Microsoft Spends $1 Billion a Year to Bring Third Party Tittles to Game Pass

[John Elden Ring]

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.

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.

via Insider Gaming

 

[RE4-Station]

150% more money than what it takes to make a single Concord a year just to get what everybody gets for free!
Well except Nintendo of course

 

[Systemshock2023]

That's easy 10 games of varying budgets they could develop per year. But they can't manage their teams.

 

[Entropi]

That's pocket change for Microsoft, am I right?

 

[Zzero]

It really is money down the drain. Just a house of sand if you don't own the titles and can't keep them forever.

 

[TubzGaming]

 

[Kokoloko]

Seriously doubt it made profit overall. Especially considering game sales dropped because of it.

80billion spent on Activision. 7Billion on Bethesda…. Bought Ninja Theory… They’ve probably spent close to 100billion in the last 5 years. They aint making 100billion profit in a long long time. I know it doesnt work like that because its money they had to spend, but lol

 

[Evilms]

Seriously doubt it made profit overall. Especially considering game sales dropped because of it.

80billion spent on Activision. 7Billion on Bethesda…. Bought Ninja Theory… They’ve probably spent close to 100billion in the last 5 years. They aint making 100billion profit in a long long time. I know it doesnt work like that because its money they had to spend, but lol

Nobody believes Philnocchio

 

[voke]

Didn’t gamepass get upwards up 25 million before it essentially became XBL? So they invested about 25% of the revenue in third parties. Pretty good number honestly. My question is, if they fizzle out the console business…. Doesn’t that kindve mean GP has no future?

If the new box runs other stores, I’d imagine most would then flock to steam…. Which makes GP less attractive. Honestly idk where they are taking this, Gamepass = Xbox. But without Xbox, what is gamepass?

 

[SuperPotato]

That's the only reason they get late japanese ports.

 

[FatKaz]

Seriously doubt it made profit overall. Especially considering game sales dropped because of it.

80billion spent on Activision. 7Billion on Bethesda…. Bought Ninja Theory… They’ve probably spent close to 100billion in the last 5 years. They aint making 100billion profit in a long long time. I know it doesnt work like that because its money they had to spend, but lol

"It's profitable for us"

I know it may sound obvious what he is trying to say, but it gives the conman a get out of jail card if we do find out it wasn't actually profitable financially and he meant some other bullshit.

 

[peter42O]

Microsoft should increase this to $2B and give me more games day one. Come on you cheap bastards!!!

 

[mibu no ookami]

Seriously doubt it made profit overall. Especially considering game sales dropped because of it.

80billion spent on Activision. 7Billion on Bethesda…. Bought Ninja Theory… They’ve probably spent close to 100billion in the last 5 years. They aint making 100billion profit in a long long time. I know it doesnt work like that because its money they had to spend, but lol

The only way he was able to say something like this is because he probably didn't include the cost of first and second party games and exclusivity deals in the cost for GamePass.

If you look at gamepass deals and operating costs for the servers itself, sure GamePass is probably profitable, but if you develop a game for 150 million and put it directly on gamepass at not cost to gamepass for the lost sales and for the development cost... it's not honest.

 

[Shadow2027]

$1 billion dollars and still cant get many good games on the service. Its clear that money is drying up with the subpar months theyve been rolling out

 

[Infinity]

$1 billion dollars and still cant get many good games on the service. Its clear that money is drying up with the subpar months theyve been rolling out

They got frost punk 2 on their first day. Super fun post apocalyptic city builder. Came out today but early access started Tuesday

 

[Shadow2027]

They got frost punk 2 on their first day. Super fun post apocalyptic city builder. Came out today but early access started Tuesday

PC game?

 

[ghostwriter74]

Sometimes I really wonder how idiots like Spencer can get such senior positions. One year of business studies is enough to realise that Game Pass, as it was implemented, is a loss-making business. Pretty much everyone has said that, except Team Xbox and journalists who are too stupid to give a shit. It's not without reason that MS has redesigned Game Pass for the third time and made it more expensive.

Even now, with the price and CoD Day 1, they're still going to make a loss. If you only play CoD for a month and then, as often happens, prefer to play something else, you can now play it for much less. Before, I had to pay at least 80 euros + Game Pass Core / Xbox Live Gold to play CoD on my XSX, now I pay 15 euros for a month or 45 euros for 3 months to play CoD AND Indiana Jones. Even if a month of Game Pass Ultimate cost me 19 euros, like Ubisoft+, it would be a big loss for MS and a big win for me, who only plays CoD every now and then.

Weren't there even leaked FTC documents where Booty or someone else from Xbox noted that first party games day 1 in the GP wasn't a good idea? Is the whole GP changeover perhaps already the first step to reversing the whole thing? Only Xbox GPU users get day 1 games now. Maybe CoD is the last test run to see that they are burning a lot of revenue. But what do I know. Spencer almost drove Rare into the wall in his first few years, and since he was now fully responsible for Xbox he has happily continued that to the entire Xbox section. Maybe Spencer is actually a Nintendo or Playstation fanboy and wants to completely destroy Xbox from within.

 

[Kokoloko]

Sometimes I really wonder how idiots like Spencer can get such senior positions. One year of business studies is enough to realise that Game Pass, as it was implemented, is a loss-making business. Pretty much everyone has said that, except Team Xbox and journalists who are too stupid to give a shit. It's not without reason that MS has redesigned Game Pass for the third time and made it more expensive.

Even now, with the price and CoD Day 1, they're still going to make a loss. If you only play CoD for a month and then, as often happens, prefer to play something else, you can now play it for much less. Before, I had to pay at least 80 euros + Game Pass Core / Xbox Live Gold to play CoD on my XSX, now I pay 15 euros for a month or 45 euros for 3 months to play CoD AND Indiana Jones. Even if a month of Game Pass Ultimate cost me 19 euros, like Ubisoft+, it would be a big loss for MS and a big win for me, who only plays CoD every now and then.

Weren't there even leaked FTC documents where Booty or someone else from Xbox noted that first party games day 1 in the GP wasn't a good idea? Is the whole GP changeover perhaps already the first step to reversing the whole thing? Only Xbox GPU users get day 1 games now. Maybe CoD is the last test run to see that they are burning a lot of revenue. But what do I know. Spencer almost drove Rare into the wall in his first few years, and since he was now fully responsible for Xbox he has happily continued that to the entire Xbox section. Maybe Spencer is actually a Nintendo or Playstation fanboy and wants to completely destroy Xbox from within.

Im guessing they knew it wouldnt work. They just wanted to spend Playstation out of business

 

[Shadow2027]

Im guessing they knew it wouldnt work. They just wanted to spend Playstation out of business

Xbox heads clearly thought Microsoft would let them spend and lose an infinite amount of money to kill Playstation. But even microsoft made money and patience is limited

 

[Landiri]

Only 1 Billion?

Didn't Jedi Survivor cost them 300 Million alone?

How would they have big third-party games, with only 1 Billion, over a full year?