Xbox Game Pass: Developer Concerns and Sales Impact

July 4, 2024 (3 weeks ago)

The Impact of Xbox Game Pass on Game Sales

All right, so today we’re going to be talking about a new report about Xbox Game Pass. As a consumer, I enjoy Xbox Game Pass. I’m a cheap person, and it’s nice to pay a monthly subscription service and get a whole bunch of games added that I can play at any point in time. Now, there’s always been that sort of backend situation with what about developers that don’t put their games on Xbox Game Pass but do put their games onto Xbox. Many people like to act like they’re genuinely concerned about that, but I really feel like, at the end of the day, people are more concerned about what their dollar is doing rather than what a company’s dollar is doing. I mean, it’s just human nature. There’s nothing wrong with admitting that. You can still care about the developer, but as a consumer, your number one interest should be in yourself.

Developer Concerns with Xbox Game Pass

Well, we got a new report that came out about Xbox Game Pass, mostly about games that don’t go onto Game Pass but are released onto Xbox, and it looks like everyone’s fears are a bit confirmed with this. A lot of developers do not like Xbox Game Pass if their game is not going on there. We’re going to talk about this and take a look at it together and see if we can come to some sort of middle ground.

This is an article done by Twisted Voxel. Developers claim Game Pass has caused a behavioral shift that has led to very few sales on Xbox. And I mean, that’s kind of a long-running joke. People don’t buy games on Xbox because of Game Pass. If it’s not a game that’s going onto Game Pass, a lot of people are going to look past it. Now, it’s not a true blanket statement or anything like that. I buy some third-party games on my Xbox to play with my friends that maybe don’t go into Game Pass, but generally speaking, I’m kind of avoiding buying games on Xbox because I like Game Pass.

Behavioral Shift and Sales Impact

ScaleUp Associate Edward TR recently had the opportunity to interview a series of anonymous game developers, and the overall takeaway regarding Xbox was that Game Pass has resulted in a behavioral shift that has led to very few sales on the platform. The general sentiment among developers is that the existence of Xbox Game Pass has created a vicious cycle. One such developer released an award-winning title on Xbox more than two years ago after initially releasing on other platforms. They mentioned that game sales on Xbox have been the weakest. It’s a bit like trying to sell a DVD to someone who uses Netflix. Some people still do that from time to time, but you’re not targeting the right audience.

Challenges for Indie Developers

As for the challenges involved in porting to Xbox and its financial worth, another developer with a small team working on an indie game said that the difficulty of releasing games for Xbox consoles is low on the list of reasons not to consider the platform. They added that this is especially true in a world where Switch or Steam Deck is an optimization target. Meanwhile, one developer pointed towards the large number of Xbox configurations to tackle, namely Xbox One, Xbox One X, Xbox Series X, Xbox Series S, and Windows PC. According to them, it isn’t healthy for small indie game developers to port to five different hardware platforms.

Comparison with PlayStation and Other Platforms

When it comes to indie titles, things aren’t a whole lot better on the Sony side either. While PlayStation ports lead to better sales than Xbox, some still trail significantly behind PC and Switch. According to one developer, it makes more sense to ship an indie title on Xbox and PlayStation sometime after launch where they can strike a deal with either console maker for their respective subscription service. Doing so has become more of a necessity.

Game Pass and Developer Revenue

Another developer said that if they release a game on Xbox without Game Pass, they miss out on the majority of the player base, which is essentially only playing games via subscription service. A lot to unpack here and a lot of things that I find interesting. We know that if a game gets chosen for Game Pass, that company gets money upfront. Microsoft will give companies money to put their games onto Game Pass to sort of offset the price of people not buying the game. We’ve seen that time and time again and will continue to see Microsoft paying for games to go into Game Pass.

Developer Realization and Business Challenges

I find it very interesting how developers are just now sort of realizing that this is kind of a problematic thing from a business standpoint. From a consumer standpoint, I think we can all agree it’s great having this large library of games that you have access to at any point in time. You can do cloud streaming with them, however you prefer to play these games. You have that option, but it takes time and effort to create that sort of thing. For a lot of companies that aren’t approached with that Microsoft bag saying, “Hey, we want your game on Game Pass,” what are they supposed to do?

The Culture of Not Buying Games

Anyone who says that Game Pass doesn’t create a culture of not wanting to purchase games is fooling themselves. When was the last time an Xbox game was number one in sales in the NPD stuff? It doesn’t happen. I’m not saying that’s your fault as a consumer because it’s not. Why would you, if you’re paying for Xbox Game Pass, go out and buy the game when it’s already on there? You’re just wasting your money unless it’s a game or a franchise that you’re a big fan of. Maybe you want a collector’s edition or something of that. Then that kind of makes sense, but most people that have Game Pass are probably a bit of a younger demographic that doesn’t care about physical game sales or buying games.

Business Decisions and Platform Bias

If you see a new game for $70 but that game is in Game Pass, you’re not going to buy the game. But what does that do to the other companies who don’t have Game Pass, who don’t have that luxury? Is that potentially a reason why some third-party games, especially Eastern games, Japanese games, and stuff like that, tend to skip on the Xbox? People question why. It’s a bias against Xbox, and it’s like no, they’re businesses. At the end of the day, you have to run your business in the best manner possible. If you see a platform where people are not spending money, people are not wanting to buy games, if you’re not going to at least break even on the platform, what’s the point?

Development System Challenges

The multiple development systems that you have to keep in mind with Xbox also play a role. It’s not like the PS5 where the PS5 is the PS5. Whether you buy a digital edition or a physical edition, the PS5 always works the same way as far as the technical specifications are concerned. With Xbox, there is a lot more nuance and variety to keep in mind. Is that worth a company’s time and effort?

Future of Game Pass

With all the stuff going on with Game Pass right now, all this pushback, it’s not consumer pushback, it’s company pushback, and you’re starting to see it more and more. When Xbox is potentially going to be raising the price of Game Pass, how many people are going to be on board with that? I really feel like this Game Pass culture that Phil Spencer created is now at a crossroads. They don’t necessarily know what to do with it. What’s the next move? At this point, it’s not like you can get rid of Game Pass because people are accustomed to it. If you take that away, what’s the incentive for people to buy an Xbox?

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