling DLCs at retail" -- Doesn't that signify that Gamepass doesn't and won't make enough money? And in that case, shouldn't all first-party games follow the non-GP model if that's more profitable?
• "Because retail sales are more important than growing subs" -- Does this mean that betting on a subscription model is inherently flawed?
• "DLCs won't help grow Gamepass." -- If the entire Xbox model and future is based on Gamepass, why even make DLCs then?

Share your opinions and help me decode this enigma.

 

[arvfab]

Even if GP was making any profit (which I doubt it's doing), they would still make DLC and sell them separately in order to increase their profit margins. Never forget

 

[BloodMod]

DLC is separate content, subscription services never include it as far as I remember.

 

[Heisenberg007]

Even if GP was making any profit (which I doubt it's doing), they would still make DLC and sell them separately in order to increase their profit margins. Never forget

Yeah, that's what they are doing, which implies that profit margins can only be increased by selling the games and not launching them on a subscription, right?

In that case, why don't they release all other first-party games normally instead of giving them away on Gamepass? It feels like there is no rhyme or reason to this decision.

 

[Heisenberg007]

DLC is separate content, subscription services never include it as far as I remember.

They don't normally do that, yes, but I'm questioning the basis of that decision. Why don't they?

If it makes financial sense to release $100M AAA games on a sub day one, why doesn't it make financial sense to release a small (< $5-10 million) DLC on a subscription service?

 

[PropellerEar]

They don't normally do that, yes, but I'm questioning the basis of that decision. Why don't they?

If it makes financial sense to release $100M AAA games on a sub day one, why doesn't it make financial sense to release a small (< $5-10 million) DLC on a subscription service?

I think they want to recoup some of the Dev costs this way, as sure as hell GP isn't doing it.
20M+ players or what ever the PR number was, they are thinking a portion of these gamers will pay 20$ for this DLC.

This feels specially cheap as they cannot seem to release anything AAA first party on GP during 2022.

 

[Shmunter]

Dlc, micro transaction, battlepasses etc. Would you like fries with that. That’s where the extra money is made.

 

[Heisenberg007]

I think they want to recoup some of the Dev costs this way, as sure as hell GP isn't doing it.
20M+ players or what ever the PR number was, they are thinking a portion of these gamers will pay 20$ for this DLC.

This feels specially cheap as they cannot seem to release anything AAA first party on GP during 2022.

That's what I think. DLC sales (not available on GP) is a way to recoup some development costs and minimize the losses.

But the strategy is still half-baked, isn't it?

They release their games day one on Gamepass, citing the sales revenue isn't worth it, and that the real money is in growing the subscription service. So even if they have to give away the game on GP, it's worth it because it helps grow the sub. And that Microsoft is "playing the long game."

Then why doesn't that principle apply to DLCs. That's the argument.

 

[Heisenberg007]

Dlc, micro transaction, battlepasses etc. Would you like fries with that. That’s where the extra money is made.

Battle-passes and MTX, I agree.

Not so sure about DLCs -- especially when it's a 0 sum game with retail sales and your premiere subscription service, Gamepass.

P.S. Welcome, Shmunter!

 

[nominedomine]

Microtransactions and DLC were always going to play a huge role in this.

 

[Bo_Hazem]

I think Sony has been smart when it comes to subscription models, not only in gaming but in movies as well. Now with most big names in the movie/series scene sinking in debts Sony is just selling its goods for the highest bidder and only having one subscription model tied to their Bravia TV's and Xperia phones and only using their own content and not day one as well.

 

[SLB1904]

Step one: release unfinished game "free"
Step two: sell the rest in parts

 

[Alabtrosmyster]

My question (and the point of discussion) is: Why doesn't Xbox release all DLCs on Gamepass? After all, that's their entire new business model -- that growing a subscription service is more important and a better business model than selling games at retail. That's why all their games are released on Gamepass day one.

Aren't they releasing straight up game demos on GP now? (I know PSNow does that too). But would paying for demos defeat of a service that was sold as the one stop shop for your gaming needs?

Selling DLC separately is a way for them to keep the other revenue streams open, no way they were gonna include that, not at the current price for sure.

I can't find an MS official saying it, but I recall forum posters telling me that all DLC for all games would be included, obviously this is not official MS marketing and it could have changed, but if MS said it it enters the realm of deception.

 

[Heisenberg007]

Microtransactions and DLC were always going to play a huge role in this.

Re DLCs: Yes, but why? That's the question.

Based on Xbox's current model, all DLCs should be a part of GP from day one -- if the focus is on growing GP at the cost of retail sales and revenue.

 

[Heisenberg007]

Aren't they releasing straight up game demos on GP now? (I know PSNow does that too). But would paying for demos defeat of a service that was sold as the one stop shop for your gaming needs?

Selling DLC separately is a way for them to keep the other revenue streams open, no way they were gonna include that, not at the current price for sure.

I can't find an MS official saying it, but I recall forum posters telling me that all DLC for all games would be included, obviously this is not official MS marketing and it could have changed, but if MS said it it enters the realm of deception.

I don't think MS officials said it (could be wrong), but I can't remember.

Regarding keeping the other revenue stream open, they'd have that stream open if they included the DLC on GP from day one, as non-GP subscribers would be buying the DLC anyway. Same as their first-party game releases.

 

[peter42O]

Personally, I believe that they will add DLC/expansions once they decide to drop Gold completely and make online multi-player free. This will add something back to the $15 ultimate package.

 

[ethomaz]

What exactly is confusing?

You need to monetize Gamepass day one releases.
That is a key point to try to recover the lose of the full priced launch window sales.

That is why there is some fear in MS focus in more GAAS, MTX and paid DLC in Gamepass day one releases.

BTW you can make a contrast with F2P games… they are free but hugely monetize on DLC and MTX.

The ideia is that day one releases on Gamepass approaches more and more the F2P model.

 

[nominedomine]

Re DLCs: Yes, but why? That's the question.

Based on Xbox's current model, all DLCs should be a part of GP from day one -- if the focus is on growing GP at the cost of retail sales and revenue.

The focus is to charge a subscription for F2P-like/GaaS games full of microtransactions and paid DLCs. If even paid games are leaning that way, It was always inevitable for something like Gamepass to lean on that.

I don't know why people always assume publishers are going to hold back on this stuff, they never do.

 

[Heisenberg007]

What exactly is confusing?

You need to monetize Gamepass day one releases.
That is a key point to try to recover the lose of the full priced launch window sales.

That is why there is some fear in MS focus in more GAAS, MTX and paid DLC in Gamepass day one releases.

BTW you can make a contrast with F2P games… they are free but hugely monetize on DLC and MTX.

The ideia is that day one releases on Gamepass approaches more and more the F2P model.

F2P games are very different than Xbox's paid first-party games that launch on Gamepass (e.g., Forza Horizon 5). F2P games are "free" to play. Gamepass charges $10-$15 to be able to play those games every month.

I've explained the confusion in the OP.

Xbox has claimed that Gamepass increases game sales (which I know is bullshit). Assuming that is indeed true, shouldn't putting the FH5 DLC on GP increase the DLC sales?

Second, regarding "Xbox needs to monetize Gamepass day one releases." They are monetizing that with $15 per month. Now an argument can be made that the $15 p/m fee isn't enough and Xbox needs retail sales to minimize the loss. In that case, doesn't this just prove that the GP model is inherently flawed?

I can't understand how these two completely opposite business strategies can be applied simultaneously. One of them has to be wrong.

 

[Heisenberg007]

Personally, I believe that they will add DLC/expansions once they decide to drop Gold completely and make online multi-player free. This will add something back to the $15 ultimate package.

That seems unrealistic to me.

I don't think Xbox will ever make multiplayer free. They could abandon Gold and then tie multiplayer to the $15 GPU tier (which would only make MP more expensive for gamers), but I don't see them making it free altogether with no strings attached.

This strategy will also make them lose two revenue streams simultaneously: (1) free MP and (2) DLCs on Gamepass.