We need to talk about Xbox Game Pass

Xbox Game Pass is the latest in a long line of services that have been branded ‘Netflix for Games’ – for better or worse. But with Microsoft and numerous heavyweight publishers behind it, Xbox Game Pass is the strongest contender yet.

So why aren’t publishers keen to talk it up?

In doing research for this article, MCV contacted several publishers for comment on the service. Every single one politely declined.Looking further, we couldn’t even find press releases from any of these publishers concerning the service. Not a single on-message enthusiastic soundbite from the likes of Warner Bros, 2K, Sega, Capcom, 505 Games, and Bandai Namco – all of which have titles on the service.

We’ve been assured that it’s not some shadowy Microsoft diktat – with the platform holder happy to discuss the service (see right). And while it’s early days, it will be available well before we see Project Scorpio revealed, and many of these publishers have already promised support for that and even added logos to promotional material.

So is there a wider unease about the new service and how it will affect games publishing? Once again, it looks like the service has summoned the much over-hyped spectre of the ‘disruptive business model’.

DISRUPTIVE INFLUENCE

Disruptive is one of the more irritating business buzzwords of the past decade. Yes, the ability to download MP3s did change the music industry irrevocably, first with illegal downloads, then with legal downloads and now with streaming. However, the big record labels are still largely there, though their artists are far more reliant on touring, merchandise and other revenue streams.

Xbox Game Pass, with its content reliant upon the same small group of publishers that sell full-priced titles, digitally and physically, isn’t about to violently rock anyone’s boat. If console games publishers don’t get onboard, consumers aren’t going to be pirating games in the void they leave, as happened with music and TV.

Digital downloads have certainly changed the industry – just look at the 16.7 per cent drop in physical software sales last year – but Xbox Game Pass is a clearer threat to discounted digital sales than it is to full-priced physical games. After all, how many people will be picking up older titles in the online sales for under 10 if they have a big library of these titles already on tap?

It’s not the first attempt at such a service either, says IHS Markit’s head of games research, Piers Harding-Rolls: There have been many past attempts to provide a collection of games under a monthly subscription model stretching back to the late 1990s. Some have been moderately successful – although none have developed into a mass market opportunity as we have seen in the online video or music space.”

Nor is it the only one around today, he notes: Xbox Game Pass offers a different distribution approach to Sony’s expanding PlayStation Now service. Sony’s on-demand approach is laying the framework for the future and significantly allows it to target PC users as well as those gaming on PS4, which brings it more directly in competition with the Xbox Play Anywhere initiative.”

In the short term, Xbox’s approach is a more practical solution for those Xbox One users that do not want to stream the service and want to play natively.”

So Xbox Game Pass doesn’t look that radical on the surface. So maybe it’s the closeness of the Game Pass’ download-and-play model to current digital retail, that is so unsettling?

PASSING THE BUCK

At first glance, then, Xbox Game Pass is simply an alternate way for platform holders and publishers to make money from older titles. Much of what’s announced of the 100 game launch line-up is older, mid-tier games. Yes, there are a couple of homegrown tentpoles, such as Halo 5, but it will be the likes of Mad Max that underpin the service – decent games with mass appeal that many might have passed on as full-priced releases.

Content is king, says SuperData’s CEO Joost Van Dreunen: The success of Game Pass and PlayStation Now depends on the consoles’ ability to negotiate top content from publishers. And, relatedly, it raises the question how Sony and Microsoft will differentiate their content offering to convince players to spend the extra $10-$20 a month. All of this is likely to benefit audiences most, and I think that is a positive thing.”

For publishers, the additional revenue stream is welcome, adding earnings to titles that have already had their day in the sun, if that. However, they will be keeping a very close eye on the impact it has on their digital sales.

At the same time as potentially impacting long-tail digital sales, Xbox Game Pass is promoting them. It’s providing discounts on titles on the service, so users can buy games before they rotate out of the collection. Alongside that is the possibility of bringing new players to your ongoing franchise.

And in those terms, Xbox Game Pass is a very different beast from Netflix. While consumers may have to wait for the next series of Daredevil, when it does arrive they will get it on Netflix first, included in the price of the subscription. That simply won’t happen with Xbox Game Pass.

The pricing model of games makes it essentially impossible to offer a catalogue of new triple-A titles at a price that consumers will happily pay month-by-month. So the latest titles look unlikely to feature on the service. While TV viewers may have different needs and budgets, Netflix has successfully cast a net over many of them, something that looks far harder with gamers.

Harding-Rolls agrees that it’s a trickier proposition: Unfortunately the economics of running a subscription service like this at a $9.99 price point and what type and age of content can be included because of that, means that its impact is likely to be similar to previous efforts in this space.

Having said this, today’s general pressure on retail catalogue sales means that third-party publishers could well be more open to turning over their titles more quickly to a service like this – especially if it acts as a marketing channel for discounted catalogue sales – and the inclusion of more recent games would broaden its appeal. How the content portfolio develops and rotates is key to its success.”

So, once again, content is king.

MAJOR BY-PASS SURGERY

Xbox Game Pass is definitely looking to developing its offering in the future. Head of Xbox Phil Spencer has already gone on the record to talk up the possibility via Major Nelson’s podcast.

I think there’s an opportunity for this to not just be about games that have already shipped. I’d like to see [shipped] games come into Xbox Game Pass [at launch] as a way that they get distributed,” Spencer said.

You’ve seen this in the TV space with Netflix… At first, [it] was really about movies or TV shows that I might have missed. Now some of the best TV out there is actually being created as Netflix Originals.”

And it will likely evolve beyond downloads, too, says Harding-Rolls: In time, as full streaming of games content becomes more commercially robust, I th