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Mummelmann on 08 July 2025
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JRPGfan said:
Otter said:

All of this makes sense but people are not thinking very hard about the topic.

Based off old and approximate figures MS spends about 1billion on third party GP content. They make around a minimum of 3billion annually from subs. That would have to be 2billion they're spending a year on 1st party releases for it to eat all their GP revenue. That is like 4 COD size AAA games+ marketing campaigns with no alternative income (retail/Steam/xbox sales/playstation etc).

Outside of COD which makes all it's money back easily at retail and digital stores, the biggest budget games MS has had on gamepass has been the likes Doom, Indiana Jones and Awowed etc. And there's typically around 4 of these 1st party titles per year. Even assuming they don't have any alternative sales revenue, these games collective budgets are likely reaching 1billion, not 2...

It's safe to assume GP makes perfect financial sense for MS, but it's where it comes to the aquisitions they made with Activision and such that MS really has to depend on playstation and other platforms to get their return back.

You would need to factor in the cost of running the service as well.
Also if you spend 1bn on 3rd party new content pr year.... what about the older content that remains on the service?
Same is true for 1st party games, even if the profits, can support like 4 gigantic 1st party games made, what about the cost of keeping older titles there?

Also is it enough to just be profitable?
How much more profitable is this, than say just selling the games the normal way?

Lets say if they just sold their 1st party, didn't spend 1bn on 3rd party, and made say ~2.5bn that way.....
Does this mean Gamepass is loseing them potential profits? they could have had just selling the games instead? Is that still profit? when its costing them money, they otherwise would have had?

Its not as dry and cut, as just saying it made 3bn in profits (I have no idea where that nr is from, I'm just running with it, since you used it).

A huge conglomerate that just axed 4% of its global staff after a record-breaking annual profit won't be the same one accepting a service or platform barely paying for itself in a space that's approaching 520-530 billion dollars yearly revenue. So, yeah, I agree with this sentiment.