Game Pass is worth 'jack sh*t' without game developers, ex Bethesda VP says

Subscriptions like Xbox Game Pass have changed Microsoft's games business and the industry at large. All of the major Big 3 platform-holders have their own subscription offering, but Xbox is unique in its approach: its content is not a catalog bin like the competing Switch Online and PlayStation Plus. Microsoft launches all of its biggest first-party games day one on Game Pass, which can lower both the launch and long-term sales of a game product.

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This replacement effect is called "cannibalization," where users will subscribe to Game Pass for $20 instead of buying a game at $70. The game is a one-off purchase, but Game Pass is recurring and can be worth a lot more than $70 over time. That's the gamble Microsoft is taking--the idea is to make Game Pass have enough value to keep users subscribed, and hope that subscriptions become the default way to access games. Why? Subscriptions mean you never own anything, and Microsoft has made its business on perpetually leasing software to consumers.

Cannibalization has caused disruption and tensions with game developers. It appears the problem is that game devs don't have a sure-fire way to properly attach a monetary value to their games, leading to layoffs and studio closures when things go badly. We're now seeing more former game industry figures talk about these disruptions, with ex Bethesda VP Pete Hines adding his voice to the mix.

In a recent interview with DBLTAP, Hines says that companies have to find a way to evaluate the value of games included on subscriptions and fairly compensate teams to avoid disasters like cancellations, closures, and layoffs.

"I'm not working in any of these companies anymore, and so I don't assume that everything I knew while I was in the industry still holds true today.

"At the same time, I'm involved enough to know I saw what I considered to be some short-sighted decision making several years ago, and it seems to be bearing out the way I said. Subscriptions have become the new four letter word, right? You can't buy a product anymore.

"When you talk about a subscription that relies on content, if you don't figure out how to balance the needs of the service and the people running the service with the people who are providing the content--without which your subscription is worth jack shit--, then you have a real problem.

"You need to properly acknowledge, compensate and recognize what it takes to create that content and not just make a game, but make a product.

"That tension is hurting a lot of people, including the content creators themselves, because they're fitting into an ecosystem that is not properly valuing and rewarding what they're making."

Games that are only sold on a store have to be valued differently internally versus those that are included on Game Pass. The reality is that Game Pass injects a level of volatility, or unpredictability, into things because there's no guarantee how well your game will sell if it's included on a subscription that includes it for a potentially lower price.

In most instances, Microsoft offers developers an up-front payout to attract developers, and many devs take this offer and opportunity.

The real issue, though, is when a big-budget AAA game launches onto Game Pass, doesn't do well because no one's buying copies, and the developer has to lay people off or even shut down. Microsoft can fund the projects, but the games still have to come out and ideally make their money back--there's still the proving point of having to actually perform on the market and sell the product.

Microsoft's studios were (and maybe still are) set up to do business the old way, by selling games, and specific titles don't necessarily fit into a Game Pass model--especially those singleplayer games that rely strongly on launch sales and post-launch catalog game sales to make revenue.

That being said, Xbox studios have gone through heavy restructuring as the company embraces AI and tries to align more towards the subscription-oriented business model.