- Jun 3, 2019
The thing is... Microsoft doesn't get to keep all the revenue, as they need to pay what I imagine to be hefty amounts of money to keep third party games in the service. There are big games like Metal Gear Solid V (and the rest of the series), Rise/Shadow of the Tomb Raider, Devil May Cry 5, a bunch of Resident Evil Games, PES, Batman Arkham games, Borderlands games, Wolfenstein, etc. It probably adds up to a very large portion of those profits... I mean, even Netflix is always struggling to not bleed money while juggling the costs of maintaining their library of third party content vs. producing original content. While we're at Netflix... They're notorious for putting out one or two nicely produced products and a BUNCH of mediocre to bad things... So idk, but it makes me skeptical to the budget of Microsoft going into the future.It's really not hard to see how this would work. This is basic fuzzy math but if you had 10 million subs on in the 9.99 Game Pass that's going to generate 100 million dollars a month in revenue or 1.2 billion dollars per year. Let's say they're selling 1st party games at $60, let's forget for a moment they don't keep all of that from physical sales, they would need to sell 20 million copies of their 1st party games at full price to generate 1.2 billion in revenue.
Now let's say everyone who owns an Xbox stops buying Microsoft games and subs to Game Pass instead. That's 40 millions subs at $10/month which is 4.8 billion dollars a year. That's the equivalent of selling 80 million full priced $60 games.
Then on top of that you have people buying DLC and micro transaction items.
Meanwhile Netflix has 150 million subs. They might never get to that point but it would significantly more money than they would ever make from traditional sales.
The other big thing is you have revenue certainly. They might release a new game that doesn't sell very well and suddenly they've lost money or barely made profits on that game. With subs however they generally know how much money they are making every month and can budget much more easily.
Again, this is all basic fuzzy math and it's more complicated than that but you get the idea.