Putting the "Game Pass isn't sustainable" BS to rest

Gaming
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I was doing some number crunching and I feel that we can finally debunk the idea that Game Pass isn’t sustainable or can’t support big AAA games

Before the Bethesda I was going to assume that Xbox would release 1 maybe 2 big AAA games a year ei Avowed, Fable etc and then release 4-5 smaller scale games like Plague’s Tale or Ori per year. However its clear that they want to go through with the goal of one AAA game per quarter according to ZhugeEX (supposedly)

Now I see that happening. So lets say 4 AAA games per year and maybe 8 AA games per year to get a game on Game Pass every month

Game budgets vary of course. Horizon Zero Dawn cost 50 million to make, Shadow of the Tomb Raider cost 75-125 million to make

But lets say every AAA game gets a 100 million budget (which is probably on the high end but for this example) and every AA get gets a 30 million budget (again highly unlikely but for demonstration purposes

Your total content investment per year on the EXTREME high end is 640 million, of course that’s not including third party deals so lets just flat out state 1 billion dollars. Clearly 1 billion is more than enough for Game Pass content for a year

Game Pass currently has 15 million active subscribers and is going to continue to grow. If these 15 million subs are paying 10 bucks a month for the year, the revenue solely from Game Pass subs is 1.8 billion per year. That’s not including Game Pass ultimate which many are probably subscribed too. Also not factoring in things like MTX, DLC and expansions, and of course flat out buying the game

So the revenue would be much higher, the cost of the games would be much lower. In fact if MS truly wanted to they could even put out an AAA game per month of course that would require a ton of manpower so naturally they’d want a nice flow of smaller AA games ei Plague’s tale, Hellblade, Ori to buffer between the bigger AAA games

Of course we have to factor in things like taxes, maintaining the servers and upkeep of Game Pass etc.

But its pretty clear that Game Pass is more than sustainable even on the extremely high cost end of game development, getting third party deals and such.

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I honestly don’t think this is stuff we need to worry about, we can just continue to enjoy our subscription :slight_smile:

I feel like the only time we see concern for the service is usually when people want to downplay Microsoft and their service.

Obviously the service will continue to grow, on consoles, pc and mobile going forward.

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Of course we don’t have to worry but we should still address the nonsense.

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The people that doubt, will just tell you everyone is paying £1/$1 for the service (forgetting that Microsoft isn’t going to complain about people buying 3 years of gold especially to upgrade) :stuck_out_tongue:

I’m personally very curious as to how many people adopt the service on mobile, how popular is apple arcade?

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The Apple Arcade is still a thing?

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They are going to be eating those words. It’ll be like the Ken Olsen situation but real lol.

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No idea tbh, I assumed it was the reason why apple didn’t want game pass on their service :stuck_out_tongue:

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That’d make sense if the Apple store was super successful but I haven’t heard much about it in a while

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#EatTheRich lol feels like Game Pass is highway robbery. It’ll grow more this gen and I’m sure gamers on Steam will still buy games in the 100s of thousands. They have a very high chance of having multiple system sellers down the line as well.

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The same guy who said BC isn’t important, the same guy who said he believes in generations for months, and then later lied about that.

He has lost all credibility and shouldn’t be taken seriously.

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This is also the same company that tried to gaslight customers at the launch of the PlayStation 3 by claiming that rumble in controllers wasn’t a next-gen experience - that they found the motion control functions of the SixAxis controller to be more immersive than the rumble function…

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We know why some folks pretend to know Microsoft’s finances to an extent that they can tell that Game Pass is unprofitable and bad for the industry. We know why they ignore how services like Netflix and Spotify became successful. And we know they’d change their tune if some other players did something like Game Pass. I don’t think it’s worth even entertaining the idea.

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Yup! As soon as sony launches day and date games on PS Now everything will change.

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People call Netflix unsustainable still.

Yes, I have no idea how this is still remotely plausible as an argument now but it doesn’t stop them.

Especially the physical only crowd refuse to accept that other markets and revenue streams could possibly work.

Go back not so long and renting was the dominant form of media consumption for a reason. Many people don’t particularly want to own all of the media they use and Game Pass, Netflix, Spotify etc serve their needs.

As the membership expands, it’ll only become more viable for more budget to be dedicated to procurement, making a virtuous cycle.

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Nadella and Hood are two of the top execs in the world, crunched the numbers, told their investor they were going to acquire studios to supply content for their Netflix of games and just spent 7.5 billion (in addition to everything else they’ve recently purchased and are spending money on). No corporation ever gets it right 100% of the time but it’s kind of silly when armchair analysts armed with very little data and who have very little insight into the greater industry trends are trying to convince gaming consumers how wrong Hood and Nadella are on this bet. I’d ignore them. We don’t need to worry about the sustainability of a 1.4 trillion dollar corporation’s multi-billion dollar bets.

Subscription models are complicated but the simple summary is there is a tipping point in which the bet pays off. Microsoft believes there is potential to go beyond that tipping point otherwise they wouldn’t be making all-in investments like buying Bethesda. Investments with giant payoffs like that are expensive long term plays. If they weren’t, everyone could do them. Netflix is nearing 200 million subs. As streaming improves while phones, PCs, consoles, set top streaming boxes and tablets continue to converge and blur the lines between each other, there’s good reasons why Game Pass can hit current Netflix numbers 10 years from now.

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Sony latest fiscal reports pretty much made the case for gamepass.

In 2019 Sony sold 43 million 1st party software. But that’s in units from all price ranges. And on ps4 their most successful first party ever in their history.

Revenue wise, gamepass (not ultimate) is equivalent to 2 full $60 purchases per year, so 20 million subscribers would generate a lot more yearly revenue than Sony selling 43 million units for less than $60.

But then. It took Sony 6 years and their most successful 1st party ever to reach 100mi ps4s and 43mi software per year, it’s super easy to see how gamepass revenue growth is just trampling that.

And I would argue that the potential reach is a lot higher. 100mi is something that basically only Playstation consoles do (and 2 Nintendo exceptions) but a service reaching millions of users across multiple platforms is quite common.

And there’s also the stability, arguably Ms haven’t yet delivered any of their big AAA productions created solely for gamepass yet. But they are already collecting revenue for them because of the smaller games and investments keeps people signing up. On a release to market paradigm without the big guns releasing and selling 10mi plus you don’t reach that number of sales too. Which means on sony side both 2018 and 2020 to be higher than 2019 due the bigger releases, versus gamepass that saw continuous growth.

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There is also the part about Game Pass beeing a predictable monthly recurring cashflow versus the traditional model of making a game for 4-5 years for 100 million dollar and not knowing how much money you get back. Thats why shareholders and CFOs love this model.

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It will/is sustainable past a certain number of subscribers. Obviously they have crunched the numbers and shown a good profit margin, otherwise I doubt they would have invested 7.5B into new teams, and apparently more to come.

The concern will never go away, we should just enjoy the content as it comes, we’re in for what I think will be Xbox’s best generation yet :slightly_smiling_face:

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to be very honest, I wouldn’t put too much credence into Microsoft’s spending habits lol, they paid Ninja 30 million for Mixer only for it to die out within the next year. Although I do think them doing that and still being confident enough in spending all this money in gaming is what gives me reason to think it’ll work out. Also, the reason Mixer failed is because of Twitch and Youtube, basically it was getting into a market with already huge competitors. In Game Pass’ case, there’s literally no service like it at the moment (outside PS Now and Humble Bundle and the like, which are nowhere close to Game Pass and don’t intend to be, even Sony admitted to it). So I think MS is in a far better position when it comes to Game Pass than they were when it comes to Mixer, and when these AAA first parties start rollin in from late 2021 onwards, it’s just gonna be non-stop every quarter.

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I view gamepass as the trojan horse to get people into Xbox ecosystem. More people that are in ecosystem more potential revenue if they start buying major mainstream annual releases like; COD, Fifa, NBA 2K, Assassin’s Creed, etc. Having those consumers buy those games means more potential revenue since they’ll buy their microsotransactions through xbox store which means they get 30% cut. Plus, these consumers might buy other games at launch or when on sale, so it makes perfect sense to take a hit because potential revenue

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