Gamepass made it easier for both Sony and Nintendo to strike third party exclusivity and marketing deals

[Swift_Star]

I've been thinking about this for a while now and it just comes to cement how gamepass might be "good" for gamers but terrible to publishers and developers alike.
Since the only way your game will be successful on Xbox if by releasing day one on gamepass, publishers are, honestly, avoiding the service like the plague. Gamepass is a service that dilutes the value of a game since it's offered cheaper with other games, so you're having to divide the whole gamepass revenue with other publishers, instead of getting the pure revenue for sales. This model is good for those unknown indie games or those failed ones like Avengers, but for titans like RE4 or Hogwarts Legacy? Nah.
The model made it far easier for Sony and Nintendo do strike third party deals, because it's simpler for these companies to cover the revenue made from xbox sales: it is basically nonexistent nowadays. And it made far harder for Xbox to strike the same deal: they have to cover lost Sony and Nintendo sales, and have to PAY for the license for the game to be released day one, since it's impossible to make a third party deal on Xbox and not releasing on gamepass. And it gets worse: it has to be on gamepass PC too, losing those sweet, sweet Steam revenue. Sony and Nintendo do not have the same service on PC, a game can be console exclusive and launch on PC day and date or a few months later with the publishers getting the full Steam revenue.
So, there you go, Gamepass as a model was a terrible business decision, showing how MS is still shortsighted and do not understand gaming. They should've invested in great experiences instead of focusing so much on a "all you can eat buffet" where the food is made of old bread and the new food tastes like overslept McDonald's.

 

[Nhomnhom]

Gamepass comes with a lot of unintended consequences. Xbox is all about people that don't want to buy games, that is the type of person MS has attracted for years now. Sony not only ends up with a lot more consoles sold but MS ends up with a bunch of Gamepass only people, half of them with Series S (you don't chose a much weaker console to save $200 and then spend $70 on games unless you are stupid). The Series S and focus on day one games were both huge mistakes.

Developing fox Xbox is also much harder since you have to develop for the Series S and PC as well. FFXVI devs for example only have to target the PS5 for launch. I also have no doubt that Luminous could've done better if they only had to focus on the PS5 version of Forspoken on launch, they were one of the first studios to be pushing Direct Storage, FSR, etc, focusing on that type of stuff all along their development processes.

 

[Bryank75]

I think you could look at it from multiple perspectives where it hurts Xbox... on the paid game side of things, sure it definitely hurts them as many expect the game in gamepass or will wait for it to eventually be on the service.

Then on another front you are offering gamepass as an 'all you can eat buffet' so F2P and GAAS games that usually fill peoples time will be in direct competition now with the service, meaning you are making your platform less enticing for new F2P games / GAAS unless they get a sweetheart deal for gamepass.

There are multiple downsides to basing your model around having endless content to consume over the quality of content. Plus, it's not even endless, after a couple months you have seen everything and played most of what appeals to you. Nobody will play everything.

 

[Wraith Phantom]

Yes it was always a bad deal for pubs. It was lowering their product value & long term earnings.

Xbox got the better deal.They suckered pubs by saying you won't make money on traditional sales here.The money is on gamepass. We'll give you 10-30 mill and put it on game pass. But that's one time money. No reoccurring money. Pubs lost out majorly on sales, money on a game coming back in fashion a 6 month to a year later , and they lose out massively on DLC money, MTX. Xbox basically bypassed traditional deals. They got the games for cheap no marketing cost ,no exclusive deal cost, not funding port cost. It was a hustle.Xbox benefited most & got an easy spike boost in subs.

Essentially it's a shit deal similar to how spotify cheat music artists.

 

[Gods&Monsters]

All the Day 1 games sold poorly across all platforms because GP devalues the launch sales. You can take Wo Long as an example. Nioh did way better as a PS4 exclusive.

We'll see at the next Xbox showcase if publishers continue to kill their own business by associating their IPs with Xbox cheap filth.

The deals that were announced last year were probably made before the full damage was known.

 

[flaccidsnake]

In my opinion Gamepass is only justifiable via the "titan" games. The subscription value of a $70 day one game is equivalent to like 4 months of the service. You might actually come out ahead if Gamepass' library of AAAs hits your taste. But indie games < $20 you could be buying on Steam and owning forever. It's a pretty bad value to be subscribed for a year because your Tunic save is there. In general I feel a lot better just having a backlog Steam library I don't have to pay to keep up. Mine is literally bigger than Gamepass' library anyway.

 

[Kokoloko]

Didn’t someone mention Bethesda employees werent happy because they dont get sales bonuses now and with Gamepass nothing like that is clear.

Just a dumb model a trillionnaire company can sustain for a short time

 

[ethomaz]

Userbase size relate to how much the publisher will ask for the deal.

It is cheap to make an time-exclusive deal with a 100m userbase compared with 50m userbase.

MS have to pay way more for similar deal that Sony and Nintendo do.

 

[Nhomnhom]

Userbase size relate to how much the publisher will ask for the deal.

It is cheap to make an time-exclusive deal with a 100m userbase compared with 50m userbase.

MS have to pay way more for similar deal that Sony and Nintendo do.

It goes beyond just user base size, it's projected game sales. The situation favors PlayStation even more than what the console sales suggest (and in the past quarter consoles sales were pretty much 6:1 in favor of PlayStation).

How much would Final Fantasy, Metal Gear, Silent Hill sell on Xbox? Close to nothing. The audience is just not there and the few people that actually would want to play the games would say they'll were going to wait for them to be included on Gamepass.

All along Phil Spencer has been playing tic-tac-toe on a chessboard. People mistook these unprecedented moves as the moves of a genius but it was just the absurdity of an idiot playing the wrong game.

 

[evilblade]

Userbase size relate to how much the publisher will ask for the deal.

It is cheap to make an time-exclusive deal with a 100m userbase compared with 50m userbase.

MS have to pay way more for similar deal that Sony and Nintendo do.

Yes, but 50m userbase it's not something you can dismiss that easily if they're buying games just because some else has 100. It's not a 9:1 situation and losing tons of sales. However, if that 50m userbase does not buy games at the same rate...

I tend to agree with OP. For a third-party publisher, making your product available for a machine called by their own fans "game pass machine" it's not the most exciting thing in the world.

 

[Bryank75]

Yes, but 50m userbase it's not something you can dismiss that easily if they're buying games just because some else has 100. It's not a 9:1 situation and losing tons of sales. However, if that 50m userbase does not buy games at the same rate...

I tend to agree with OP. For a third-party publisher, making your product available for a machine called by their own fans "game pass machine" it's not the most exciting thing in the world.

We don't have all the details, as you pointed out for example the rates at which each base is purchasing... we can only make guesses.

I do wonder how deep these negotiations go on these details though. Do they go by past sales of the franchise or if it's a new game, how do they gauge its potential...

There have been many situations in the past like Demons Souls, where a publisher didn't gauge the games potential correctly....

 

[Muddasar]

I would go further, Gamepass is the only reason these exclusive deals are taking place.

 

[ethomaz]

I would go further, Gamepass is the only reason these exclusive deals are taking place.

These deals already existed way before Gamepass...

More recent on PS4 from my mind... FFVII Remake, Death Stranding and Street Fighter V.
If you add DLC timed exclusivity then you have CoD, Batman, Destiny (before become Sony studio), etc.

PS. I listed only PS4 exclusive or time-exclusive deals... Xbox has it own share of that with Ryse, Titanfall, Shadow of Tomb Raider, etc.

 

[evilblade]

These deals already existed way before Gamepass...

More recent on PS4 from my mind... FFVII Remake, Death Stranding and Street Fighter V.
If you add DLC timed exclusivity then you have CoD, Batman, Destiny (before become Sony studio), etc.

PS. I listed only PS4 exclusive or time-exclusive deals... Xbox has it own share of that with Ryse, Titanfall, Shadow of Tomb Raider, etc.

Death Stranding is Sony IP (not the dev, Kojima Productions). It's a Bloodborne situation.

We don't have all the details, as you pointed out for example the rates at which each base is purchasing... we can only make guesses.

I do wonder how deep these negotiations go on these details though. Do they go by past sales of the franchise or if it's a new game, how do they gauge its potential...

There have been many situations in the past like Demons Souls, where a publisher didn't gauge the games potential correctly....

I don't know either. I assume a third-party dev has a sales forecast like everybody else and they have internal studies about how many copies in how much time do they have to sell in a certain amount of time to reach objetives. If someone like Sony PlayStation can "fill" the gap of another player in that forecast with an exclusivity agreement (more sales, more % of sales, free marketing campaign, devs or wathever) that deal is going forward for being good for both parties. But if this gap is too wide and exclusivity deal is impossible in the first place.

GTA6 exclusive, impossible. But a Final Fantasy especially in console market, totally possible. I think I read somewhere the last main Final Fantasy game (XV) sold around 80% in PS4.

 

[Muddasar]

These deals already existed way before Gamepass...

More recent on PS4 from my mind... FFVII Remake, Death Stranding and Street Fighter V.
If you add DLC timed exclusivity then you have CoD, Batman, Destiny (before become Sony studio), etc.

PS. I listed only PS4 exclusive or time-exclusive deals... Xbox has it own share of that with Ryse, Titanfall, Shadow of Tomb Raider, etc.

The exclusive deals on Playstation and Switch are very different to those before Gamepass.

Theres no moneyhat. It’s simply a case of Third party publishers knowing where the money is in terms of sales.

Microsoft going the Netflix route has not only spoilt their gamers in expecting everything on Gamepass but put off some Third party publishers from releasing their major titles on Xbox cause theres simply no money to be made except for Microsoft with their subscriptions.

Death Stranding is a Sony IP. Obviously it would be exclusive.

 

[Loy310]

Not only that but XBSS have also made it easier for devs to skip XB. MS made some really poor choices this gen.

 

[Alabtrosmyster]

When you condition your clients to just wait for the AAA games to come over and only provide an extremely limited choice of indies... Well people who have your console(s) don't buy games, publishers don't want to put games on there unless they have completely exhausted all other sources of revenue.

Also, MS did not ship any truly enticing games to bring people to their platform for years now, there is no real buzz... I mean they have not told us what we will play on gamepass once we get it.

This is dollar bill Phil for you!

 

[ethomaz]

Death Stranding is Sony IP (not the dev, Kojima Productions). It's a Bloodborne situation.

The exclusive deals on Playstation and Switch are very different to those before Gamepass.

Theres no moneyhat. It’s simply a case of Third party publishers knowing where the money is in terms of sales.

Microsoft going the Netflix route has not only spoilt their gamers in expecting everything on Gamepass but put off some Third party publishers from releasing their major titles on Xbox cause theres simply no money to be made except for Microsoft with their subscriptions.

Death Stranding is a Sony IP. Obviously it would be exclusive.

Removed Death Stranding.
But that doesn't change the main point that is these exclusives or timed-exclusive deals already existed (PS1, PS2, PS3, etc all have them).

Of course I understand Gamepass could have affected how easy or not it is to make these deals.
But to say these deals happens due Gamepass I fell it is a bit of stretch.

And I will give another example pretty easy to understand...

On 6th gen it was easy to PS2 have these deals than Xbox.
On 7th gen it was easy to Xbox 360 had deals than PlayStation 3 until late of the gen.
Before start of 8th gen it was easy to Xbox One have these deals than PlayStation 4.
After the results of 8th showed it self in the launch windows become easy to PlayStation 4 have these type of deals than Xbox One.

And that is the status today... PlayStation 5 is easier to have these deals than Xbox Series.

Xbox lose the timed-exclusivity of CoD for a whole generation due the adoption success of PS4... remember the first CoD on 8th gen have exclusive content to Xbox One and after Activision saw the user base and potential of Xbox One was bad and made a big deal with PlayStation that is valid even today.

Why no big publisher wants to make deals with Xbox with big games? Because there is no return of investiment unless MS basically pays millions and millions that covers all sales lost from PlayStation.

It is hard to compete when you are 3rd.
You have to rely mainly on 1st-party games to grow and publishers see you as a worth contender but MS focus in 1st-party is laugable they are specialists in kill franchises (if you asked me 10 years ago if it was possible to kill Halo franchise I should call you delusional or crazy).

 

[ethomaz]

I’m on a roll I will say more.

MS wants to be market leader without do the effort a 3rd place needs to do for in the future become market leader

Xbox division has cultural issue and they don’t want to change that… so buying studios will only kill the studios.

My fear with Activision deal is not games not releasing on PlayStation but losing the games with Microsoft culture.

Arkane and Tango already give hints they won’t survive…

 

[Zzero]

Aside from a few indies I don't see this helping Nintendo too much, they appeal to people with different tastes.