Gamepass was not created to make Xbox beat Nintendo or Playstation. The service was created to find Microsoft a way to continue to stay in the race when they were fading so fast last generation it looked like it was probably time to pull the plug on the gaming division for a Trillion Dollar company that sees little to no return from that division. Gamepass gave Xbox a niche that the other companies did not provide and allows them the opportunity to make gains in other ways instead of selling consoles or games.
The thing that no discusses when talking about the Gamepass model is just how much money Gamepass would have to make to be successful. Netflix was losing money every year with 120 million full paying subs and I still think they are losing money yearly and have never turned a profit. If Gamepass was a service where they purchased rights to games to put in the service then all they would have to do is secure more money in sub payments than they pay out to developers for the games. It would be an easy model to predict if it was successful.
But because Xbox decided to put all current, past and future party games in Gamepass... now Xbox has to also make enough revenue to offset the amount of money they lose on every single title and this is simply unsustainable unless they are the only console in the game or at the very least the most dominate console in the game. They can't be in third place in a 3-way race and also give up almost all their revenue for every title they publish.
So far this year they haven't put out a large budget game to the service. But let's skip to the end of the year. Gamepass has to now recoup the revenue they will lose out on all the sales for Flight Simulator, Psychonauts, Forza Horizon 5 and Halo Infinite. Sure they will still sell some copies of these titles. But being in Gamepass will at the very least cut all of these sales by more than half. With titles like Halo they could be sacrificing a couple hundred million dollars of sales to give their game away in the service. Not to mention giving any gaming consumer so many titles in a subscription service is going to make them buy less games a as a whole. For all the kids whose parents have got them Xbox and Gamepass.... their parents aren't going to let them keep asking for new games and continue to subscribe. Gamepass is counting on multiplying their customer base many times over with cloud to recoup the loss in game sales.
Paying 7.5 billion for Bethesda, then cutting out 40-50% of all sales by taking it off of Playstation and then cutting another 50% or more of remaining sales by giving away the games in the service will make this purchase impossible to recoup the investment.
By launching Gamepass, Xbox may have saved their gaming division but now they have also backed it into a corner with no more bullets to fire. You can't go back now and say we aren't doing Gamepass anymore or your model will collapse. You can't go back and say we aren't doing day 1 first party titles in Gamepass or your model will collapse. It's all or nothing now. They have to make Gamepass profitable now. And that is no easy task, which is why they won't ever give us active subscriber counts or more importantly active full paying subscriber counts. There are only two ways this model has a chance to survive. One is if tens of millions of people who currently play things like candy crush are willing to pay $15 a month and learn how to play actual video games... I don't see this happening ever. Two, is if Xbox drops out of the hardware business and becomes a publisher and developer like EA. They could put their games on all consoles to make their first party game developers profitable. If they aren't in the competing console business maybe then they could begin to convince Nintendo or Sony to allow Gamepass on their platforms. I can't see this happening either. Why would Nintendo or Sony want an influx of new customers who are being groomed to not want to purchase new games because they get new games for "free." Sony and Nintendo would see console to game sale attachment ratio take a big dive.
The way I see this all playing out is Xbox doing this for as many years as they can get away with before investors start asking better questions and demanding answers. Microsoft investors should not be told they aren't allowed to know how many full paying subscribers the company has when they have a vested interest as a stock holder. They aren't even being told the amount of consoles being sold. These numbers are going to be forced to be revealed and then Microsoft will have to make the choice of either trying to convince stockholders that the gaming division will be as profitable as the other divisions at some point or they will begin to break up the gaming division and sell to places like Google or Amazon who may not be in the race at that point if they can't get their vision together.
Either way, no matter what side of the "console fanboy war" you are on... XBox failing isn't good for the industry. We need more people pushing hardware and making triple A games. What we don't need is a future where every major publisher has a subscription service for their games like the future of television is showing us.
