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Every gamer has dreamed about having an infinite library of games to choose from. Perhaps that began with envy of that one friend you had growing up who seemed to own every game, or the kid-in-a-candy-store feeling of browsing the aisles in GameStop or Game Station. We’ve all had that dream. But video gaming is an expensive hobby – the current standard price of a triple-A game is $70, with another $10 increase looming on the horizon. Meanwhile, the world’s other major entertainment mediums – movies, music, and TV – have embraced subscription-funded streaming.
With this as the backdrop, it’s no wonder one man had an ambitious vision: what if you paid $9.99 a month for access to a whole cornucopia of games? After all, if it could work for film and television, why wouldn’t it work for video games? Back in 2017, former Xbox head Phil Spencer’s novel idea felt like it had arrived at just the right time. So how did Game Pass go from being Xbox’s innovative new spark to setting the company on fire?
In the mid-2010s, Xbox had just one problem. Unfortunately, that problem was the Xbox One. The console at the very heart of the platform was suffocating the company, thanks to a troubled launch caused by a miscommunication over multimedia and a need for an "always on” internet connection, plus the underwhelming innovation that was the Kinect camera bundled in every overpriced console unit. By the end of its generational run, the Xbox One had sold just 58 million units, multiple millions fewer than its predecessor and far fewer than its rival, the 117 million unit-selling PlayStation 4. Xbox’s next generation needed a big, bold idea if it were to compete with the next PlayStation – enter Phil Spencer and Game Pass.
Spearheaded by Spencer, Game Pass was originally conceived as a games rental service before Netflix and Spotify’s success suggested a potential gap in the market for a gaming equivalent. It was a big, bold, and risky bet for Microsoft, but Spencer’s acquisition of Minecraft developer Mojang for $2.5 billion in 2014 proved to many at Microsoft that his ambitious gambles had significant potential to pay for themselves. The service launched in June 2017 at $9.99 and offered 100 backwards-compatible titles. By the start of the following year, Game Pass had expanded into its now-marquee offer: day one availability for all first-party titles, including Halo and Gears of War. This would be the first of many big Game Pass swings from Xbox. Initial feedback from both the industry and players alike was optimistic, with Forbes calling it “ a bright feather in Microsoft’s cap going forward ” and GamesIndustry.biz listing Phil Spencer as one of its 2018 People of the Year .
The enthusiasm for putting brand-new first-party games onto the service the day they launched wasn’t universal, though. The service received big pushback from publishers who believed it would devalue games, including the likes of Take Two Interactive CEO Strauss Zelnick and former Xbox Game Studios VP Shannon Loftis . As early as the summer of 2018, industry analysts like Brendan Sinclair flagged the oblique nature of streaming metrics, boiled down to “times streamed” or “average time played”, which disabled developers from using key statistics like copies sold to wager financing for their next project.
Xbox did well to counteract this negative press, most notably securing Bethesda’s support of Game Pass following its acquisition of the company, which likely curried favour from other publishers wary of Game Pass. That being said, once you bring a studio into the first-party stable, they’re a lot more inclined to follow the party line – at least publically. Following his departure, f ormer Bethesda VP Pete Hines made his feelings on Game Pass pretty clear : “When you talk about a subscription that relies on content, if you don't figure out how to balance the needs of the service and the people running the service with the people who are providing the content – without which your subscription is worth jack shit – then you have a real problem.”
The level of money Xbox poured into Game Pass is eye-watering – the company paid up to $300 million for Jedi: Survivor and Suicide Squad. Hines wasn’t the only one frustrated by the service. Game Pass received consistent criticism from Xbox staffers who believed it would eat into profits , concerned over how the company could possibly expect to make its money back when it was taking all its $60 first-party titles, each costing millions of dollars to develop, and placing them behind a mere $9.99 threshold. An amazing bargain for players, for sure, but it’s not hard to see why there was cause for concern within Xbox.
However, a library of legacy games and a brand-new first-party title arriving every now and again far from lived up to the ‘Netflix for Games’ moniker the service was trying to earn. Xbox needed to expand the Game Pass catalogue in a big way. So, in 2018, Phil Spencer went on a spending spree.
The level of money Xbox poured into Game Pass is eye-watering – leaked internal documents show that the company was paying up to $300 million for Star Wars Jedi: Survivor and Suicide Squad: Kill the Justice League, and these are just some of the deals we’re aware of. Alongside licensing third-party triple-As, Xbox purchased a slew of studios with the intention of putting them to work on Xbox (and thus Game Pass) exclusives: Undead Labs, Ninja Theory, Compulsion Games, Obsidian, inExile, Double Fine, Bethesda. With hindsight, these acquisitions are confusing. Undead Labs has yet to release a game since their acquisition, Ninja Theory’s Hellblade series is critically acclaimed but financially underwhelming, and Double Fine’s best-selling-game to date only sold 1.7 million copies. None of these studios are money-printers. And so, perhaps inevitably considering Microsoft’s financial-first approach to game development, all three of those aforementioned studios (plus a few more) are...
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