Xbox Game Pass Adding New Microsoft Games Is a Massive Value Proposition; Likely Good for Everyone
By releasing new games within its Xbox Game Pass subscription service, Microsoft made a move that will possibly create ripples in the industry as a whole.
Today, Microsoft announced that going forward its Xbox Game Pass subscription service will include new first-party games from Microsoft Game Studios day and date with their retail release.
This means that paying as low as $9.99 a month, or the price of a full game ($59.99) every semester, Xbox One users will be able not only to enjoy a large number of older (but still definitely valuable) games like Halo 5: Guardians and Gears of War 4, but also brand new titles like Sea of Thieves, Crackdown 3, State of Decay II, the upcoming new Halo, Gears of War, Forza, and more.
Of course, that access will be limited until each game gets rotated out of the lineup, and then you need to purchase them at a 20% discount if you want them forever, but many play new titles only close to their release, so that isn’t such a restrictive caveat.
This is without a doubt a massive value proposition from Microsoft. Basically, customers interested in Microsoft’s biggest games can simply purchase the console, Xbox Game Pass, possibly a Xbox Live Gold subscription, and they’re all set. The games will then simply be delivered to their digital doorstep.
The move is revolutionary because so far, subscription services were mostly a way to play older games for free: but now, they enter the realm of brand-new and shiny first-party releases. That’s big. Playing games on Xbox One has suddenly become immeasurably more convenient and possibly much cheaper, depending on how many games each customer normally buys and for how long they’re played.
CEO Satya Nadella himself explained back in October that the goal of the service is to become a sort of “Netflix of Games” accessible across different devices, but even now that it’s limited to Xbox One, it’s already very much a Netflix-like offering. While Xbox Game Pass is still far from the media giant’s massive catalog of movies and TV, this is a large step towards a similar philosophy for games, and we all know just how convenient Netflix is.
Another caveat is that Microsoft’s first-party effort has been a bit on the underwhelming side in the past few years, but Xbox Division head Phil Spencer himself mentioned in November that investment in the development of more first-party games is set to increase.
Considering the value proposition of Xbox Game Pass once new games start to roll in, it’s almost surprising to think that a company can afford this kind of move. Yet, Microsoft is a very, very rich corporation and some of its non-gaming businesses have been extremely successful over the past few years. This means that they have a lot of cash to throw at the gaming division, which their management has stated on multiple occasions is seen as a large opportunity.
It also makes sense simply from a wider business point of view, considering the strong expansion and profitability of Azure. A service like Xbox Game Pass can easily be spun into the cloud, and as Nadella mentioned, it could become truly a “Netflix of Games” available across many different devices. This is not to say that Xbox consoles are going the way of the dodo: downloading and playing games locally does, at least for the time being, still offer a much better experience than streaming from the cloud, and this is exactly what the current service offers.
Yet, this lays the groundwork for a service that might in the future offer gamers the choice to play games on a dedicated console (or PC), or simply stream them. Choice is a value that Microsoft businesses in general and Xbox, in particular, have been embracing quite actively.
It’s hard to say just how far this new initiative will carry Microsoft’s console offering in terms of competitive edge, but that’s not the most relevant factor here: what’s most important is that the value proposition of the platform has suddenly increased rather radically, and has done so in the “games-as-a-service” fashion that is so near and dear to many publishers’ hearts nowadays.
Interestingly, this is achieved without actually influencing the content of the games at all. All of the titles included in Xbox Game Pass partake into the games-as-a-service scheme, without needing to be games-as-a-service themselves. This happens whether they’re multiplayer or single-player experiences, whether they have DLC, season passes, and loot boxes or not.
This ability to generate recurring revenue, regardless of the game’s genre or specific business model, might even push Microsoft’s management to greenlight a few more pure single-player story-driven games, which have been quite scarce within the Xbox first-party lineup as of late.
This is also possibly good news for those who aren’t interested in Xbox at all. The potential of this kind of initiative is likely to be large enough to make ripples beyond Microsoft; it’s something neither Sony or Nintendo offer, and they might feel compelled to do something to respond.
This is especially the case for Sony Interactive Entertainment, as it has been working very hard on improving its network infrastructure and is now helmed by the former boss of its network business, John Kodera; Sony could, in response, decide to up its online ante to compete with Microsoft’s offering.
This is, as usual, the value of competition in an industry with so few main players. Whatever one side does, it somehow impacts the perception of the others.Each response, whether small or big, normally goes to the advantage of the customers that are offered more for the same price (or less).
It remains to be seen how big the ripples made by this initiative will be within the gaming ecosystem as a whole, and we might not see their full extent tomorrow or even this year. Yet, Microsoft seems to be thinking long-term, and customers will most likely benefit. How much and how far beyond Xbox this will go is still in question, but this is a large step that probably won’t be ignored.