Xbox spends $1 billion annually to bring third-party titles to Game Pass: report

Microsoft spends $1 billion USD (about $1.35 billion CAD) every year to bring third-party games to its Xbox Game Pass service, according to a new report from Bloomberg.

The publication cited the sum in a larger profile of Xbox president Sarah Bond. Per Bloomberg, this includes Microsoft paying publishers “millions of dollars” upfront, as well as a portion of subscription revenue.

Of course, that doesn’t include what Microsoft does with its own first-party games, all of which have come to Xbox Game Pass on day one since January 2018. Through this unique release structure, Microsoft places less of an emphasis on people buying the games outright (although that is also still an option) and more on driving subscribers.

It’s an undeniably good value for gamers, who can pay a single monthly fee to get access to hundreds of big games, including first-party titles like Starfield, Senua’s Saga: Hellblade II and Sea of Thieves, as well as third-party offerings like Lies of P, MLB The Show 24 and Dead by Daylight from Montreal’s Behaviour Interactive. The company has also expanded Game Pass’ supported platforms to include Xbox consoles, PC, mobile and select smart TVs.

However, Game Pass is also a gamble that so far hasn’t quite paid off for Microsoft in the way it intended. In February, the company confirmed it had 34 million Game Pass subscribers, less than 10 million more than the 25 million it reported two years prior. Given that Microsoft has — or, at least, had — a lofty goal of reaching 100 million subscribers by 2030, that relatively slow growth doesn’t seem optimistic.

As it stands, Microsoft is betting big on Activision Blizzard, the gaming giant it acquired last October for $69 billion USD (about $94.2 billion CAD at the time). The company has noted its intention of bringing the Call of Duty and Diablo maker’s catalogue to Game Pass, and so far, those efforts include Modern Warfare III (2023) and Diablo IV. 

But the biggest test will be in October when Call of Duty: Black Ops 6 launches day one on Game Pass. As part of a legally-binding agreement, Microsoft must release Call of Duty games on PlayStation for at least 10 years, so it will be interesting to see what impact, if any, Game Pass will have on the game’s performance on Sony’s PS4 and PS5 consoles. Other notable upcoming Game Pass titles include Microsoft Flight Simulator 2024 (November 19th), Indiana Jones and the Great Circle (December 6th) and Avowed (February 18th, 2025).

The discussion of Game Pass was perhaps the most notable part of Bloomberg‘s Bond feature, which otherwise mostly explores how she’s adapting to the job after being promoted last October. However, one other interesting tidbit is how Bond focused on a “more diverse” hardware future for Xbox. Some have speculated this could be a handheld, something Microsoft CEO of Gaming Phil Spencer has hinted at, and Bond also expressed interest in such a device.

Source: Bloomberg