‘I Much Prefer PS Plus’ Lifecycle Management Strategy’: Devs Chime in on Xbox Game Pass Impact

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Update [Mon 7th Jul 2025, 7:45pm]:

Over the weekend, there’s been a lot of talk online about the potential success of Xbox Game Pass, and among these discussions, insights from journalist Chris Dring have shed some light on the economic factors involved.

On numerous instances, Xbox’s chief, Phil Spencer, has affirmed that the service generates profit. However, as per Dring’s explanation, these profits primarily cover expenses such as fees for third-party services, advertising and marketing costs, and operational expenses associated with the service itself.

It appears that there’s an essential type of expense omitted from this list: the cost of initial-produced content, which is integrated into the service right from the start.

As a gaming enthusiast, it’s clear Sony has repeatedly emphasized that they don’t think it’s financially viable to bundle high-priced in-house games with their service. It seems like Xbox Game Pass only turns a profit when those costs aren’t included in the calculation.

It’s reasonable to assume that original game creators such as Compulsion Games or Ninja Theory would receive some form of compensation for featuring their games on the platform, similar to how they are paid when working with third-party titles.

Regardless of it being essentially an internal financial shuffle, it’s crucial to carry out this process. Failing to do so might result in our developers operating at a loss because of the predictable decline in high-priced game sales.

It seems that, according to Dring’s comments, the fees aren’t included in Game Pass’s calculated profits. This leads one to wonder if the service is generating any income after accounting for these expenses again.

It seems unlikely that we’ll fully understand all aspects of the situation, but Sony’s claim that this product would significantly affect their profits doesn’t appear to be unfounded.

This week saw a massive job cut of more than 9,000 employees at Microsoft, and unfortunately, the Xbox division has been significantly impacted. Several projects have been terminated, one studio has shut down, and countless individuals like myself are now grappling with unemployment. It’s a tough time for everyone involved in this community.

Following the turmoil, individuals are searching for explanations. According to a Seattle Times report, the multibillion-dollar tech colossus is aiming to release funds in order to boost its investments in Artificial Intelligence.

Microsoft, based in Redmond, has made significant investments in Sam Altman’s OpenAI, which in turn has led them to promote their Copilot product more aggressively to consumers.

However, regarding Xbox, former Arkane Studios founder Raphael Colantonio suggests that there might be another potential cause for any issues experienced.

What’s everyone avoiding discussing? It seems quite obvious – I’m referring to Game Pass, of course!”, he hinted slightly on X (or Twitter).

This sparked an intriguing series of discussions on social media platforms, as several notable developers expressed their views on Microsoft’s innovative approach to doing business.

Asked to expand on his thoughts, Colantonio said:

In my opinion, the Game Pass model has been causing harm to the gaming industry for over a decade due to its reliance on Microsoft’s vast financial resources. However, at some point, this reality must be faced. I don’t believe that Game Pass can operate alongside other business models; either it will drive all competitors out of business or it will eventually collapse itself.

In response to Colantonio’s post, Michael Douse from Larian Studios expressed that the concept of endless money had always been confusing, and Raphael agreed with this statement.

Indeed, I concur with your sentiment. It’s incredibly frustrating when information is initially presented as having no significant impact on sales, only for it to be later acknowledged that it indeed does have an effect. This revelation seems almost obvious in hindsight!

As a dedicated admirer, I can’t help but mention that Colantonio’s masterpiece, Weird West, from his innovative studio WolfEye, was added to Game Pass last year in 2022. Given this experience, it’s likely he has a solid understanding of the advantages and challenges associated with this business model.

As a gamer, I can vouch for the fact that Douse and Colantonio both believe that Sony’s strategy of offering subscriptions with games added later in their life cycle is a more solid choice.

Douse said:

As a gamer, I’ve always found the economics of game development confusing, but I get why it’s beneficial for smaller teams working on innovative or risky projects. It helps reduce some of the financial risks they face. On the other hand, I much prefer Sony’s approach to game management throughout the entire lifecycle of a title. It feels more balanced and supportive for creators like me.

Previously, Sony’s former CEO, Jim Ryan, faced significant criticism for his stance opposing the Game Pass subscription service model. It was thought that the success of PlayStation 5 hinged on the immediate availability of first-party games within the PS Plus membership program at its launch.

At the time, he said:

Previously, we’ve discussed this matter and it appears we won’t be transitioning our new release game titles into a subscription model. The reason being is the substantial cost of developing these games, which can exceed $100 million. At present, we find such an approach unsustainable.

It’s intriguing to observe how the economic aspects of Game Pass are now under scrutiny following years of vague discussions by Microsoft and the mainstream media about this topic. The bigger picture behind this situation is certainly worth exploring as well.

This week, a French analyst revealed that fewer than 5% of The Elder Scrolls 4: Oblivion Remastered’s sales took place on Xbox systems in Europe. This suggests a decrease in Microsoft’s market share in Europe, but it also hints at the broader impact of Game Pass on traditional full-priced game sales.

It’s apparent that we don’t yet possess sufficient information to determine whether our business model is positively or negatively affecting Xbox’s profit margins. However, it seems that Sony’s cautious approach towards subscriptions has proven beneficial for them over time, suggesting that their decision was strategic and well-considered.

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2025-07-07 22:37