Current Events > How do they make a profit with Game Pass?

(+) Yeah! (+)

Arent there millions and millions of copies of new games that are no longer purchased at $60-70 a pop?

I imagine they arent. Especially with the $1 a month promotional period. They will be trying this time to get as many subscribers as possible. This will eventually go the way of all services. Massive price hikes or a decline in services. Then theyll rely on people not cancelling.

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They're going from $0 to $10 more often than they're going from $60 to $10. They're getting all those people that were content without Game Pass until they decide "hm, well since it's only $10 a month I might as well get it and play these games" which has value in itself. Then you just sort of always keep Game Pass even if you aren't using it, so now they both collected all those people on the fence, and those people will still pay even without actively using it since the deal is so convenient.

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Master Kazuya posted...

They're going from $0 to $10 more often than they're going from $60 to $10.

Hmmm, I dunno. I mean yeah I see the logic but I just have to imagine that a LOT of these players were fully prepared to buy these new games on launch day at full price.

If it was old, dead games that are years old then yeah, sure, its going from $0-$10 because if they were gonna buy those games they already would have, but I absolutely wouldve dropped the full $70 on MLB The Show 21, and id imagine a lot of Xbox gamers wouldve done the same if Game Pass wasnt a thing.

It's a long game gambit. Lose a ton of money now and make it back later.

Same thing Epic is trying to do with Epic Game Store.

But what has me concerned is thinking about what MS would do if it did actually achieve the monopoly it clearly wants.


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I cant see how they are, but Im sure theyre banking on people not knowing whatll be included with game pass? I know I had MLB the Show preordered for Xbox and I found out a few weeks later on twitter that it was going to be included with game pass on launch day. I dont think Xbox really advertised that. If they did, I missed it.

Devs are happy to take the guaranteed payment from Microsoft rather than the uncertainty of direct sales, especially if it means more players are playing and looking at DLC.

Microsoft was only making a small portion of game sales (30% of $60 for digital games), and is okay taking a loss in the short term if it means more players are considering Xbox.

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Antifar posted...

Devs are happy to take the guaranteed payment from Microsoft rather than the uncertainty of direct sales

I wonder how these fat Microsoft checks are gauged. Im assuming its based on what they project sales will be based on pre-release hype, but then I would think that sleeper hits that grow sales strongly over time from word of mouth like Hollow Knight would get fucked.

Game pass had like 15 million subscribers, let's say 5 million of those did the conversion, that's 10 million people at 10 or even 15 a month for ultimate

10,000,000x10=100,000,000 A MONTH in revenue

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I can only assume they dont actually have very many copies of a game but are banking on most consumers simply never cancelling their subscription nor them all ordering a specific game at once.

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lejonbrames posted...

I wonder how these fat Microsoft checks are gauged. Im assuming its based on what they project sales will be based on pre-release hype, but then I would think that sleeper hits that grow sales strongly over time from word of mouth like Hollow Knight would get fucked.

Yeah, that's a possibility, but some devs are willing to trade the possibility of a big payday for the guarantee of a solid one.

Also, consider the role being available for free can play in generating word of mouth, especially for a multiplayer game where active player bases are important to have. Rocket League was a PS+ game the month it came out; Fall Guys was the same.

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AlBundy33 posted...

Game pass had like 15 million subscribers, let's say 5 million of those did the conversion, that's 10 million people at 10 or even 15 a month for ultimate

10,000,000x10=100,000,000 A MONTH in revenue

Thats revenue though, I wonder what the projected losses are based on individual sales of those new games they wouldve had.

lejonbrames posted...

Thats revenue though, I wonder what the projected losses are based on individual sales of those new games they wouldve had.

Assuming $100m in monthly revenue, Microsoft would have to otherwise be selling $300 million worth of those games digitally a month (5 million at $60) to just Game Pass subscribers to be losing money on lost sales

Now, what their payments to devs to get games on Game Pass is costing them monthly is an open question

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lejonbrames posted...

Thats revenue though, I wonder what the projected losses are based on individual sales of those new games they wouldve had.

They're not losing a penny, there's no possible way

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Here you go TC. This is an interview from the publishing label that has done Descenders, Yes Your Grace, Hypnospace Outlaw, etc., and it's pretty much a deep dive into how GamePass works from the publisher side.

It's a lengthy podcast but if you want to know how it's profitable for publishers/developers he answers all of that.

https://youtu.be/khce702SBo0

In regards to how it's profitable for Microsoft we don't know. The thing is though it's Microsoft, assuming their main goal is to get it to 100m subs as soon as they possibly can they have more than enough $ to take that hit and reach their goal.

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Subcription services are lucrative.

$9 for netflix vs. Thouasands to buy all those shows separately! How do they make money!!!

Becuase millions of people paying $9 a month means $9 million per whatever million people per month.

Say 10 mil people have netflix.
That is $90 million a month and a billion a year.