Why Xbox Game Pass Is So Attractive For Devs, Whether It Cannibalizes Sales Or Not

Xbox Game Pass has quickly taken hold in the industry, representing a strategic shift for Microsoft that eschews a key part of the traditional model of console competition: namely, directly buying games. The subscription service offers an all-you-can-eat buffet of games from Microsoft itself, as well as third-party developers that Microsoft has partnered with to host its games. But how much does it benefit developers?

That question hasn’t been answered clearly, especially since the answer seems to vary by studios and the terms of agreements are not disclosed. Microsoft has not specified exactly how it makes deals, but comments from various developers suggest that it tailors the terms of each deal individually. Xbox head Phil Spencer told The Verge that the deals are “all over the place.” Microsoft seemed to concede recently that Game Pass can cannibalize game sales, but quickly clarified that it works with publishers to maximize their profits on an individual basis, while allowing room for “creativity and innovation.”

You won’t find many people in the industry more vocally positive about Game Pass than Mike Rose, founder of independent publisher No More Robots. He’s made a point of talking publicly about how Game Pass has helped his own company’s games, most recently in a detailed talk at GDC 2023. That talk, titled Why I Chose Game Pass: No More Robots Talks About Growing their Audience for Let’s Build a Zoo, went into an unusual level of detail and insight about the multiple benefits of putting Let’s Build a Zoo on Game Pass.

First and foremost, Rose said, putting a game on Game Pass “de-risks” the project financially, since financial terms are arranged ahead of time instead of having to wait for the outcome of sales figures. The sizable Game Pass subscriber base also guarantees a big player base at launch, which means the studio can focus on supporting it with post-launch content. And that ultimately benefits the studio, as many players who are already sampling the game as part of their subscription will purchase DLC. Rose said roughly four times as many people bought Let’s Build a Zoo DLC as only the base game. Among those who did buy the base game, an unusually high attach rate bought the bundle with the DLC, which he credits to consumers wanting to keep access to the DLC they bought after the game rotates out of Game Pass. Finally, he said, Game Pass players provide a great deal of feedback, which can be invaluable for smaller developers.

Rose told GameSpot that when the studio launches a game on multiple platforms with a day-one launch on Game Pass, the Xbox playerbase far outweighs all the others. Usually, he said, at least 80% of the players will be on Xbox. Asked about Microsoft’s admission of cannibalizing sales, Rose chalks it up to guessing at unknown factors.

“From my perspective, as someone who has put numerous titles on Game Pass, it’s just impossible to actually say,” he said. “We’ve definitely had titles that have sold better when entering Game Pass, and we’ve had titles where, after they’ve gone into Game Pass or left Game Pass, we’ve seen zero change in the sales they were getting before or after. The big problem with the ‘Game Pass cannabalizes sales’ angle is, no developer or publisher has any idea how many copies their game was going to sell on Xbox if it didn’t launch into Game Pass. So how exactly could you categorically state that it occurs?”

Visibility is important, especially as the games marketplace grows more crowded. According to Statista, Steam adds around 10,000 new game listings per year–or around 200 per week. Being selected as one of only a handful of games on Game Pass in a given month, especially as a new release, makes it that much more likely to stand out. Rose said for a company the size of No More Robots, the most important things Game Pass brings to the table are “money and players.”

“We need the money to make sure the developers we work with see a nice payout for their hard work, and then the huge influx of players we receive for each game means you’re guaranteed to have a ton of people talking about your game, which is great for both the short and the long-term success of any title,” Rose said. “I imagine for a much larger publisher than ours, it’s a little more complicated–they have investors to make happy, they have metrics to hit, and so a subscription might not be so simple for them. For us, it’s simply: Is the money right? Let’s go.”

And while Rose is a proponent of Game Pass, he does recognize that competition in the subscription space is heating up. PlayStation’s new tiers of PlayStation Plus appear to be competing directly with Game Pass, penning day-one publishing deals with new releases like Tchia. So while No More Robots has had great success with Game Pass, Rose is also looking at PlayStation. The studio put Descenders on PlayStation Plus, which he says added hundreds of thousands of new players, as well.

“PS Plus is great, just as good as Game Pass for us,” he said. “We’d definitely like to get more titles on there in the future.”