Xbox Game Pass: Why Microsoft Calls It a Blessing, Not Threat to Consumers, Developers

Game Pass members spent 20% more time playing games and played 40% more titles, Microsoft said.

On its surface, Xbox Game Pass seems like a sort of Netflix for video games. The Microsoft-run service charges players a monthly fee for unlimited access to a library of titles.

But the results of that service, which has been live now for about a year, show a number of surprising, meaningful changes in the way its users consume games.

“Netflix is what we hear, but that’s not what we think of it as. When we started out with the program we wanted to be additive, something that grows the entire ecosystem,” said Ben Decker, general manager of services at Microsoft. “So we tracked how customers are using Game Pass and how it interacts with the purchase model. How much time are you spending and how many games are you purchasing?”

The result, Microsoft found, was that Game Pass members spent 20% more time playing games than they did before signing up. And not just with Game Pass games, but with other games on the Xbox One as well. The company also saw a 40% increase in how many games a subscriber plays, and again, that wasn’t just for Game Pass titles, but all titles on the system. They also found that franchises with multiple entries would see a significant increase in the purchase of other games if one of the titles hit Game Pass.

“People might think (Game Pass) is competitive,” Decker said. “But we are seeing both purchase and subscription increases as a result of Game Pass.”

‘A Big Investment’
Microsoft launched Xbox Game Pass in 31 markets on June 1, 2017, as a monthly download gaming subscription service with unlimited access to a library of about 100 Xbox 360 and Xbox One games. By paying a monthly fee, currently set at $10, subscribers could play included games without the need to purchase them.

Since launch, the service continues to add new titles and rid itself of some, expanding the variety of games and the genres that they represent. Last year at Gamescom, Microsoft extended the service to eight more markets.

This January, Microsoft announced that going forward, all new Xbox One games from Microsoft Studios would become available to Game Pass members the same day they go on sale globally. And in the past week, Microsoft announced an app for browsing the games in the service. It’s been a busy 12 months for Game Pass.

“We’re happy with what we could do in the first year,” said Ashley McKissick, head of Xbox Game Pass. “We wanted to reduce the friction and barriers for people who wanted to play games.

“What we love about Xbox Game Pass is that you don’t have to choose one game; you can snap between different games in the catalog. One gamer told us that you never know what your next favorite game is going to be.”

Since launching, McKissick and her team have been busy tracking the issues users bring up about the service and doing their best to solve them. Early on, players complained about how slow downloads were, so Microsoft added fast-start, which allows a game to be played before it finishes downloading completely.

“We also have our own ideas and big goals and thoughts around where we want to bring the program,” she said.

While Decker declined to offer any specifics on how many subscribers Game Pass has or how much money it is making, he did say that Microsoft is happy with the results.

“I will say it has significantly exceeded our expectations,” he said. “The feedback from our developers and customers has been really positive. Those metrics, as well as the raw number of subscribers, have made us really happy.

“This is a big investment for us. A real focus for us. There was a bit of a leap. It was, in many ways, kind of new, something we hadn’t tried before, but we’ve been blown away by the response.”

Threat to Developers?
As the service continues to grow — a rumor now has Microsoft potentially tying it to an all-access pass that would bundle it with a console and the company’s online Live service — some worry that it could eat into profits, reducing the money made from a game that sells for $70 or so a pop to pennies for a stream.

But Tim Woodley, senior vice president of global brands at 505 Games, said that’s not what his company has seen.

505 Games was among the developers and publishers that announced support for Game Pass at launch. In May, the publisher launched “Laser League” with Game Pass support.

“We are very excited when another opportunity to bring our content to consumers comes along,” Woodley said. “The reason why we were so excited with such a service is that it gives consumers more choices for how they access content.”

Game Pass inclusion brings with it a number of benefits to a game, Woodley said. Chief among them is discoverability.

“Discoverability is one of the bugbears of our industry,” he said. “Our titles also experience a much higher level of engagement than they otherwise would have.”

Unlike with movies, television, or music, continued player engagement can make or break certain types of video games. Games that feature online multiplayer require a base level of players to make the experience fun for those who decide they like the game. If there aren’t enough players around, the experience can become less enjoyable, the process of matching up players with one another can take longer, and that can quickly lead to a game’s death.

“That’s one thing unique to the video game world,” Woodley said. “You need a minimum number of concurrent players for a game to work. One of the biggest things we’ve seen in terms of Game Pass is that it’s one of the largest needle movers in terms of concurrency.”

Increased engagement also leads to players spending more time in the game and that can lead to an increase in other monetization systems, like in-game microtransactions, downloadable content, and subscriptions.

“We don’t need to make a ton of money off that first purchase because we know if we can keep the player engaged that DLC will grow because they are enjoying the game,” he said. “Something like Game Pass heightens that ability. It was looked at like the service that was going to cannibalize sales, but we’ve seen the opposite.”

There is a benefit to single-player offline games as well, he added. The more people playing a single-player game, the more there are talking about it and word will spread. He called it “another element of discoverability.”

It also, Woodley believes, improves the relationship between publisher and player.

“Our job as a publisher means we have to keep content coming, updates regular,” he said. “We have to make sure the people are invested in our game and have every reason to come back. The increased engagement (through Game Pass) means our attention levels are that much higher. And we still have a responsibility that new content is still there. So it’s a symbiotic relationship.”

Curation is Key
Decker doesn’t want to kill off game purchases and he also doesn’t think that services like Game Pass would have that sort of impact.

“Sometimes there is a narrative around either subscribe or buy, but we want to make sure it’s a mixed ecosystem,” he said. “That’s what customers want and that’s what our partners want.

“For gaming to be healthy you want to create choice for developers and for customers. Game Pass is a great way to do that with customers. It’s simply an opportunity for discovery. I don’t see it replacing purchase to own.”

And that’s how Microsoft approached the entire program. The key concept behind Game Pass isn’t to offer a massive glut of games, but rather to serve as a sort of curator. While Microsoft’s commitment for the service is to include more than 100 games, and currently it’s around 170 titles, that’s not the important metric for the company.

“It’s more about balancing content,” Decker said. “We want to make sure there is something for everyone. We want to retain a highly curated catalog so that we think every game in the catalog is great.

“Initially, we thought that number was going to be really important. But what we hear now is, ‘I don’t want thousands and thousands of games, I want really good games.’”

McKissick said the team is always looking at the current portfolio of games to make sure it has a nice balance of content, while also remembering that users often try new games and genres they may not have had the titles not been in Game Pass.

That push toward a more curated experience is part of the reason that McKissick doesn’t see Game Pass as a subscription service.

“We think of it more as a membership than a subscription,” she said. “We are constantly looking at ways to add value. Game Pass members get discounted DLC. That doesn’t exist in Netflix’s world.”

The Rise of Digital
“I think historically, especially with movies or music, you have seen a transition toward more of a subscription model, giving customers more choice,” Decker said. “We want to create that same choice in gaming, so you can have just as good an experience through Game Pass or by purchasing a game.”

The rise of better internet access in many places, more secure digital content, and a desire by some to shed the physical wrappers of digital creations all seem to be key factors in the rise of video game subscription services too.

Electronic Arts, Twitch, Discord, PlayStation, and Ubisoft all either have some form of game subscription service or are considering it.

“It’s definitely clear gaming is following a broader industry trend to move to digital subscription,” McKissick said. “While gaming is a very different entertainment experience than something consumptive like TV or movies — people don’t sit and watch the same Netflix episode hundreds of times, but they’ll sit and play and the same game over and over — the path of experiencing or consuming entertainment, shifting from digital away from disc or adding a subscription model is similar.

“We believe this content and service can play across many platforms. It is our intent to bring it to as many devices and platforms as possible. I am excited to have this conversation next year when we are able to talk about the things we weren’t able to talk about today.”

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