Xbox Documents Reveal Staggering Cost of Bringing Games to Game Pass, PS Plus

Well now you know why Sony don't go for these new releases, they don't have bottomless pockets like Microsoft does, Microsoft can throw spare cash and get anything they want.

That's like the entire budget for HFW just to get a game like Jedi Survivor on GP. That's insane and a waste of money imo. This is typical MS tho, wasting resources instead of investing it in it's own studios.

Well, the model is different. At gamepass you have all, where with Sony the games are first sold (sony takes cut) and after a while those are in ps plus (where sony pays, but takes the subscription fees). Sony model is meaningful where MS just pours money for the personal data. Personal opinion.
Also, an AAA game for 70 euro how many times is sold? LOTS. Multiply this by 70....well. it is a global business and service so...not that big amount at the end.
P.S. MS is a bad model. They do go for the personal data at main target. Proof for me is that the promotion for the office for 39 lifetime license is going for year and a half now. One more reason to support Sony.

So for uncle phil.......buying out everything is absolute necessity 😭.....

Huge numbers to secure games that were coming to your system anyways. Could have just developed a good game with that money.

Still think back to that moment on the Game Awards when Spencer came out with Nintendo and Sony talking up the gaming culture and it turns out he’s plotting to buy out one of them whilst the other he hopes to strangle in to submission. This whole “good guy” Phil act he portrays has well and truly died with these leaks.

I hope this whole subscription service thing with tv, film, music, and games dies

Sony will actually need to pay more than this due to the larger instal base. It is eye watering. If only MS spent this much actually making games eh?

If Gamepass has 30 million members (and that's if the rumors are true) that pay anywhere from $7-$17 a month that's $210-510 million that they are pulling in a month. It makes perfect sense to spend $300 million for a game to go on GP or PS for a couple months if it's below even one month of revenue. I don't think people realize how much revenue Sony and Microsoft are pulling in from these services.

Well seeing as how EA didn't take the deal, I am guessing this is a non-issue. It's a pretty huge amount of money for one game, though.

Honestly, why does anyone here care about what Microsoft pays for games on Game Pass - especially if you adamantly oppose anything and everything Microsoft does? It's not as if Microsoft is paying to put it on Game Pass and only Game Pass.

If you feel Microsoft has an unstainable business model, then let Microsoft lay in the bed it creates and you all continue to enjoy whatever it is you enjoy on PlayStation.

Sure, one can argue that Microsoft has the pockets to do it and Sony might not, but Game Pass doesn't "move the needle" - it simply provides another avenue for gaming: take it or leave it.

$300 mill for SW:Jedi Survivor? Just to put it Day 1 on Gamepass?
Horizon FW & TLOU:P2 entire budget was around $220mil.

Also they estimated it would cost $5mill for Badlur’s Gate 3. Think they might have been a bit off with that estimation😅

These number are not surprising after how much Epic is paying just to get games on their store, or given away for free.

This is why every year in June you will see a price increase for game pass. Next year game pass xbox will go up by a $1 or $2 a month, so ultimate game pass will be $18.99 or $19.99 a month.
The cost for Microsoft to get games for game pass is only going up.

Suicide Squad: Take The Money and Run

@HwuaiLiang (Is this the same report where MS said Baldur's Gate 3 was a second-run Stadia PC RPG and were going to offer them peanuts compared to other titles to put it on GamePass?)

It's still a better game then starfield which cost them alot more then 200 million.

This is why I believe Gamepass as it is won't be sustainable in the long term. There's definitely going to be another major price hike coming and they'll likely use the Activision acquisition as the rationale for it. They're really just bleeding money otherwise.

@thefourfoldroot1 I'd say that it's almost certainly why Sony said that day one releases on Plus aren't viable for them. Most games on plus are over a year old so will likely be much cheaper to add.

To be fair we are talking about some big brands there so it's no surprise that the price is going to be steeper than say a Sea of Stars for example. Still, it does make you wonder just how much they would've had to pay to put Starfield on GP had Microsoft not bought out Bethesda beforehand.

@UltimateOtaku91 Or rather, they spend the money smarter by investing in MAKING great games.

Ultimately, subscription model is reliant on the quality of the content. What MS is doing does very little to nothing for the quality. They are ultimately shooting their own foot in the long run.

@GrumpyDev But you're talking about a single game. They have about 200 games on there?!? Yes they won't all cost that much but I can't understand how they could not be spending more on the games that are on the service vs the amount they get in. I'd estimate they must lose millions every single month. But like a Man City fan - I don't see why anyone with an Xbox would care about it. I certainly don't think or care about it while I'm playing Starfield!

@RedShirtRod I mean people that frequent websites like PushSquare, Resetera, etc. probably are aware.
It’s in their financials.
It’s already been said that after the pandemic high these subscription services are already flattening out (little to no growth).
So these big corps have to increase the costs because these deals are expensive & they need to squeeze as much cash out from us consumers as possible.

Also there are plenty of people that just sign up for a month or two & then they’re done.
Do that with EA play retry much every year.

Well, I guess I can understand why Sony doesn't want to put new games on PS Plus day 1. But, if MS wants to throw money down the drain, I guess go ahead.

I've been banging the drum on this for years now but imagine if MS decided to spend £300 million on a new AAAA IP instead of offering Jedi: survivor for a month on GP. We'd still all play Jedi: survivor but we'd also get to play this new AAAA IP on the off chance its a new amazing game. If not, then don't make a sequel and instead make another AAAA for another month! How much better would the gaming industry be for that, and in turn I'd argue that MS would be a much better gaming company for it too.
Edit: Also how many more jobs would that create in the industry and how much better talent and experience would that bring into MS throughout the process?

@BusyOlf The Nintendo news is so old. And dull. It’s not new news.

gAmEpAsS iS sUsTaInAbLe

@GrumpyDev there’s 400+ games on GPU (minus the MS owned ones) so what 300?! They pay for monthly. Add in the fact they will pay EA to have EAplay in GPU, and the associated costs of running GPU. Also the fact that currently a good % aren’t paying full price due to conversion/points etc (GPU is approx £150 a year and if you stacked conversion, you got it for around £50pa) And that 500mil a month quickly vanishes.

For context, Sony paid $229 million for Insomniac so you can see why publishers are falling over themselves to buy developers rather than tying up AAA games for subscription services.

The more interesting story linked to these leaks is what some of the publishers like Sega, Nintendo etc make of what Phil has been saying in private emails @get2sammyb , do you think companies will give it much care, or do you think they brush it off?

And where does Sony stand on all this? How do they react. Its inevitable they have similar conversations behind closed doors (i.e the Yves Cheshire cat comments), but its really unclear what their relationship with 3rd parties really looks like. And whats the deal with SEGA. Something must have happened that we dont know about that has strained that relationship and contributed to the real risk of a partnership with Microsoft. I bet they are fascinated by some of the reveals though. Didn't slick phil say Microsoft were not going to have a mid gen refresh during the trial, yet clearly that is not true based on these documents

Going to be a messy few years ahead.

@RedShirtRod exactly!!!

@HwuaiLiang “ What gets me the most from all of this is how they would spend $300M to get a game on GP just for a period of a time, but major 3rd party timed exclusives were out of the question because of costs and playerbase.”

I’m assuming the reasoning behind it is the risk/cost for the actual developer. Can you imagine the massive backlash if developer would get if MS was spending this cash on 3rd party exclusives, and titles like the next Witcher was exclusive? It a far better deal for the developer to take the 300 million release day 1 on Gamepass and then still be able to release on PS.

@BusyOlf I mean it is always obvious. Even diehard Xbox fans would see through it but keep saying that cliche rhetoric. I mean who would have believed when they said in court ‘oh we haven’t decided the platforms for ES6’

@RedShirtRod Doesn’t work like that, dude. Lots of people on service bought yearly sub on discount. There are other costs like staff salary, building, game development. Not to mention, those services also offer other games too.

@RedShirtRod it's not just the licensing fees though it's also the cost of operations like cloud servers. Really curious to see how much Microsoft is profiting (revenue -expenses) from game pass

@StonyKL exactly - if Xbox want to make gaming more accessible and it’s at their cost, that’s not for me to worry about. We all know that Xbox is going down the cloud route and it’s not a secret. Never was.
Also leaks are never accidental. Ever. Usually PR ‘accidents.’

@RedShirtRod

But you have hundreds of games in the service and also have to pay for opperational costs of the servive, marketing and invest in game and hardware development, among others. What are your other sources of revenue to pay for this? I assume hardware sales and game sales, but the last one you decreased by puting the games in the service in the first place, and you have to hope for more hardware or subscription sales to counter it.

Just shows, gamepass is not profitable. They were only pulling in 240 mil from April for gamepass and thry have to get a lot more than 1 game to fill out the lineup. All rhat without factor of their own games cost.

It’s not clear to me what the timeframe is on these fees. Is that $300 million per month? Hopefully not. Maybe for a year?

I have been curious as to how much it costs to include a game on PS+. For an PS + Essential game it’s effectively a permanent giveaway (as long as subscribed), vs Extra and Premium tier which are more like GamePass in that the games are presumably just there temporarily.

@RedShirtRod other leaked data said xbox only pulled in like $230 million for April this year when data was used for FTC. They need more than 1 game and this doesnt include the cost of their own studios which they wont see a great deal of sales revenue from. And gamepass was like 25-30% of xbox revenue. Not profitable

@Fight_Teza_Fight Yeah, the single month users is a statistic that so difficult to track. Netflix is the only source that give us a clue since their streaming service is their sole revenue provider (They can't tie profits and revenue to other sources of income). They report $31.6 billion in revenue with 143 million paying members (they have 220 million subscribers with roughly 30-40% that don't pay). That means each they draw in about $221 per customer a year which is $18 a month. Disney plus is the same. From what I found the vast majority of subscribers to streaming services pay yearly.

https://www.businessofapps.com/data/netflix-statistics/

https://backlinko.com/disney-users#disney-average-revenue-per-user

@WizzNL I would agree with you if Microsoft and Sony were spending $300 million on a game every month but that doesn't happen. These major purchases happen once or twice a year since the game will stay on for months.

Look at the lineup of Game Pass games for this year. If we use the numbers I gave above then at the lowest Microsoft is pulling in $2.5 billion in revenue (makes sense with their annual report showing around $16 billion) then there is no way they aren't making their money back. That's just Microsoft. Sony makes roughly double in revenue in their gaming division than Microsoft. I doubt their PS service is pulling in much less than Game Pass.

https://www.purexbox.com/guides/xbox-game-pass-in-2023-the-full-list-of-everything-announced-so-far

@WizzNL other leaked data through gamepass April revenue at 230 ish million

Wonder how much Gotham Knights cost GamePass with the game being a year old now and how much it would have cost Sony for PS Plus. Possibly cost way more than Saints Row hence why Sony went with Saints Row instead. This also could mean PS Plus will be getting Gotham Knights later next year when it gets a little cheaper for PS Plus?. Love to see both set of numbers for Sea of Stars given how both were day one on both, possibly cost PS Plus more than GamePass?. How much was Wu Long Lies of P day ones and all the others. How much is it costing Microsoft for Ark 2 exclusivity and for it to be day one. Could be a lot closer than we think or one could have to be paying way more than the other. Need more details but we ain't ever meant to know these things to begin with so I'll take whatever we get

@Americansamurai1 I can't speak on their cloud operating costs but I bet it helped Microsoft as they use their in house Azure. I think Sony uses Azure as well but that would be a little more since they don't own it. Microsoft's 2022 report has operating expenses at a $1.5 billion increase or 14%. That means their operating expenses for that year are roughly $13 billion. That would include servers but it also is their entire personal computing department, not just Xbox.

@Rmg0731 For April Game Pass brought in the following:

Goat Simulator
Loop Hero
Everspace 2
Iron Brigade
Ghostwire: Tokyo
NHL 23 (EA play)
Minecraft Legends
Coffee Talk Episode 2
Medieval Dynasty
Homestead Arcana
Cassette Beasts
Quantum Break
BlazBlue
The Last Case of Benedict Fox

If that $230 million figure is correct that means they would have spent roughly $16 million per title to eat all their revenue. This is just a guess but I highly doubt they spent that much on those games. Any extra would have gone for expenses on other months. That's just how stream services work. They earned $230 million(ish) dollars offering very little the first half of the year so they could cover their costs for Starfield and Motorsport. That's just Microsoft. Sony is most likely making even more money with their larger install base and they are still pulling in large numbers for their in house games.

I guess that explains the PSN price increase. I would still rather they dumped 600 games that youll probably never play and just spent the same money on 100 good ones though.

@GamingFan4Lyf I agree with much you say my friend, but I would point out that some believe this model devalues games, and if a trillion dollar company is using its vast pockets to effectively devalue full price games, it has ramifications for all gamers.
I feel for the studios that have closed and the devs that have lost their livelyhoods recently. But I suspect im not the only person thinking 'I'll wait till thats on gp or ps+" for many games I might otherwise have bought.
Im not sure of the truth of it, but it seems to be a valid concern?

@HwuaiLiang You’re only thinking about the risk/reward for MS. Not from the actual developer standpoint which there is actually really no reward but a lot of risk.

Damn, the amount of people butthurt that MS can spend millions to release day 1 games here is crazy. this isn't even news tbh

@RedShirtRod Something you aren't taking into account is how much are Microsoft paying EA to subsidise EA play, and other perks being available on game pass, you also need to take into account development costs for first party games that will have lower traditional sales by Microsoft's own admission.

Microsoft Mistakenly Posts Secret Game Plans to Government Site

https://archive.ph/nUGKa

Microsoft Corp. mistakenly uploaded confidential information about its video-game operations to a federal court website, according to a person familiar with the matter and a post from a Federal Trade Commission employee.
“The FTC was not responsible for uploading Microsoft’s plans for its games and consoles to the court website,” the FTC’s director of public affairs wrote on X, formerly known as Twitter.
The documents uploaded Monday are exhibits in the FTC’s antitrust suit to stop Microsoft from completing its $69 billion takeover of game giant Activision Blizzard Inc. They contain proprietary information about Microsoft’s plans for a refreshed Xbox console, upcoming unannounced video games and older discussions around purchasing Nintendo Co.
Future plans regarding new consoles, upcoming titles and M&A discussions are closely guarded secrets in the video-game world, meaning Microsoft’s inadvertent disclosure will be of keen interest to other players.

A person familiar with the matter, who asked not to be identified discussing the confidential information, said Microsoft was responsible for uploading the documents.
In June, confidential documents pertaining to Sony Group Corp. leaked as part of the FTC case. The files described Sony’s revenue from Activision’s Call of Duty and game-development costs.
Microsoft didn’t immediately respond to a request for comment.

@Titntin That's a simple fact if you look at how little games are sold why even bother buying games if they might be free in the future.

If you look at the actual leaked email chain, the funniest thing is probably that the email chain is actually called "Games". I just find that hilarious.

A $250 million figure is mentioned in relation to Mortal Kombat 1 and Suicide Squad: Kill the Justice League, while $100 million would be appropriate for Assassin's Creed Mirage.

I am not surprised about these estimates. Many years ago Phil Spencer stated in an interview (sorry dont have the link for the podcast, but I'll try to hunt it down) that MS usually pays enough to cover the entire game's development. $250 million for MK1 and $100 million for Mirage sound rather realistic estimates to those game's development budgets.

@RedShirtRod And that's why so many users online, who don't know fk all about what they're talking about, cry and whine about how terrible GP and PS+ subs are; if it was losing colossal amounts of money, MS and Sony wouldn't be doing it. The business model is cleary making them both money. I'm not even defending the prominence of TV/gaming/music etc. subscription models, as I like owning my media, but it's not going away, and it clearly brings in big bucks.

Probably why Sony likes to bring indie games day 1, rather than big titles. Which is fine. Rather take something down the road and patched up, than play a bug ridden release.

These figures are obscene and that business model is not sustainable in the slightest. They will have to massively increase subscriber numbers and the cost of Game Pass to sustain it.

@EVIL-C I prefer demos, it’s sad Sony lock that to its top tier model, but I get to try a game before I buy and Sony doesn’t spend literal hundreds of millions to get the game on its service.

@Titntin I suppose, till you see $300m for a AAA game. That’s a lot of cabbage right out of the gate on top of whatever it gets on sales outside the subscription. For context that’s equivalent to ~4.3 million sales (at $70).

If anything, this shows that the potential price that developers get from Microsoft is based on projected sales (for the time period of the contract) x the MSRP for the game. I would guess the older the game the lower the projected sales as well as the base MSRP and therefore the cheaper for Microsoft to add.

I think most GP subscribers would know that a Jedi Survivor, Resident Evil, Assassins Creed, etc. wouldn’t be on GP for a long time (or at all) and simply buy it. Getting something like that would be a huge deal and a major shock to everyone.

@S1ayeR74 I remember how common demos used to be in the ps3/360 days. Seems like every other game was getting a demo each week. Now they're far more uncommon. 😔

Sony too poor to spend MS kind of money! I really hope Sony does continue devloping single player games though rather than the worrying trend of live service games they are lining up.

Really want to see whats it the sony pipeline.

@GamingFan4Lyf C'mon, mate! What you're saying is the textbook definition of "short sighted". You've got to put the pieces together. Have you already forgot the "spend Sony out of business" quote?

Game Pass is a cancer that is rotting the very foundation of the games industry, and these latest leaks clearly indicate that this is by design.

Sorry if this comes out a little harsh, but your comment sounds straight out the "frog in the pan" analogy.

@EVIL-C Back in the day when I had the PS1, I bought a magazine every month with a game demo CD on it, now everything’s digital and hardly any game dares to release a demo, excluding Sony’s new paid for demo feature.

@BusyOlf Subscriptions for music makes a lot of sense. It's gets very expensive very fast. I used to be adamant about buying all my music, but eventually gave up and got Tidal instead because they pay better royalties (I still occasionally buy physical music). However, with games and TV movies, yeah it doesn't make sense to me. I just rent most movies off Amazon.

Speaking of renting, digital game rental sounds kinda interesting..

@Art_Vandelay Do you honestly believe the same rhetoric hasn’t been thrown around Sony’s e-mail servers?

Time will tell if it’s it a cancer. If Microsoft made it the only way to play games within its ecosystem, then I’d be willing to agree; but I haven’t seen where the industry has been on the verge of collapse because it exists.

Microsoft puts in an offer and it’s up to the publisher/developer to accept or deny.

I’m reaping its benefits as long as its around just like I reap the benefits of the deals Sony makes with third parties (Final Fantasy VII, Silent Hill, etc).

And now you see why it was a complete fabrication that gamepass makes profit and is sustainable

You could say this is bonkers or you could say it’s just a good thing for a developer. You take away the risk of game development. It might save a lot of studios that would otherwise not make enough money.

Recently Ascendant Studios had to lay off half of their staff because Immortals of Aveum didn’t sell enough in its first weeks. Sony probably had the marketing rights of the game, it was in a State of Play if I remember correctly. With the gamepass check this studio might have done good enough to survive. It looked good, but didn’t attract me enough to pay 70 euro for it.

Take Lies of P for example. Another game that gets good review scores but I’m not sure that game will sell enough for the investment made to make the game. They have a gamepass check though so we probably wont know.

We also know making Horizon forbidden west did cost 212 million dollar to make. And the last of us 220 million. Thus creating a game takes so much to invest these days.

Also, gamepass has ~30 million subscribers. Say half of those are core, half of them are ultimate. 12,5*30 million=375 million per month. Lot of stuff you can do with that amount of money.

That's ***** wild man if some of these companies just distributed this throwaway money to poor people this world could be an interesting place

Apparently Phill Spencer has been buying Nintendo stock for years so Microsoft can do a hostile takeover. Very sad. Nintendo was the last true video game maker.

Actually, @UltimateOtaku91, it may not be as simple as Sony not being able to afford the fees that Microsoft could, but also the install bases of the two platforms; If you put a game on the Game Pass, they will sell 'X' fewer games, and then if you ask the same question of Sony, because of the larger install base, you will likely sell still fewer copies.

The issue is still further complicated when you consider that Sony has a Tiered system, meaning that it is probably much more difficult to work calculate the maths. Yes, Sony can tell the Developer how many people are on the highest Tier, but what they cannot necessarily say is how many more will upgrade to the highest Tier in order to play said game. It is a lot easier to do the maths on the Game Pass, plus they know that because of the much smaller install-base on the Xbox sales would always be lower there. Truthfully, it is possible that Sony would actually be charged more to put a AAA game day and date on their service than Microsoft would because of the risk of losing a much higher number of sales...

Do we know this as a fact, @miguelseara, or is it just another anti-Microsoft rumour doing the rounds among gamers that make up this kind of thing just to paint Microsoft as the evil overlord that so many like to see them as? I'm not suggesting you are incorrect, I'm just curious as to whether there is a actually any truth, and proof, to what you are saying...

I think you are entirely right, @Friendly, except for the Core/Ultimate bit. The 30 million subscribers does not include Core, that is for Game Pass and Game Pass Ultimate subscribers alone. Core will likely add a few more million to the total, but Microsoft are always very reluctant to tell us the exact figures involved...

You are absolutely right, @GamingFan4Lyf`, are these emails 'spit-balling' or actually discussing strategy? Everyone is up in arms because the emails have been made public without necessarily being aware of the full context of the conversations. Ultimately, Microsoft are a business, not a charity, and every business (incluing the likes of Sony) is always looking at ways to grow their business and their market share. Microsoft simply have more money, and are a bigger business, so they will always have bigger ambitions and targets.

However, there is always a level of hypocrisy that amuses me when we see things like this, because it doesn't matter what Microsoft were to do, they are simply the evil empire. They can do no right, even if it benefits PlayStation gamers.

Also, if Sony were to suffer similar leaks, just what 'evil' plans would be revealed? Or would it simply be a case of them walking on water no matter what...?

@miguelseara where did you get that info?

Also, it is stated in the email that a hostile takeover is not an option.

The only companies Microsoft bought or is going to buy approached Microsoft / were looking to be bought (Zenimax / Activision-Blizzard).

@GamingFan4Lyf Gsus man, you're so far behind that it's pointless to argue.

Yes, these are the figures I expected. When they get these games they are basically paying for a bulk of licenses 4 to 10m of them. In the case of jedi survivor your look at maybe 5m licenses. The expectation is the number of subs will balance that out. 40m even at 60 a year is 2.4b dollars. So if they can get one winner a year and maybe some dated titles that don't really sell anymore for less than a few million like say saints row. They can usually pocket a billion and some change. Maybe use the change for network infrastructure and slowly build a coffer for network overhauls at the last possible minute after accumulating 3 to 5 years of profit.

Which is why they should cut these free games loose and return to a free model for online play. It's also why Microsoft should reconsider its game pass strategy. Profitability numbers just aren't there. Especially when you can pay for a month and then ditch the service to play first party titles at a fraction of the cost.

In microsofts case they've gone back to abandoning backward compatibility. Only 50% of the x360 library is support on xb1 and series. Less than 10% of Xbox classic. These ftc documents showed them switching architectures which basically undoes all the progress with that platform if they decide to go with arm64. So this money which should be going towards that initiative isn't.

Gamers blew it by doubling down on these subs. Now we're conditioned.

@friendly just read the email that leak

@miguelseara i did. And I quote:

“I don’t think a hostile action would be a good move, so we are playing the long game.”

No hostile takeover, and only if and when Nintendo wants to sell.

@Friendly
I believe he is talking about the part where Phil says one of the ex MS BoD (ValueAct) has been buying Nintendo stock, and this could prove the only opportunity to encourage Nintendo towards a sale, as this party is going to push for more sales growth. Phil seems a bit aghast that Ninty don’t expect continuous growth.

Anyway, @Miguelseara just seems to have read it hastily and thought Phil was buying Nintendo stock directly (which I’m really not sure would be allowed by MS).