Xbox Game Pass is a huge gamble for developers and it doesn’t always pay off

Xbox Game Pass is a huge gamble for developers and it doesn’t always pay off
Amaar Chowdhury Updated on by

Video Gamer is reader-supported. When you buy through links on our site, we may earn an affiliate commission. Prices subject to change. Learn more

As a disclaimer, I am signed up to a subscription service that sends me a new set of underwear each month. I’m not immune to the allure of cheap products delivered monthly, and I also have a subscription to Xbox Game Pass. It’s affordable, worth every penny, and lets me play games I would never otherwise have considered. I don’t think it’s good for every game though.

Xbox Game Pass has some fantastic success stories. Manor Lords, for one, despite hitting the service on day one, also broke records as Steam’s most wishlisted game. With a peak of 172,000 players on Steam, it’s also presumably being played endlessly on Game Pass. While we don’t have access to Xbox’s metrics for this, we can assume it’s been deemed a success there too. The issue with using Manor Lords as an example is that it’s an absolute force of nature, and that type of game doesn’t come along too often. 

There are plenty of other games that have hit Game Pass recently too, and have not seen the same success. Hellblade 2 being one of them. It’s a short game. Its story is told within the first four to six hours of gameplay, and anything after that is secondary. Ninja Theory’s title is a fantastic display of the Xbox Series X’s capabilities, though it’s not the type of game you revisit again and again. In fact, our review hits the nail on the head: 

“For all the praise I’m about to heap on Senua’s Saga Hellblade 2, it’s a game I never want to play again…As the credits roll, I’m left spent, drained by its emotive heft, by the whirling, needling Furies, by the wearying loss, by the fragile hope it cradles, and the near-unbearable cinematic bleakness that ripples out from every polygon.”

Via SteamCharts

With a very modest playerbase on Steam (as calculated by SteamCharts), it’s clear that others echo the same sentiment as our review. Hellblade 2 is not a game designed to be replayable – which I have touched on in my thoughts on how Xbox failed Ninja Theory with its release – and this has serious repercussions on what is deemed a success via Game Pass.

Understanding how games launching on Game Pass works is a bit tricky, especially considering little has been said on the topic. Even then, when it has, Phil Spencer’s words are quite ambiguous. “Our deals are, I’ll say, all over the place,” he says. “That sounds unmanaged, but it’s really based on the developer’s need.” In his interview with The Verge, the CEO of Xbox Gaming explains that each developer is served a unique set of benefits when they launch onto the service. Different devs might be at different stages, and require full funding, or they’re already ready to launch, they just need a platform. It sounds fairly egalitarian, though without knowing specifics it’s still hard to tell.

Moon Studio’s CEO, Thomas Mahler (responsible for Ori and the Blind Forest and No Rest for the Wicked) has been very vocal about his issues with Game Pass. When asked why Ori and the Will of the Wisps won’t be on Game Pass, Mahler responded that “‘Cause then people get it on gamepass and that doesn’t help Moon.” He continues that Game Pass can be good for developers “if you’re a smaller dev and get an upfront fee,” though in his case “Moon would make no money at this point.”

When considering all of the above, it should be noted that Moon Studios and Xbox parted ways in 2022 due to a “difficult relationship.” Whatever the reasons, there is likely logic and reason to Mahler’s claims that Xbox Game Pass is not a good option for established developers who want to do more than recoup their initial investment in their projects.

Microsoft has even confirmed that “Game Pass cannibalizes sales,” according to The UK Competition and Markets Authority has said that “Microsoft also submitted that its internal analysis shows a [redacted]% decline in base game sales twelve months following their addition on Game Pass,” which should tell you all you need to know about the viability of Game Pass from a developer’s perspective.

Tango Gameworks’ closure should serve as the prime example of this. Its critically acclaimed Hi-Fi Rush served as Xbox’s only treasured exclusive from this generation, though the studio was recently axed by Microsoft. In fact, Brad Hilderbrand, the former Senior Public Relations Manager at Microsoft published a LinkedIn post in the aftermath of Tango’s closure, and it revealed some very interesting facts about the Game Pass operation.

“The biggest paradox with Game Pass is that basically every game that launches on the service badly misses its sales goals.” He later continues “… games like Hi-Fi Rush, which is incredible mind you, gets a very small bump in revenue from being the hot Game Pass game for a month, then it falls off a cliff when everyone moves onto the next thing.”

Hilderbrand also says that Xbox Game Pass’ growth has stagnated significantly, meaning it’s impossible for them to recoup the costs of development and funding for smaller studios. He says that this wouldn’t have mattered years ago, but since the $70bn spending spree on Bethesda and other studios, it’s now a significant issue.

Hilderbrand also brings up Call of Duty, which at the time of his writing, was not confirmed to be launching onto Game Pass Day One. Now though, it’s looking even more likely that Black Ops 6 will launch directly onto the service. Modern Warfare 3 was the second best selling game of 2023, and while there aren’t publicly available figures for its revenue, expect that figure to blow you away. The former Microsoft PR manager asks if Microsoft would be prepared to risk those sales on Game Pass sign ups, though I’m going make a further prediction. If they don’t meet the sign up numbers that they’re expecting from Call of Duty on Game Pass, it’s going to be even more of the small studios under Microsoft’s belt that feel the brunt of it.

For emerging indie developers, it looks as though the financial safety afforded by its up-front payments is a lifesaver. For anything else, Game Pass is allegedly haemorrhaging money left, right, and center. The implications this has on the future of gaming absolutely terrifies me.