A new report has revealed the jaw-dropping sum of money that Microsoft reportedly spends each year to encourage third-party developers and publishers to bring their games to Xbox Game Pass.
Bloomberg reported that, “Microsoft now spends $1 billion a year getting third-party games on the subscription service.” The site said Microsoft offers “flat fees of millions of dollars upfront” to add titles from smaller publishers to Game Pass.
GameSpot has contacted Microsoft in an effort to get more details on this. Presumably Microsoft would pay more for a developer to bring a new release to Game Pass at launch compared to a licensing arrangement for an older title.
In 2021, Microsoft Gaming CEO Phil Spencer spoken openly about how there is no one defined path for the deals it makes for Game Pass releases. He told The Verge that Microsoft’s Game Pass deals are “all over the place,” and he understands that this might sound “unmanaged.”
In some cases, Microsoft will completely fund the development costs of a game, and the studio can go sell their game on rival stores like PlayStation and Steam, or at retail, while Microsoft enjoys the benefit of having another Game Pass game. “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.
In other cases, a game might be finished, and then Microsoft works out a straight cash deal to bring it to Game Pass, Spencer said. Still, other deals involve usage and how much monetization a game has through in-game sales. If this all sounds like the Wild West, it’s because it is.
Spencer has been frank in acknowledging Microsoft doesn’t have all the answers. “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.
While Microsoft can pay smaller publishers big money to bring their titles to Game Pass, larger publishers don’t always take the money or agree to put their titles on Game Pass, for any number of reasons. Strauss Zelnick, the head of GTA and Red Dead company Take-Two, told Bloomberg that putting its big games on Game Pass at launch doesn’t make “any sense at all.”
Zelnick has been saying this for a long time. Take-Two has, however, brought some of its older titles to Game Pass, including Grand Theft Auto V and Red Dead Redemption II, though both have since rotated out of the catalog. Recently, Zelnick discussed Microsoft’s decision to put Call of Duty: Black Ops 6 on Game Pass at launch, saying it will help drive Game Pass memberships, but only for a period of time.
Many have questioned the economic sustainability of launching brand-new games on Game Pass, and that’s one of the reasons why Sony doesn’t launch new PlayStation games into PlayStation Plus.
In other Game Pass news, a new Standard tier of the service just launched, though it has some key differences between the other versions. For more, check out GameSpot’s breakdown of all the Game Pass tiers.
