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.
Game Pass Could Undermine Switch Online And Leech Playerbase
There's also a strong possibility that Xbox Game Pass could undermine Nintendo's own Switch Online service. This wouldn't happen right away. It'd be more of a slow burn. We know Game Pass is built as an additive branch to the Xbox-as-a-service platform and could pull users over to its own ecosystem by using Game Pass on Switch as a doorway, the same way the service is a doorway to Microsoft's own platform. This folds into the technical hurdles of such a service on the Switch that we'll outline below.
Make no mistake: Microsoft doesn't want to share a platform or a player base. It simply wants to make money, and it would do so by undercutting its host, as any company would. And by letting a service like Game Pass onto a more closed, Nintendo-only ecosystem, the company could risk a kind of leeching of its installed base and player base. Game Pass on Switch would be kind of "lite" consolidated version with lots of missing games. I expect if it comes to Switch, Game Pass will be a multi-console service, so any active subscription can play and download games on multiple platforms.
That's great for gamers, but bad for platform-holders like Nintendo. To get the rest of the Game Pass games missing from Switch, players could just jump on their PCs or buy an Xbox One and potentially leave the Switch ecosystem.
Game Pass is a competing service on a competing platform, and the only reason Microsoft wants to bring it anywhere else is because of accessibility. Its own Xbox hardware platform isn't so hot insofar as install base and sales; in fact, the hardware install base isn't a primary goal for Microsoft anymore. It's learned to leverage a rich bedrock of services to compensate for sales losses.
But with the Switch's massively growing install base that just broke 32 million units, Microsoft sees potential (at least theoretically via the rumors). It's also a massive undertaking though.
Game Pass is specifically designed to feed into the Xbox service webwork. It's designed to get you hooked and get you buying, playing, and spending money in, games, all while interacting with other players. That's not really something you can do on Switch as it is, so players could jump ship and go to Xbox (or just game on Windows 10 PCs) instead.
Plus how would multiplayer work with Game Pass games on Switch? Would users have to buy Switch Online and subscribe to Game Pass too, similar to needing Xbox LIVE Gold to play GP titles online with friends?
This would probably be the case, but interactivity and community-driven engagement would be interrupted as the Switch doesn't really have adequate tools for expanded multiplayer gaming. Microsoft wouldn't like this. The company likes its social aspects to be as open as possible, whether it be party chats, community tabs, or Mixer streams--there's always some way to interact with others in a more free environment.
Nintendo, on the other hand, has basic tools and restricts communication.
Hardware And Technical Issues
Game Pass works because on an OS-level the games have been made compatible between Xbox and Windows 10 hardware (this is doubly true for older backward compatible games). The service has been carefully crafted to work well across these systemic platforms, which have grown to a cohesive platform that're interwoven with online frameworks like Xbox LIVE acting as the glue that holds them together.
Making Game Pass work on Switch would be tough because not only is it a foreign platform, but it's hardware is dramatically different than that of an Xbox One or Windows 10 PC (even the base 2013 model is more powerful).
The Switch's internal specs are underwhelming compared to current-gen systems; it's built-in Tegra X1 chip is designed for NVIDIA's Shield set-top boxes, which in turn leverage the power of its GeForce Now cloud servers for game streaming. Things are even tougher when we consider the Switch's power drop when running in handheld mode versus docked console mode.
But these lower specs haven't stopped big new third-party AAA games showing up on the Switch. Lots of newer games have been ported to the handheld-console hybrid, but there's always trade-offs and compromises. Visuals don't ever look as good, there's a drop in textures and overall FPS etc. It's surely impressive big shooters like Wolfenstein: The New Colossus and Doom come to the platform at all, though.
Read Also: Nintendo Switch has extra power while docked
The point is games have to be tailor-made to run on the Switch.
This process is tougher when a game is made for PS4, Xbox One and PC first, as devs then have to re-optimize the source game for the Switch. This is a big roadblock for Game Pass because users must download the games, and not every game on Game Pass is or was optimized for the Switch (even old-school backward compatible games from the Xbox 360 could run wonky on the system).
So if Game Pass were to come to Switch, it'd only be able to offer a small number of games that have been specially optimized to run smoothly on the handheld-console hybrid. This would likely dramatically cut down the selection, thus reducing the service's value, and might make Microsoft think twice about offering it.
There are also other considerations that we can't actually predict or know about without intimate knowledge of how the two online frameworks would mingle. We don't know if Microsoft's servers would play nicely with Nintendo's, or what kinds of tricks they'd need to do in order to get things running smoothly, but launching something like a subscription service on a competing platform you don't totally control could prove to be tough indeed.
Microsoft would have to run all decisions through Nintendo, who would have to approve them before changes were made. Launching Game Pass on Switch would require a high-level partnership that transcends the current console war and could ultimately undermine Nintendo's own established online framework in the long run.
I expect any potential partnership would be on Nintendo's terms first, and that Microsoft would use Game Pass on Switch as a means to bring its first-party games to the platform, but to what avail? So it can sell games on the Nintendo Switch via the eShop and make its first-party "exclusives" into third-party titles?
This way Microsoft would potentially sell more games but make less revenue off of each sale--less than it would on its own platforms like Xbox One and Windows 10 PCs. Maybe that's the end game here.
But since when did Microsoft care so much about just selling games? Its ecosystem is built around services, which in turn leads to game sales. Dropping Game Pass on a third-party platform would rake in less cash on both fronts and miss out on key engagement opportunities to boot.
As with any article that discusses why I think something won't happen, we should look at the reasons why it could.
On a surface level, it's great to hear Game Pass could come to Switch. The service has done wonders for Microsoft, and maybe it can do the same for Nintendo. The Switch doesn't have its own a la carte download service (yet?), and we could see two of the biggest names in gaming come together to provide something great for gamers.
The Switch is an attractive platform. It's growing and is big across all regions of the world, from North America to Europe and Japan. Microsoft has had a hard time penetrating some of these regions (namely Japan) and it could use the Switch as a vehicle for more revenues and accessibility.
Gamers would get an expanded library for a low-cost fee every month. Microsoft has a wealth of games it can offer Nintendo (not that the company actually needs this games, as its first-party titles are exploding left and right on the platform) via Game Pass.
One could also argue that EA brings its service to a competing platform with EA Access on Xbox One. The difference here is EA doesn't have hardware of its own, and doesn't have a streaming service and a huge webwork of services that are built specifically around wholly-owned hardware. Microsoft does, and its motivations are to bring its games to the widest audience as possible to promote engagement and spending.
The Microsoft-Nintendo partnership could see lots of changes and compromises to Game Pass to get it working on the Switch.
Game Pass on Switch would need to be a forked version that runs indies and other games optimized for the Switch, whereas every other major third-party game not optimized for the lower-end hardware would be streamed via Project xCloud.
This sounds like the future. Game streaming is ultra convenient and paves the way to a new kind of experience where users can simply integrate gaming into all facets of their life. Mobile gaming wouldn't be compromised to just smaller microtransaction-ridden freemium games. Instead, we'd get to play Gears of War 5 on our smartphones, and maybe on our Switches.
But there are so many roadblocks in the way for streaming right now that Project xCloud is kind of a pipedream that won't truly manifest until 2020 or thereabouts. The technology and online infrastructures are still very new, and there are lots of kinks to iron out namely latency issues. Plus the Switch's lackluster Wi-Fi chip isn't the best for online gaming, and it doesn't sport an LTE or 5G chip in its guts.
Even with this business plan, all of it sounds like a huge technical hurdle that Microsoft may not be ready for.
But could it be done? Maybe. Just about anything could be done with enough money thrown at it. The question is, how much do Microsoft and Nintendo want to potentially jeopardize on this bet?
Remember that Microsoft is a master of mitigating its risks. If it determines something isn't worth doing, like say investing heavily into singleplayer-only games, it simply won't. Instead, Microsoft likes to spread around its cash to multiple moving parts that generate revenue over time, like Game Pass, Mixer, Xbox LIVE--pretty much anything associated with the Xbox brand is built for long-term earnings rather than short-term sales.
Despite all of the things we've outlined here, Game Pass on Switch could happen. Things could change, and Microsoft and Nintendo may be willing to take potential losses and risks to make it happen. But everything we know about how the companies and services actually work tells us not to expect it to manifest.
Nintendo Should Make Its Own Game Pass
Rather than teaming up with Microsoft, Nintendo should make its own Game Pass service. Yes, the company may not have the servers required for such a feat, and yes, it may be rather slow-going to adopt new business methods, but it's the best way for the games-maker to not only accrue strong revenues but to control the service and how it takes shape.
Being able to control any service you make on a platform you own is extremely valuable. It gives you much more flexibility to make decisions and mold the service in the short- and long-term. Nintendo has already made its own little Game Pass-like service anyway with Switch Online's NES library. We expect this selection of classic games to expand to different platforms like SNES and maybe even Nintendo 64 at some point.
Is that enough to sustain strong subscriptions? It certainly helps. Switch Online now has over 8 million paying subscribers, meaning 25% of the Switch's 32 million install base has bought into the service.
Nintendo says it plans to boost value to the service in the coming years. Shortly after saying this, Nintendo released Tetris 99 exclusively on Switch Online and dramatically skyrocketed the service's acclaim.
But are Xbox LIVE Gold-style free games and an expanding roster of classic NES games enough? Does Nintendo need to make its own big Game Pass service? Well, yes and no. Yes because it could potentially make tons of cash, and no because it's doing quite well for itself. It honestly doesn't even need to adopt Microsoft's Game Pass right now--it just doesn't seem worth the potential risk.
If it were to make a Game Pass, it could roll out a limited selection of indies first and maybe add some premiere first-party games like Super Mario Odyssey and Zelda: Breath of the Wild at some point.
This theoretical service would branch off from Switch Online and offer a kind of tiered structure. But Nintendo's business model isn't built around the strong core of engagement like Microsoft's, so it'd have to be careful how it executed this plan. Hardware and full game sales are still big parts of Nintendo's business, but a Game Pass-like Switch Online extension could provide additive subscription earnings over time.
There's also the possibility Nintendo could make its own game streaming platform similar to Project xCloud.
The company patented an interesting Switch hardware add-on called a Supplemental Computing Device back in 2016. The SCD is kind of like an Expansion Pack that boosts the Switch's processing power for online gaming, and is specifically aimed at improving latency for multiplayer content. Streaming isn't outright mentioned, but we predicted the SCD could be a gateway to Nintendo's own games-as-a-service cloud initiative.
Also, remember the NVIDIA Tegra X1 chip found in the Switch is specifically designed to leverage the company's GeForce Now servers for game streaming. We predicted that the Switch could also be used in such a way, and tap the GeForce Now servers to stream Nintendo games.
Japan has been experimenting with on-demand Switch game streaming from the cloud for a while now. The first test was with Resident Evil 7 in 2017, and then Assassin's Creed: Odyssey in 2018. Both games were offered in a kind of rental fashion where you paid x amount of cash for x amount of game time.
Even back then we believed this was the beginning of something big with the Switch, and it could be a part of Nintendo's multi-year roadmap for the console. But whatever Nintendo does, it should be wary about signing big deals with other companies and bringing competing subscriptions over to its platform--especially ones that are built specifically to benefit a competing billion-dollar ecosystem of engagement and monetization.