Xbox Game Pass: Microsoft Has Paid "Hundreds Of Millions" To Devs
Microsoft has shared new data points regarding the economics of Game Pass and ID@Xbox.
Microsoft has shared new numbers that speak to the Xbox economy and how much money developers who release games through Game Pass and on ID@Xbox are paid. This is notable because Microsoft rarely discloses dollar amounts regarding specific units of Xbox, like Game Pass and ID@Xbox in this case.
In a blog post, Microsoft's Chris Charla revealed that Microsoft has paid developers and publishers "hundreds of millions of dollars" in Game Pass license fees since the subscription service launched in 2017. "There are amazing games out today on Xbox (and other platforms!) that would never have existed without the support of Game Pass members, and that's really been an incredible phenomenon," Charla said. "Ensuring that millions of Game Pass members get to experience some of the best independent games ever created has been transformational for Xbox players and developers."
Game Pass has more than 25 million subscribers. After a low introductory rate, the service costs $10/month or $15/month for Game Pass Ultimate. With 25 million subscribers, Game Pass is no doubt generating a lot of money for Microsoft, but the service has not been without its detractors as well. Some have questioned whether or not the subscription-based model is actually good for gaming overall. For its part, Xbox boss Phil Spencer recently spoke about how Game Pass is not trying to squeeze out other release models, like the traditional retail model, or free-to-play games, among other categories. They can all co-exist, Spencer said, though how this all shakes out in the end remains to be seen.
Microsoft has historically shied away from sharing any specific data about the economics of Xbox Game Pass, so the disclosure of "hundreds of millions of dollars" being paid out in license fees is notable. Still, it's nebulous, and it doesn't answer the question of whether or not Game Pass is turning a profit.
Spencer recently said Game Pass is "very sustainable" already. In his vague statement, Spencer didn't say how the service is sustainable, or for whom it is sustainable, but he wants to dispel the narrative that Game Pass is a cash pit right now. "I know there are a lot of people that like to write, 'We're burning cash right now for some future pot of gold at the end.' No. Game Pass is very, very sustainable right now as it sits and continues to grow," Spencer said.
If Microsoft has paid "hundreds of millions" to developers through Game Pass licensing fees, then Microsoft's cut as the platform-holder would be substantial as well, though a specific figure was not disclosed.
As for ID@Xbox, which is Microsoft's independent games publishing program, Charla announced that it has paid indie developers more than $2.5 billion in royalties since the program debuted, while total revenue from ID@Xbox partners through Xbox has "almost doubled" over the past three years, Charla said.
ID@Xbox was announced in 2013, and Charla said when the program was originally unveiled, Microsoft "really didn't know much." So the company listened to developers and gathered their feedback about their wants and needs, Charla said.
"Innovations like cross-play across other consoles, for example, came directly from ID@Xbox partners. Stemming from their feedback and requests, we made a lot of changes to our back-end publishing systems and even our app framework," Charla said. "These changes may seem mundane but are really important as we seek to enable independent developers to ship their game easily across Xbox and PC."
ID@Xbox's results have "exceeded our wildest dreams," Charla said.
Microsoft also revealed that more than 4,600 developers from 94 countries are signed up for the ID@Xbox program, and more than 1,000 developers have registered in the last two years.
The ID@Xbox program currently has more than 3,000 games in the catalog, and Charla said Xbox is running into the problem that Steam has, and that is "discoverability."
"Teams across Microsoft work every day to help solve discovery challenges so players can find games they love, and in turn, ensure developers find the audience for their games. ...We're always looking for ways to connect creators with new audiences," Charla said.
With a library of around 3,000 games on ID@Xbox and $2.5 billion in payments to developers, that works out to around $830,000 per game. There is no doubt that some games have generated much more than this average and others have made significantly less, but Microsoft did not provide any further context.
Xbox overall is doing great right now, with Microsoft recently reporting that Xbox just had its best year of all time based on revenue.
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