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They don't need to.

Gamepass is MS's bandaid for crashing software and hardware sales. They can no longer compete with Sony on both and so this is their answer. Ironically, Gamepass as a strategy results in further declining hardware and software sales and so in a sense this is MS's last effort.

I largely see Gamepass as unsustainable for the AAA gaming industry for 2 reasons:

Whereas once the market decides on the revenue a game makes and its future budget, now the platform holder (MS) has all the power to decide how much to pay devs, which may entirely miss the market's price. This is a similar issue that Netflix faced: content creators realised they were being undervalued and so either pulled their content from Netflix and started their own streaming service. The market will always be far more efficient in directing revenue than any platform holder, as said paltform holder always has a margin to make profit or incur costs.

People often quote other streaming services, as a way to justify Gamepass, but fail to realise that the budget for a game are far far greater than TV, subscription service movies and music tracks. Its easy to have the model work when a relatively low amount of subs allows you to have enough revenue to pay the lower costs of production. AAA games have budgets comparable to Hollywood movies, and despite Netflix's 100 million subs, they do not have the money to buy Hollywood blockbusters onto their service. Same with gaming. Gamepass can't support AAA games that have budgets of $100-200 million.

There is also the issue of the platform holder wanting continuous content, which could compromise game design of SP games, turning them into a GaaS like Anthem, Destiny, and the upcoming Halo.

MS's plan is taking a loss till they get enough suscribers that it does become sustainable, however for third parties to place their biggest games on the service day 1, MS would need to pay $x0-100 million per game which would require a very large number of subs. Add to this that Gamepass is stuck on Xbox hardware which is declining, unable to be on Nintendo or Playstation and MS have a slow ticking time bomb: they need to reach their sub count before it becomes impossible to reach said sub count.

Playstation already brings in twice the revenue of MS's gaming division, and far bigger profits, all while getting the lionshare of third party sales and deals and having a model that allows them to carve out their own brandname in software. So that sub count MS needs to be sustainable will be twice as high in the case of Sony.

To top it all off, its a renting service. You never own the game.