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.
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