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Microsoft ‘paid $5-10 million’ to get Guardians of the Galaxy on Game Pass, analyst claims (VCg)

kingfey

Banned

Microsoft likely paid between $5-10 million to get Marvel’s Guardians of the Galaxy on Xbox Game Pass, according to an industry analyst.

David Gibson, who is a senior analyst at MST financial, has estimated that Square Enix was paid around $5-10 million for its superhero adventure to join the on-demand subscription service.

Although this figure has neve been officially confirmed, Gibson says it’s an estimate based on “discussions with Square Enix and others”. Gibson has been covering Square Enix as an analyst for 15 years.

Microsoft typically keeps the terms of Xbox Game Pass deals confidential, so Gibson’s estimate – if accurate – could shed some light on the upper end of the scale.

In a recent blog post celebrating nine years of ID@Xbox, Microsoft’s Chris Charla revealed that the company has paid developers and publishers “hundreds of millions of dollars” in Game Pass licensing fees since the service launched.

He also revealed that after joining the service, the average member plays “30% more genres and plays 40% more games, with a majority of those games being outside of Game Pass”.

Guardians of the Galaxy joined Xbox Game Pass last month. Despite positive fan reception, Square Enix stated that sales of its Guardians of the Galaxy game “undershot initial expectations“.


In presentation slides following its results briefing held in February, the company’s president Yosuke Matsuda stated that the game hadn’t sold as well as hoped, even though it had reviewed well.

“Despite strong reviews, the game’s sales on launch undershot our initial expectations,” Matsuda said. “However, sales initiatives that we kicked off in November 2021 and continued into the new year have resulted in sales growth, and we intend to work to continue to expand sales to make up for the title’s slow start.”
 

Stuart360

Gold Member
Although they probably got it a little cheaper due to the underwhelming sales, it does show that MS are probably paying much lower than people think to get these games on Gamepass (especially games with MTX).
All those 'its costing MS 50-100mil for these games lol' posts were always way off the ,mark. The EPIC leaks already showed us that the deals for these games are way lower than people think.
 
It was a good get and perfect timing. Gamepass didn't have a quality AAA game on console for the first quarter. Not many people bought GOTG so it was a nice addition to keep subscribers happy. Between Elden Ring, GOTG and Tunic there has been a lot to play for me.
 

yurinka

Member
I don't get his maths. Where the $2 comes from?

If it's 25M subs and they pay let's say $5-10M that would mean Square gets $0.2-0.4 per user. Let's say only half of the subs play it, 12.5M. That would be $0.4-0.8 for Square per user.

Regarding MS paying only $5-10M to put Guardians of the Galaxy on GP, I think this price is too low and that must be way higher. Because as I remember this is what Sony paid RE Village only for having a marketing deal and preference for game subs negotiations plus skipping game subs of the competition during 14 or 15 months startting to count from release. I think MS paid them way more than $5-10M.

If the number is real it would mean that the game absolutely tanked hard in sales and that Square are desperate to get some revenue from some place. Because if not, I don't get why Square would be ok getting $2 (or less) per copy instead of $29.
 
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Chukhopops

Member
People always overestimate how much it costs to add those games when we already know from the Epic vs Apple trial that it’s usually fairly cheap.

Don’t know how much the game bombed but I enjoyed it on GP. Gameplay was so-so but the game is carried by great writing and story.
 

elliot5

Member
I don't get his maths. Where the $2 comes from?

If it's 25M subs and they pay let's say $5-10M that would mean Square gets $0.2-0.4 per user. Let's say only half of the subs play it, 12.5M. That would be $0.4-0.8 for Square per user.
You expect a financial analyst to have good math skills or something?
 

Banjo64

Member
thats damn cheap. Gamepass now has 20 million subscribers generating $200 million monthly. Must be a big profit machine for MS in months they dont have their big AAA first party exclusives releasing.
it’s actually over 25m from their last announcement.


If you think that some people are on basic game pass and some used the £1 trick you could conservatively say the average monthly fee people are paying is £7.

25m * 7 is £175,000,000 a month.

Obviously not accurate but gives some idea of the numbers we could be talking about and all of the sudden £5m looks like small fry.
 

BPX

Gold Member
Happy Guardians Of The Galaxy GIF by Eidos-Montréal
 

tmlDan

Member
why would people think its $50M to get it on there, the game was dead at this point where there were no sales, it was months after release.
 

kingfey

Banned
I don't get his maths. Where the $2 comes from?

If it's 25M subs and they pay let's say $5-10M that would mean Square gets $0.2-0.4 per user. Let's say only half of the subs play it, 12.5M. That would be $0.4-0.8 for Square per user.

Regarding MS paying only $5-10M to put Guardians of the Galaxy on GP, I think this price is too low and that must be way higher. Because as I remember this is what Sony paid RE Village only for having a marketing deal and preference for game subs negotiations plus skipping game subs of the competition during 14 or 15 months startting to count from release. I think MS paid them way more than $5-10M.
Because buying 1m copy isnt the same as buying 1 disc. Disc price is only for consumers. Company price is different money.

AAA games like gtav cost around $30 copy per 1m if you are buying it in bulk for day1 purposes.

That is how Sony is able to afford alot of timed exclusive games, because they negotiate based on that.
 
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That's cheaper than I expected, which is great news for the future of Game Pass subscribers. If Microsoft doesn't have to spend super ridiculous amounts on every "big" game then this seems sustainable for the types of 3rd party Game Pass games we can get. I also imagine multiplayer games, or games with significant monetization, would be substantially cheaper, and if Game Pass continues to grow may end up having to pay for the privilege and benefits of being on Game Pass. As a Game Pass subscriber I'm excited by what this means for the quality and frequency of 3rd party games that will come to Game Pass
 

yurinka

Member
You expect a financial analyst to have good math skills or something?
Michael Patcher says a lot of random dumb shit out of his ass and he's one of the best know gaming market analysts. So I assume an unknown gaming market analyst like this on can also say random dumb shit out of his ass too.

But yes, I'd expect from them at least some basic math skills.
 
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kingfey

Banned
Michael Patcher says a lot of random dumb shit out of his ass and he's one of the best know gaming market analysts. So I assume an unknown gaming market analyst like this on can also say random dumb shit out of his ass too.

But yes, I'd expect from them at least some basic math skills.
Gibson has been covering Square Enix as an analyst for 15 years.
He isnt some unknown.
 

Metnut

Member
Totally sustainable. Surely they won’t change anything if they ever get more market share.

Maybe I’m wrong though and Sony copies them with Spartacus and this is what gaming becomes going forward.
 
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DaGwaphics

Gold Member
I don't get his maths. Where the $2 comes from?

If it's 25M subs and they pay let's say $5-10M that would mean Square gets $0.2-0.4 per user. Let's say only half of the subs play it, 12.5M. That would be $0.4-0.8 for Square per user.

Regarding MS paying only $5-10M to put Guardians of the Galaxy on GP, I think this price is too low and that must be way higher. Because as I remember this is what Sony paid RE Village only for having a marketing deal and preference for game subs negotiations plus skipping game subs of the competition during 14 or 15 months startting to count from release. I think MS paid them way more than $5-10M.

If the number is real it would mean that the game absolutely tanked hard in sales and that Square are desperate to get some revenue from some place.

The biggest factor will be the time from release, I'm sure MS is paying more for the day one additions. But, in the game subscription space the console maker with the smaller userbase is going to pay less than the console maker with more users. They are effectively buying out a portion of their own customers, the opposite of buying console exclusivity.

Who knows if this number is right, but the Epic deals do show that the amounts might not be that large.
 
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Dr Bass

Member
thats damn cheap. Gamepass now has 20 million subscribers generating $200 million monthly. Must be a big profit machine for MS in months they dont have their big AAA first party exclusives releasing.
No it doesn’t. Again where are these assumptions coming from? None of us have any idea what the actual economics of the platform are. I’m a Game Pass Ultimate subscriber through 2025 and I paid 1 dollar to do so. I’m not paying ten dollars a month.

We don’t know how many people pay monthly.

We don’t know how many people converted XBL to a GP sub.

We don’t know how many people in the revealed numbers are using a trial they got over the holidays.

And you don’t know either. It’s all speculation. But given the popularity of the XBL conversion … the real numbers are surely an interesting tidbit. The bottom line though, is that none of us know. So making an assumption of that nature has zero basis in fact or reality.
 

SlimySnake

Member
The real question is.

How does the dev earn their money on getting their games on game pass 🤔
you mean publishers. devs are owned by publishers who are paid yearly salaries and bonuses based on game sales.

Square Enix already made whatever they were going to make selling this game on PC, PS5 and XSX last year. anything they get now is extra revenue. free money.
 

SlimySnake

Member
it’s actually over 25m from their last announcement.


If you think that some people are on basic game pass and some used the £1 trick you could conservatively say the average monthly fee people are paying is £7.

25m * 7 is £175,000,000 a month.

Obviously not accurate but gives some idea of the numbers we could be talking about and all of the sudden £5m looks like small fry.
they couldve easily gotten cod every year for $100 million at least for the first month. even $200 million. 25 million monthly subs is a lot of money. no need to buy activision really.
 

kingfey

Banned
you mean publishers. devs are owned by publishers who are paid yearly salaries and bonuses based on game sales.

Square Enix already made whatever they were going to make selling this game on PC, PS5 and XSX last year. anything they get now is extra revenue. free money.
Yup, publishers are usually the one who sets up these prices, because they know devs already got paid for the game.
If you are contracted to a publisher, you are kinda getting fucked by these deals. Since the publisher is the one that is funding your game, and paying you.

That is how scummy these publishers are.
 

cormack12

Gold Member
On the surface that looks a great deal obviously down to the game under performing but it's actually a really good game.

Makes you wonder why Sony didn't compete as a + game really. Would have been a great get for them and especially at that price point.

Whether a plus or gamepass deal, that's a steal imo
 

Ceadeus

Member
I was surprised to see it on gamepass. I was one who bought the game. IMO square does a horrible job advertising games from their NAM studios. actually they do a crap job advertising any of their games imo.
Well they dit a good job advertising Stranger of Paradise, I can stil hear CHAOS to this day
 

adamsapple

Gold Member
I reckon the price was reasonable because the game didn't exactly burn the charts and under-performed at retail.
 
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Chukhopops

Member
No it doesn’t. Again where are these assumptions coming from? None of us have any idea what the actual economics of the platform are. I’m a Game Pass Ultimate subscriber through 2025 and I paid 1 dollar to do so. I’m not paying ten dollars a month.

We don’t know how many people pay monthly.

We don’t know how many people converted XBL to a GP sub.

We don’t know how many people in the revealed numbers are using a trial they got over the holidays.

And you don’t know either. It’s all speculation. But given the popularity of the XBL conversion … the real numbers are surely an interesting tidbit. The bottom line though, is that none of us know. So making an assumption of that nature has zero basis in fact or reality.
We know it’s whatever the average people pay for PSNow plus around 20%. So probably not $1 average and probably not full price either.
 

ManaByte

Gold Member
People always overestimate how much it costs to add those games when we already know from the Epic vs Apple trial that it’s usually fairly cheap.

Don’t know how much the game bombed but I enjoyed it on GP. Gameplay was so-so but the game is carried by great writing and story.
It going to GP made it PlayAnywhere. So if you owned it on Xbox you automatically get the awesome Raytraced PC version for free. Replaying it on PC due to that.
 

Amiga

Member
This proves it's unsustainable for GP to constantly get AAA games that cost $100 million to make. Best it can hope for are good games that couldn't find a place on the hype train.

Ironically it will be more difficult for MS to get deals like this if expands it's market share. publishers are losing less than 10% of the market on Gamepass, vs 50% of the market on Playstation store platforms.
 

kingfey

Banned
Btw, if this number is true, does anyone think this “bodes well” for the future of the industry? :messenger_tongue:
It should represent the platform split. Xbox wont be able to sell 3m copy of this game, as they dont have more users compared to Sony and Steam.

This applies to every game.
 

John Wick

Member
No it doesn’t. Again where are these assumptions coming from? None of us have any idea what the actual economics of the platform are. I’m a Game Pass Ultimate subscriber through 2025 and I paid 1 dollar to do so. I’m not paying ten dollars a month.

We don’t know how many people pay monthly.

We don’t know how many people converted XBL to a GP sub.

We don’t know how many people in the revealed numbers are using a trial they got over the holidays.

And you don’t know either. It’s all speculation. But given the popularity of the XBL conversion … the real numbers are surely an interesting tidbit. The bottom line though, is that none of us know. So making an assumption of that nature has zero basis in fact or reality.
Exactly! We don't know until MS breaks down the numbers. Same as the analyst's prediction.
 

kingfey

Banned
This proves it's unsustainable for GP to constantly get AAA games that cost $100 million to make. Best it can hope for are good games that couldn't find a place on the hype train.

Ironically it will be more difficult for MS to get deals like this if expands it's market share. publishers are losing less than 10% of the market on Gamepass, vs 50% of the market on Playstation store platforms.
Publishers are already losing money on logistics making disc based games, then shipping those games. Then you have 30% loss to the platform holder on both disc and digital.

Getting deals like that, for games that sell 2-5m on life time is big deal for publishers and developers.

The breakdown for a $70 DISC game is:

  • $1.50 for disc manufacture (at Console manufacturers expense)
  • $14 (20%) Console manufacturers royalty
  • $14 (20%) retailers cut
  • $70 – $28 = $42 to developer
The breakdown for a $70 digital game is:

  • $21 (30%) Console manufacturers royalty
  • $70 – $21 = $49 to developer
The less the cost is the more money you lose.
 
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yurinka

Member
Does a multiplatform game doing well on gamepass ever get boosted sales on PS?
To include a game in a subscription like Gamepass/Gold/Plus/Now means that it appears in some game news coverage, and if good would have some extra word of mouth after played by the people in the subs.

So I assume unknown games like indies who aren't the cool ones with a good PR that appeared in the gaming press may get their sales increased after being included in Gamepass/Plus/Now/Gold.


Publishers are already losing money on logistics making disc based games, then shipping those games. Then you have 30% loss to the platform holder on both disc and digital.

Getting deals like that, for games that sell 2-5m on life time is big deal for publishers and developers.

The breakdown for a $70 DISC game is:

  • $1.50 for disc manufacture (at Console manufacturers expense)
  • $14 (20%) Console manufacturers royalty
  • $14 (20%) retailers cut
  • $70 – $28 = $42 to developer
The breakdown for a $70 digital game is:

  • $21 (30%) Console manufacturers royalty
  • $70 – $21 = $49 to developer
The less the cost is the more money you lose.
Would be nice to include there taxes like VAT (in my country is 21% of the $70/70€) plus refunds/chargebacks. Refunds/chargebacks at least in mobile and Steam are pain in the ass, in the case of Steam the refunds eat around 10-15% of the revenue that the dev gets, in mobile at least some years ago was like half of that depending on the game (I have no idea about console).
 
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kingfey

Banned
To include a game in a subscription like Gamepass/Gold/Plus/Now means that it appears in some game news coverage, and if good would have some extra word of mouth after played by the people in the subs.

So I assume unknown games like indies who aren't the cool ones with a good PR that appeared in the gaming press may get their sales increased after being included in Gamepass/Plus/Now/Gold.
That is the real boost for subscription like these.
If you follow social media, you will talk these to games to your friends.
You also have youtubers and twitch users who keep talking about these games.
 
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