Microsoft typically cares more about services than it does selling its full games, and its Game Pass subscription is a big reason why. Now that all of its biggest first-party games are coming to Game Pass, Microsoft can now make money from new games without actually having to sell them. Throw in a bunch of microtransaction hooks and online play and you've got a game plan for revenue growth.
It's so potent that Microsoft's own games are now additive to its services and like EA, Microsoft doesn't focus intensely on full game sales. This plan's success hinges on one path, though: staying within the carefully curated Xbox-as-a-service ecosystem and not selling big games on competing platforms like Steam.
So why isn't it taking the same approach with The Master Chief Collection? Why is The Master Chief Collection coming to Steam and not staying as a Microsoft Store exclusive on PC? Simple: this is a rare instance where Microsoft cares more about full game sales than services, and it's all because these Halo games were made in a different era.
The six Halo games included with The Master Chief Collection on PC (Reach, Halo 1-4, ODST) were made before free-to-play style microtransactions hit the AAA console market. Before Halo 5's REQ packs that earned $1 million in a month, there were paid DLCs and map packs that you bought post-release. That was really the only way to expand the game besides QoL adjustments and seasonal playlists.
Without embedded live service hooks, these old Halo games aren't monetizable in the same way current games are and have to rely on the raw might of game sales to make money (we've heard map packs just didn't sell very well, but Halo multiplayer sure sold a lot of Xbox LIVE Gold subscriptions).
Microsoft knows there's more players on Steam, so it's decided to take the 30% revenue hit per game sale to reach a wider audience of enthusiastic hardcore PC gamers. This was the right move and it's a calculated business decision rather than a move to please fans.
Yes, Microsoft will only keep 70% of every MCC and Halo game sale on Steam (the games will be sold separately as well as bundled in the Master Chief Collection), but the per-sale revenue drop will be vastly outweighed by the sheer volume of sales that the game will make on Steam.
Given the bigger audience of core PC gamers on Steam, and the fact that these Halo games weren't made for microtransactions, it's easy to see why Microsoft is bringing the games to competing platforms like Steam.
But if Halo 5 ever comes to PC (which 343i says it won't) the game should stay exclusive to the Windows Store so Microsoft can keep full game sales and microtransactions revenue.
Conversely, we don't expect Microsoft to bring any of its big new first-party games to Steam. Just because Microsoft is okay with taking the 30% revenue hit now doesn't mean it'll be okay with not pulling 100% of revenues for its live games.
Games like Halo: Infinite and Gears of War 5 are made in the current era and don't rely solely on full game sales to make money (as we've outlined above). Microsoft's current and future first-party games will have online-based monetization structures for long-term earnings that Microsoft will want to keep entirely for themselves, not pay Steam every time it rakes in cash.
This move also hints that Halo: Infinite will take a long time to make.
343 Industries and Microsoft likely needs revenues to help fund development of the ambitious new shooter. Releasing MCC in a staggered wave of releases on PC will bring more revenue in over time and will keep Halo fans happy in the lull between now and Infinite's launch. The team is currently developing a new games engine from the ground up (the Slipspace Engine) to power the project, so it should take quite some time before it's ready for release.
Understanding how Microsoft's business works is key to decoding its power plays in the games industry. The company is focusing hard on unifying both Xbox One consoles and PCs with software, services, and unique interactivity. Everything from its hardware (look at the digital-only Xbox One S) to its games (glance at Game Pass) are morphing to be more service-centric and serve its forward-thinking plan of long-term revenue generation.
The plan is working quite well, and each of the moving parts--whether it be Xbox LIVE subscriptions, Game Pass, Mixer, or even PC-to-Xbox game streaming--all serve this great money-making wheel of engagement.
But legacy content that doesn't fit this wheelhouse is an anomaly that needs special planning. This is exactly what happened with The Master Chief Collection, and we shouldn't get used to Microsoft peddling its big games on Steam.
Last updated: Mar 14, 2019 at 06:11 am CDT
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