Because the money coming from Game Pass will just vanish?
Why aren’t you taking into account revenue of the subscribers? We are talking about total revenue made from all distribution methods are we not?
I think you guys have no ideia how Gamepass revenue works.
Let's clear here.
When you put a game on Gamepass you expected to receive a parcel of the revenue subs based in how much people played your game (there is the very few exceptions that MS pays upfront but that is not how the actually works for 99% of the games there).
That is very little parcel but it come every month while the subscribers are playing your game.
To cover a $200m budget it can take months or even years... at the end the revenue from the subscription can even surpass the one of full priced sales if the game have continuous subscribers playing it for years.
But you invested $200m... you can't wait months or years to recover it... you have to already recovered and profit to invest in a new project.
So with full priced sales you have that... you pay your costs at launch windows and already accumulate funds to the next project.
You can set high budget because you know you will get it fast in the launch window (if not your made a failure).
With subscription having the game at day one you need to plan different.... you set lower budget target because you know it will take time to recover it.
If you kill decrease the number of full priced sales then you need to invest less in your games and so you have a different approach in development... the most time the subscriber keep playing your game more you will receive per month and you want them to play that game near forever... and that add mechanics that keep you playing it... that is why GAAS is better fit for subscription services with low investiment.
When you plan a big AAA budget game you target a number of sales at full price to cover all costs... it is a near term plan... you delivery, you recoup, you start to dev again, delivery, recoup, etc.
Subscription is a long term.... you need time waiting the game recoup.