Microsoft's games sell also, my friend. But what is even the purpose of releasing premium (COD/God of War/Elden Ring) or freemium (Fortnite/Warzone/Destiny 2/Overwatch 2) games in the first place? To bring in money, right? Microsoft has simply found an alternate method to get its customers to pay them for the games they offer. Game Pass helps tremendously with that process by taking the pressure off any one game from Microsoft needing to make all the money it can make on its own solely through traditional up-front sales.
Game Pass is basically an Xbox first-party game live service subscription that delivers guaranteed day one first-party AAA games as its most anticipated seasonal or DLC content, and gives it to you at no additional cost. The monthly subscription fee is how you're paying for whatever new or existing content you consume. Or like a monthly patreon with over 25 million subscribers paying a minimum of $9.99/month or a maximum of 14.99/month to access the content. People think because they may not see the exact same headlines for every Microsoft first-party game, or a first-party title may not chart as high in NPD from one month to the next, it means Microsoft is not making any money off their games. That is incorrect. Game Pass, like Fortnite & COD Warzone, doesn't need to top NPD charts or whatever other best-selling lists out there because they bring in money, period. $2.9 billion on xbox consoles alone just in 2021 to be exact.
If people are newly subscribing to and/or staying subscribed to game pass to play Xbox first-party games (or even third-party games), then Microsoft doesn't need every person to buy their first-party games upfront, because the money they would have received is still coming, but in bigger portions, I believe, thanks to Game Pass. The thing that I feel some people still can't wrap their heads around today is that people pay for Xbox/PC Game Pass
. The shit isn't free. We don't pay with sexual favors, we pay for Game Pass using real money. The sexual favors are how publishers agree to sell to Microsoft in the first place.
On a serious note, people paying for Xbox Game Pass (new and existing subscribers) is a large part of how Microsoft gets paid for all the first-party games they add to Game Pass, past and present. Some people don't like hearing this, but it's true. Many can't accept this because they think it doesn't square with their worldview of how first-party AAA games should be sold. People think "yea, but how many copies did it sell!?" The answer, in the case of Xbox Game Pass, may be that it really doesn't matter. People are subscribing to Game Pass at the pace they are yearly because of the existing and future Xbox first-party titles that are guaranteed on day one at an incredible price. They're the big attractions and why Game Pass is growing at the speed it is and maintaining subscribers. Yes, even older, already released first-party games. That there are plenty of 3rd party games and the occasional 3rd party AAA as well, is the icing on the top that further helps Microsoft pay for the first-party games they're putting into game pass because those too attract and maintain subscribers.
People gravely underestimate the power of game catalogs,
especially one that keep growing at no additional cost with many of the biggest games a platform has to offer as Game Pass does. Huge digital game catalogs are a big reason PC gaming has been so popular for years, it's the reason digital has so strongly surpassed physical console sales in like no time at all, and it's why Steam is so damn popular today. I was there at the earliest days of Steam as an early tester. My Steam ID is literally 4 digits in the 1xxx range. Game Pass in many ways feels exactly like what Steam was in those early days -- back when CS 1.6 was the only damn thing on there. And even then you knew exactly what Steam had the potential to become. You knew steam would grow into a juggernaut that would feel essential for many reasons outside of whatever brought you to it because it just made too much damn sense. Xbox Game Pass has that exact same early Steam vibe to it. We haven't yet fully seen the fully formed version of what it will become, but 2023 will start making that picture much clearer, especially with major releases like Starfield. Xbox's first party games, present and future, are the steam equivalent of what counter-strike 1.6 meant for steam in those early days.
Some may have issues with anyone saying Microsoft is being paid for putting its first-party games in game pass day one because we aren't getting the type of data necessary to individually assign credit to specific games, or even to fully know which game is most responsible for keeping people on Game Pass. It is important data to know, true, which is why the people at Microsoft who need to know this actually do. The money is coming in regardless of which game/games are responsible. Game Pass represents a collective effort by many games, headlined by all of Xbox's first-party titles. We can make educated guesses, and likely turn out correct for the most significant releases, but it ultimately doesn't matter which is most responsible for bringing new subscribers and what's most responsible for retaining them. All that matters is that they are retained and the money is coming in. Outside of that..
In fact, Microsoft is making more money per individual who stays subscribed to game pass as compared to a single person who purchases God of War Ragnarok for $60 or $70, more than a person who bought Forza Horizon 5 or Halo Infinite Campaign for $60, and certainly more than anyone who will go on to buy Starfield and Redfall. A full purchase is a one-time deal. Game Pass is likely generating just over $300 million per month right now. And I highly suspect I'm actually lowballing that figure.
Game Pass just gives Microsoft another method of payment to collect money for its games over the course of a one-year time period, rather than attempting to get it all at once. I repeat, the business model is not too dissimilar in its objective from free-to-play games that also seek to collect money over the course of the year. Or like MMOs such as World of Warcraft or Elder Scrolls Online that operate in a similar fashion. It hasn't fully caught on yet that Game Pass, despite being a subscription games service, makes more sense to be viewed like free to play service title in terms of how its money is generated gradually. It's more like fortnite, genshin impact or candy crush in that respect. Only viewed that way will Game Pass begin to make a little more sense for some.
Microsoft isn't actually giving away its games for free like some people bizarrely suggest. They're surely getting far more for them now than at any point during the previous generation. Halo 5 before Game Pass launched did 5 million sold in 3 months. Game Pass right now is likely making more than twice that revenue in only 2 months, and significantly more per calendar/fiscal year.
Now consider that over 1 million gamers had already paid for Forza Horizon 5 in early access before it officially launched on Game Pass.
There were only 2 ways to get early access. The premium add-ons bundle for $49.99 for game pass users who wanted everything in the premium edition without having to buy the game, or by purchasing the premium edition that was sold for $99. For every one of those million early access players who had game pass you're looking at $170-$230 (if they had ultimate) for the year off one game pass customer who bought the premium add-on bundle.
Even if first party games sold a bit more copies without Game Pass existing, it would not be enough to beat the revenues that Game Pass is bringing in for Xbox currently. I don't know of a single xbox first-party game that brought in $2.9 billion in revenue for the year on the Xbox 360.
Halo 3 did $170 million on its first day and $300 million in its first week.
I don't think anyone disagrees Halo 3 was a successful traditional game launch, right? Well, Game Pass each year is smashing those numbers. Game Pass does over $300 million per month. Microsoft makes more money with their first party games in game pass than they would without Game Pass. Microsoft found a different way to help generate enough money yearly to support its first party games. That method is game pass. It isn't the only means by which the Xbox business brings in money to fund their operations, but it's by far the most game-changing, and the one Microsoft has the strongest ability to dictate the return.
Xbox doesn't ever have to be the console sales leader with something like Game Pass. Without Game Pass, Xbox consoles need to sell a whole lot more units to better sell first party games to recoup investments made. Each game would need to put up much bigger numbers the old-fashioned way, something Xbox has already demonstrated it can do with a variety of games, but now there's no need to? Lots of games likely never got sequels because they didn't perform well enough on Xbox before Game Pass. If Quantum Break released today for game pass, there would be a sequel confirmed already.
The way I see it, Sony is opting to get all its money faster by demanding it upfront, which is the traditional way of doing it. Whereas Microsoft is comfortable with getting some of its money upfront for their first-party games, and is totally okay with getting the rest of their money later throughout the year. It's a distinctly fortnite in its nature or a psuedo free to play model, except not actually free-to-play because to enter the eco-system you must pay a subscription fee. That's what Game Pass is.
Forza Horizon 5 over 3 million players day one. People don't think this matters because they're like "haha players, not sales", but the people playing it on game pass (paying game pass customers) ARE the sales. And they pay per month for an entire year. Game Pass has not lost subscribers a single year since it has existed. It might one day, but that time clearly isn't now.
TLDR Version - Game Pass' revenue yearly = practically Xbox first party game revenue and should be considered as such along with actual traditional first party game sales because Xbox First Party games are the biggest reason game pass is so popular, why people subscribe, and why it has been growing at the pace it has been. The third-party titles are a bonus on top of the xbox first party games. Even when you think you or someone you know has beaten all xbox first party games, there are many who haven't and are playing through some games for the first time even up to this month. There are plenty xbox first party titles on game pass I've never beaten, but intend to. Do not underestimate the popularity of having a growing catalog at no additional cost at your fingertips. It's why pc gaming has been popular for years, it's why steam is so popular, it's why digital has blown physical sales away. Game Pass has the vibe of Steam in its early days. You knew it would be big.