It’s now known that Microsoft spends an enormous amount of money to get games on Xbox Game Pass.
Bloomberg reported that Microsoft dishes out about $1 billion each year to attract third-party games to their subscription service. They offer huge upfront fees to smaller publishers for their games.
GameSpot is trying to get more info from Microsoft about this. It seems likely that new game releases cost more to add to Game Pass than older ones.
Back in 2021, Phil Spencer, the head of Microsoft Gaming, said there isn’t just one way to make these deals for Game Pass. He told The Verge that Game Pass deals are quite varied and might seem “unmanaged.”
Sometimes, Microsoft will pay for the whole development of a game, letting the studio sell it elsewhere too, like on PlayStation or Steam. “For them, they’ve protected themselves from any downside risk. The game is going to get made. Then they have all the retail upside, we have the opportunity for day and date. That would be a flat fee payment to a developer,” he said.
Other times, the game is already finished, and Microsoft just pays a cash sum to bring it to Game Pass. Then there are deals based on how much the game is played or how much money it makes from in-game sales. It’s like the Wild West out there.
Spencer admits that Microsoft is still figuring things out. “We’re open [to] experimenting with many different partners, because we don’t think we have it figured out. When we started, we had a model that was all based on usage. Most of the partners said, ‘Yeah, yeah, we understand that, but we don’t believe it, so just give us the money upfront,'” he said.
Fans sometimes wonder if this approach is sustainable in the long run.
Even though Microsoft can pay smaller publishers a lot to get their games on Game Pass, big publishers don’t always agree to this. Strauss Zelnick from Take-Two, which makes GTA and Red Dead, told Bloomberg that launching their big games on Game Pass from day one doesn’t make “any sense at all.”
Zelnick has said this for a while. Take-Two has put some older games on Game Pass, like GTA V and Red Dead Redemption II, but those are no longer available. Recently, Zelnick talked about Call of Duty: Black Ops 6 being on Game Pass at launch, saying it will boost memberships, but only for a while.
Many people have wondered if it’s financially wise to release new games on Game Pass. This is why Sony doesn’t put new PlayStation games on PlayStation Plus.
In other Game Pass news, there’s a new Standard tier with some differences from the other versions. For more, check out GameSpot’s breakdown of all the Game Pass tiers.
