Digital Foundry discuss Game Pass impact on MS first party game sales

[foolishoptimist]

View: https://youtu.be/_BZ6kS06CpY?t=3269
In the most recent DF Weekly, the topic of MS increasing first party launch prices to $70, which they describe as long overdue.
But then they go on to question the relevance of such a change with Gamepass in the picture.

Some extremely strong quotes follow:

Richard: "If you're into Microsoft first party games, a lot of people just aren't going to buy them in the first place, with Gamepass there."

Richard: "Sales have collapsed, haven't they? I mean we can track sales data and Microsoft first party titles have vanishingly small game sales now because of the prevalence of Gamepass."

John: "Yep, I feel like they've collapsed about 80% versus where they were prior to Gamepass. And for good reason, I mean, the Xbox faithful are very into Gamepass."

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Thinking about this, I'm doubting Phil Spencers' recent claim that Gamepass is profitable, where he also stated that they're topping out at about 10-15% of Xbox console owners being subscribers.
Obviously, they're not counting the $7.5 billion for the Bethesda Acquisition, even though that essentially lets them put games on the service for "nothing". I also doubt that it's also accounting for the cost of the first party titles, whose sales have reportedly "collapsed".
I can only assume that he's merely stating that subscriptions are covering server costs and fees paid to third parties.

If the impact to first party sales is correctly estimated in the video, Xbox must still be losing money on the whole, even if you don't count the cost of all the studio acquisitions.
Especially when I don't know anyone who is paying more than $1 per month for it.

 

[Xeonidus]

Do they say where they get their sales data from? I'm sure they know more than the average person or have contacts and stuff but that seems higher than expected. I guess it isn't too surprising in a sense but if we don't have the before and after data, it's hard to see for ourselves. For instance how did Halo Infinite do compared to 5?

 

[Deleted member 93062]

Forza Horizon 5 had at least one million early access players who spent $45 (with Game Pass) or $99 (without Game Pass). Not including regular game sales (which it broke a launch sales record) and DLC spending which it did really well according to NPD and Steam charts. Seems like the game probably did really well.

Xbox first party sales are down because they haven't released much but games like Sea of Thieves, Age of Empires, and Forza (4 & 5) are consistently in the top 10 of Steam charts.

---

Re-reading it, it seems like John is just saying he "feels" like sales are down 80%. So, a nothing burger and not really surprising.

 

[Powerofthecloud]

View: https://youtu.be/_BZ6kS06CpY?t=3269
In the most recent DF Weekly, the topic of MS increasing first party launch prices to $70, which they describe as long overdue.
But then they go on to question the relevance of such a change with Gamepass in the picture.

Some extremely strong quotes follow:




Thinking about this, I'm doubting Phil Spencers' recent claim that Gamepass is profitable, where he also stated that they're topping out at about 10-15% of Xbox console owners being subscribers.
Obviously, they're not counting the $7.5 billion for the Bethesda Acquisition, even though that essentially lets them put games on the service for "nothing". I also doubt that it's also accounting for the cost of the first party titles, whose sales have reportedly "collapsed".
I can only assume that he's merely stating that subscriptions are covering server costs and fees paid to third parties.

If the impact to first party sales is correctly estimated in the video, Xbox must still be losing money on the whole, even if you don't count the cost of all the studio acquisitions.
Especially when I don't know anyone who is paying more than $1 per month for it.

Click to shrink...

They have said otherwise that they are profitable and show it on their balance sheet. And no, many people are paying more than the $1 upgrade, they have reported that as well.

 

[renoch]

If game pass has topped out at about 15% of xbox users, game pass can not be responsible for an 80% drop in first party game sales. That would be claiming those 15% on game pass were responsible for 80% of the first party sales. Seems incredible if true and I would like to know what evidence they have before I believe that.

 

[Bxrz]

Xbox games sell well on Steam though so not sure what they're talking about

 

[The Lord of Cereal]

I'd be surprised if sales are down 80% from pre-Game Pass honestly, their old first party games simply weren't selling as full Xbox One exclusives given that the Xbox One sold poorly and many of them reviewed poorly. That's the whole reason they pushed Game Pass day one as well as expansion into the PC space, or so I figured.

And hell, on Steam, Xbox Games Studios is one of biggest publishers and has been for a couple years now, so I'm not sure I really believe it, unless maybe they're talking purely console numbers and potentially even only physical numbers. Because I know that Grounded, Flight Simulator, Forza and Sea of Thieves have all been pretty big on Steam and sold like hotcakes...

Or, maybe they're using Halo 5 as their baseline? It's basically the only Xbox One exclusive pre-Game Pass that sold and reviewed well, and so comparing that to Halo Infinite and Forza Horizon 5 and stuff might actually be a pretty solid explanation for those numbers??

 

[Neural]

Especially when I don't know anyone who is paying more than $1 per month for it.

Click to shrink...

Oh yeah, the infamous ResetEra vision cone, where hardcore gaming fans believe the entire market is composed by people like themselves and their friends.

And we have quarterly financial reports to tell us if they're profitable or not. You don't need to blindlessly jump to conclusions.

 

[TripleBee]

I mean getting somebody to sign up for gamepass for all of 2022 would be more revenue then if somebody bought every first party game released for the year.

So at least for 2022 the math checks out.

 

[Vex]

Didn't Microsoft already say they were profitable lol?

 

[Mung]

Well with how cheap gamepass is, and as basically all first party games are releasing day one, why would many people buy first party games?

Can't bake your cake and eat it too.

 

[Jameson]

John said he "feel like it's 80%". Just random speculation.

 

[ThisIsBlitz21]

Where are these numbers from, if not pulled out of thin air? And no, UK boxed sales are meaningless with the meteoric rise of digital sales.

 

[Linus815]

Didn't Microsoft already say they were profitable lol?

Click to shrink...

Yes, but you see the digitalfoundry guys with zero sources and any past history of having insight into sales claimed the sales collapsed so i think I'm gonna believe the DF guys speculation here over the CEO of microsoft gaming.

 

[Zeliard]

I'm pretty into Game Pass and haven't owned a Microsoft console since the 360. I am getting it on the cheap, but then there's presumably some measure of worth in just the casual marketing, even just by talking about Game Pass games you like on forums like this and social media in general.

There's a popular thread dedicated to it, and people often talk about GP as being basically a boon to gaming here, reddit, elsewhere. I have to imagine those involved are generally happy with how it's doing. It gives games that would otherwise get zero attention the light of day.

 

[Deleted member 93062]

Where are these numbers from, if not pulled out of thin air? And no, UK boxed sales are meaningless with the meteoric rise of digital sales.

Click to shrink...

Wait... I guess if John is basing this off of UK boxed sales it makes sense why he thinks this. LMAO.

 

[Vex]

John said he "feel like it's 80%". Just random speculation.

Click to shrink...

Jesus lol. Come on, DF... Do better. Be better.

 

[ThereAreFourNaan]

I can't read minds but a lot of what they talk about on these episodes is based on off the cuff recollections. I assume what rich or john are saying is an impression not based on confidential information they're privy to but based off headlines from people like Chris Dring reporting on the uk market, since that's one of the very few places we still get public info regularly. And that has its own caveats about representativeness.

 

[-Tetsuo-]

The feel of 80%

 

[nekkid]

"Feels like" 🤣

Imagine if they evaluated a game's performance and said "it feels like it drops down to 1080p".

 

[overthewaves]

Eh they'll be fine there are always people out there that are gonna buy games and others that love their service. Look at High on Life its #1 on steam for some reason lol.

 

[Jiraiya]

So you're gonna doubt the CEO because John, who i really like, from df feels some type a way about a number? Holy confirmation bias Batman.

 

[headspawn]

Is someone using feels as speculation in an informal casual chat really thread worthy?

Seriously question.

 

[Titan6062]

Sure are a lot of salty people in here about some comments they casually said in passing.

 

[Detective]

Yeah, I Feels like…I don't buy that 🤣

But seriously, I will take the word from the CEO than DF on this one.

 

[CloseTalker]

Especially when I don't know anyone who is paying more than $1 per month for it.

Click to shrink...

Tell me you live in an echo chamber without telling me you live in an echo chamber. 95% of GamePass users don't even know what the $1 trick is

 

[DoradoWinston]

I wonder what the feeling of a percentage is like

 

[Altezein]

In before thread is closed (I bet, as there's no real data to discuss)

 

[Xando]

Didn't Microsoft already say they were profitable lol?

Click to shrink...

Yes but what if someone speculating says otherwise?

 

[Duxxy3]

Can't imagine the blowback if Microsoft just up and decided to kill off gamepass.

 

[Cirrus]

Sure are a lot of salty people in here about some comments they casually said in passing.

Click to shrink...

I don't think most of us have watched the video, probably reacting to the quotes posted in the OP

 

[Deleted member 93062]

Sure are a lot of salty people in here about some comments they casually said in passing.

Click to shrink...

People are responding to the topic of the thread, not the entire video. If it was something that was "casually said in passing" then it's up to mods to decide if the thread is worth it. Otherwise, people will respond to the thread topic.

 

[Chaos Legion]

Microsoft doesn't report sales or the like, I believe, so there's not much to do other than speculate on the impact of game pass.

 

[NaikoGames]

DF is pretty good at the technical side of things, when it comes to reading the market and general topics...well...not so much.

 

[nextgeneration]

Consecutive weeks in a row in Steam's Top 100 (by revenue):

Sea of Thieves - 132 weeks
Microsoft Flight Simulator - 52 weeks
Forza Horizon 5 - 49 weeks

Note that these aren't total number of weeks. If we include total number of weeks, those numbers go up even more. These are the peak consecutive weeks these games have hit.

I'm sure sales on consoles have taken a hit - there's no way around that. How much of a hit, nobody knows, but on the PC side, Microsoft titles are absolutely thriving on Steam.

 

[headspawn]

I don't think most of us have watched the video, probably reacting to the quotes posted in the OP

Click to shrink...

Saw the video, I didn't think there was any merit for clearly casual convo for there to be a thread made for it; OP thought otherwise. There's not really much else to discuss here, no meat.

 

[Jameson]

Microsoft made $10 billion in games/games with gold, 2.9b from gamepass and 3b in hardware last year.

80% is nonsense.

 

[Firefly]

MS would rather have more subs so $70 just pushes more people towards Game Pass.

 

[jsnepo]

I don't think Phil would straight up lie about profits, revenues, or sales. Microsoft is a publicly traded company after all. Now that doesn't mean he can't frame or spin things to apease their shareholders.

 

[Slayven]

Yeah a CEO of a publicly traded company who has a long history of having regulatory bodies domestic and foreign up their ass is going to lie for what amounts to their side hustle.

 

[Seganomics]

All this talk of Gamepass being profitable needs to die. Who really cares if Microsoft are losing or making money on it?
Gamepass is here until it isn't and the impact it's having on first party sales are something nobody but Microsoft should give the slightest shit about.

 

[Xando]

Yeah a CEO of a publicly traded company who has a long history of having regulatory bodies domestic and foreign up their ass is going to lie for what amounts to their side hustle.

Click to shrink...

Even if you ignore all of that the addition of steam to first party sales means it can't be down 80%

 

[foolishoptimist]

If game pass has topped out at about 15% of xbox users, game pass can not be responsible for an 80% drop in first party game sales. That would be claiming those 15% on game pass were responsible for 80% of the first party sales. Seems incredible if true and I would like to know what evidence they have before I believe that.

Click to shrink...

Big PlayStation exclusives routinely sell 10+million copies. But even their biggest sellers only sell to 10-20% of their install base.

So I don't think those numbers are ridiculous.

 

[Breadfan78]

They sell them on the Steam store too, and they do very well from what I've seen.

 

[cw_sasuke]

Microsoft made $10 billion in games/games with gold, 2.9b from gamepass and 3b in hardware last year.

80% is nonsense.

Click to shrink...

No way MS made 10b with first party game sales on Xbox, which what they are talking about.

MS hasn't released many new big hitters and GP exist, no rocket science needed to evaluate the level of first party sales.

Their games perform well on Steam though.

 

[Rahkeesh]

I don't know why people are bringing up Steam as some kind of gatcha. DF are talking about Xbox consoles only and Gamepass PC is a borderline trash fire compared to the xbox experience. Plus the bias of Steam being where most PC gamers buy most of their games anyway, wheras you are locked into the the xbox store for xbox console games. I would leave PC entirely out of this discussion and try to scrounge up some xbox console numbers if you can.

Like just even buying an xbox console over Sony already puts you in a group that leans towards MS games or gamepass. The same cannot be said of most Steam users.

 

[cyrribrae]

I'd love to get a sense of where they're getting their impressions from. Xbox games sell really well on Steam, but we don't know how well they sell on Xbox. They COULD have collapsed, but there's no way to tell that. We know that Gears 5 didn't sell all that well, but it's kind of an outlier compared to a lot of games - and also didn't chart as highly on the most played aspect. We can't know some things, of course. Like, we can't know what percentage of theoretical sales have been directly replaced by Game Pass subscriptions. It's impossible to know how much a person WOULD have spent on a game or games without Game Pass.

I think that's all less important than you think, though. A lot of those people simple would not be on Xbox if not for Game Pass. The amount of time and energy and engagement with the platform thanks to Game Pass is anecdotally and empirically much higher. And THAT has worth beyond just the individual game sales - it strengthens the platform as a whole. The money that goes into Game Pass is also built-in marketing for your platform and the games on it. And that's to say nothing of the incredibly valuable user and game data that MS is getting from Game Pass. In a lot of ways, Game Pass's value goes far beyond just the subscription revenue. I have zero doubt that Game Pass is profitable in many, if not almost all, conceptions of its operations.

I don't know why people are bringing up Steam as some kind of gatcha. DF are talking about Xbox consoles only and Gamepass PC is a borderline trash fire compared to the xbox experience. Plus the bias of Steam being where most PC gamers buy most of their games anyway, wheras you are locked into the the xbox store for xbox console games. I would leave PC entirely out of this discussion and try to scrounge up some xbox console numbers if you can.

Like just even buying an xbox console over Sony already puts you in a group that leans towards MS games or gamepass. The same cannot be said of most Steam users.

Click to shrink...

Because they're not mutually exclusive concepts. Marketing for MS 1st party games IS Game Pass. For games to sell well on Steam is a reflection of the impact of Game Pass on the wider gaming audience. Does that mean these are one and the same? No, I don't think so. But it's enough that dismissing it out of hand because it's Steam and not Xbox is a bit short sighted. These are the numbers we've got. We don't have them for 1st party, and AFAIK, likely neither do DF. Either we all stop speculating here, including DF, or we take what info we have and try to draw what inferences we can.

 

[Jameson]

No way MS made 10b with first party game sales on Xbox, which what they are talking about.

MS hasn't released many new big hitters and GP exist, no rocket science needed to evaluate the level of first party sales.

Their games perform well on Steam though.

Click to shrink...

I'm just quoting actual stats. Clearly we don't know the percentage of first party games in that, But their game sells haven't collapsed at all, Any speculation to the contrary doesn't make any sense without hard proof first party or not.

 

[Mung]

Where are these numbers from, if not pulled out of thin air? And no, UK boxed sales are meaningless with the meteoric rise of digital sales.

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They aren't completely meaningless as you can compare trends over time compared to other platforms. Ps5 boxed sales drop x percent and xbox boxed sales drop y percent over 5 years...

But yes cannot be used as absolute numbers and would be difficult to draw very hard conclusions due to confounders.

All this talk of Gamepass being profitable needs to die. Who really cares if Microsoft are losing or making money on it?
Gamepass is here until it isn't and the impact it's having on first party sales are something nobody but Microsoft should give the slightest shit about.

Click to shrink...

Strange thing to say on a discussion forum about gaming. This thread isn't even about that, it is about first party game sales. We discuss many things 'nobody should give a shit about' here.

 

[Neural]

I don't know why people are bringing up Steam as some kind of gatcha. DF are talking about Xbox consoles only

Click to shrink...

They're not replying to DF comments but to OP's post.