What Game Pass Is, And Why It's So Successful
Reports indicate Microsoft's wildly popular Xbox Game Pass service will come to Nintendo Switch in some form, but this doesn't jive for a lot of reasons. We take a closer look at what Game Pass actually is and what it does to understand why this probably won't happen.
Xbox Game Pass coming to Nintendo Switch wouldn't really benefit Microsoft nor Nintendo all that much, but Microsoft could get more out of it in the long run. There's many technical reasons why the all-you-can-download service shouldn't come to the system, but let's talk about what Game Pass is to understand why this doesn't make sense on a business level.
In short, Game Pass is a $10 a month service where you can download a pool of over 100 games to your Xbox One console and some to your Windows 10 PC. But it's bigger than that; the subscription is an entry point to Microsoft's carefully crafted and curated billion-dollar realm of engagement-driven services.
Xbox is now a service that bridges consoles and PCs (and soon mobile phones), but on a deeper level, it's always tethered to Microsoft-level hardware, not competing platforms. Even Microsoft's Project xCloud "Netflix for games" streaming on mobiles won't be the same as the tighter Game Pass integration. There's a strong rationale behind that, and this way the company can control where and how its foundational services are played and paid for.
Microsoft has this model down to a science, and once you buy into Game Pass, you're strategically pushed to buy into its other services like Xbox LIVE, purchase microtransactions, and engage within the community, thus making you more likely to stick around (and keep spending).
Xbox Game Pass is essentially a mechanism or tool used to make money in a lot of different ways. It makes money directly via paid subscriptions and full game sales on the Xbox Store, and indirectly via microtransactions, ad revenue via Mixer, and long-term engagement via Xbox LIVE multiplayer and interactivity. The beauty is that all of these parts feed into one another, the same way all of Xbox's services and hardware tie directly together.
Game Pass serves as a conduit for both online and offline gaming, spending, and engagement. It's so strong that Microsoft's own first-party games are now additive to its ecosystem, meaning it doesn't have to rely on software sales to make money on its games anymore.
By serving its first-party games up on Game Pass on both Windows 10 and Xbox consoles, Microsoft is trading one-off game sales for continued engagement that makes money from microtransactions, season passes, and of course Game Pass subscriptions themselves. Game Pass is a delivery vehicle for its biggest games, all of which are designed from the ground up to tap the games-as-a-service business model and directly compliment (or be additive to) the Game Pass service.
Speaking of which, Game Pass is a great way to actually spark full game sales. Users are much more likely to buy games they've played on Game Pass, whether they're first-party or third-party games.
All of these things have been designed to serve the Xbox-as-a-service model which keeps players "stuck" to the platform, to the ecosystem built on and with Windows tech. This synergy would be effectively compromised if launched on a platform like the Nintendo Switch because not all of its pieces are there; the whole picture would be disrupted, and slices of the spending pie would be missing. In short, launching Game Pass on Switch may not be worth it for Microsoft because all of the other pathways to making money wouldn't be there.
Microsoft wouldn't take a cut of the full game sales that Game Pass helped to sell on the Switch's eShop unless it ported its first-party titles over. Microsoft also wouldn't make money from every microtransaction purchase either (and that's actually more important than you think).
Microsoft wouldn't get Mixer ad revenue because Mixer isn't on the platform. It wouldn't get Xbox LIVE subscriptions because that ecosystem isn't there (and Nintendo would be insane to bring it there and undermine its own Switch Online subscription, but more on that later).
Think of Xbox as a giant wheel, and its spokes are services like Game Pass, Xbox LIVE, Mixer, and software and hardware sales. If one spoke is missing, the wheel can still turn, albeit not as efficiently. But if multiple spokes are missing, as would be the case with a Switch Game Pass launch, that wheel would be irregular and wonky.
Remember that Microsoft only supports cross-play and cross-platform initiatives because its business is set up to benefit from them. The company likes to say it wants to give players choice, but it's really about making money via that golden goose egg of engagement.