Ohhhh, so publishers get 100% of the money on every purchase now do they. Damn, why I didn't I think of that. And of course all those game sales occur at full price as well...nobody buys those on sale ever. Checks out.
Oh... s MS is getting all that money off game pass as profit? Have any idea how much they have to pay publishers of the games on the platform to have the games on there? can you even begin to imagine how much MS would need to pay to say rockstar to have their game on the platform on day 1?
Lets not be talking nonsense here.
Game pass is good, no knock on that, but its a complimentary service and should/would never be a primary service. Games just don't work that way, there is to much money to be made n games primary distribution model for publishers to just piss all that away. Eg. COD on average sells like 15M copies almost every year. Even if using an average price of $40/game, that's $600M in revenue. Every year. How much do you think it would cost MS to have a game like that available on day 1? Now do the same for Maden, Fifa, Cyberpunk, AC... or any other major AAA third-party seller you can imagine.
MS would be paying as much as $200M in deals per game for some of those AAA games. Does that even remotely sound like a viable business model to you to be the primary form of distribution on any platform???
I'll say it again if MS had the market share or IPs to be pushing games that can on their own sell 10M copies a piece, gamepass wouldn't be being pushed as hard as they are pushing it now.
My understanding of GP is that MS keeps all the money from subscriptions, yes. They do obviously make deals with various parties to get their games on the service, in exchange for a lump payment, and depending on the dev/game, there are likely provisions in the deal that sees said people getting bonuses if their game meets certain milestones on the service. Are those real expenses? Of course, but they wouldn't continue to be made if they weren't profitable.
There are a lot of factors you're not taking into account. First off, nobody ever said anything about MS making deals to get all the biggest third party games in the world on their service day one. Obviously, that wouldn't be good business. Naturally, that's why it's important for MS to make strides in providing more top tier titles from their in house studios. Now on to the benefits you're ignoring....
1) Yes, offering up big games day 1, without a full purchase entry is a short term loss on a person by person basis on the face of things. However, you are potentially reaching more players through the service than you would have gotten otherwise.
2) That expanded userbase has saved money on entry, and may be more likely to spend money on in game purchases, and DLC expansions as result, provided they like your game.
3) The service provides something of a shield for smaller, and more experimental titles. The big games may draw the crowds, but they'll try some random stuff because hey...they can, and they might find that they enjoy these titles a great deal. Every game onto itself doesn't have to justify itself to some corporate overlord as a system selling property. It encourages more freedom on the part of developers.
4) Even the people that don't start out paying full value on the service, because they got access to it initially through various deals, are ultimately going to be very likely to stick around, even at full price, if you show them that there's continued value to be had in the service. Even if they scoop up long periods of membership on discount, that at least means you're locking them into your ecosystem for said period, which is incredibly valuable on it's own.
I could go on, but I'll leave it at that. At any rate, I'll just say again, if you think Sony won't move in the same direction here soon enough, you're vastly mistaken in my opinion. I'll just leave it at that.