Statements that Microsoft has submitted to UK regulators — in a bid to salvage the proposed $68.7 billion acquisition of Activision Blizzard — contradict what the company has been saying about Xbox Game Pass for years. Namely, having a game appear on the subscription service results in lower sales.
The comment comes second-hand, in a report filed with the UK’s Competition and Markets Authority (and first reported by GamesIndustry.biz). “Microsoft has also stated that its internal analysis shows that a [redacted]% decline in base game sales 12 months after their inclusion in Game Pass,” the CMA said in its report.
Since at least 2018and through Xbox officials to department head Phil Spencer, the company has touted Game Pass as a selling point for third parties who put their games in its library.
In the most quoted quote, Spencer said in a 2018 interview with LevelUp that the growing player base that Xbox Game Pass was attracting ForzaHorizon 4 on launch day “actually leads to more sales of the game”. He added state of decay 2, Another Game Pass launch title “sold really well in the month it was released in Game Pass,” according to NPD Group retail sales data.
But Microsoft apparently told the UK CMA that Activision itself is reluctant to put its games on Xbox Game Pass or any other subscription service, believing it would be “severely cannibalizing.” [buy-to-play] Sales, especially on newer releases.”
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Self-interest in the conflicting positions is obvious: On the one hand, Microsoft wants third-party developers and publishers to see participation in Game Pass as a major benefit for their games. On the other hand, the company argues to a regulator that bringing Activision’s games to Game Pass as a first-party won’t destroy the market or wipe out the competition.
Polygon reached out to an Xbox representative with several questions to reconcile Microsoft’s public stance with its CMA testimony. A spokesman responded with a statement that has appeared in other reports since the GamesIndustry.biz story.
“Each game is unique, so we work closely with developers to create a bespoke program that reflects their needs, ensures they are financially compensated for their participation in the service, and leaves room for creativity and innovation,” said the speaker. “As a result, the number of developers interested in working with Game Pass continues to grow.”
That could mean two things happening at the same time: titles on Game Pass can see a drop in sales, and being in the library can still mean a lot for publishers and developers in terms of additional compensation, exposure, and access to one large player base (for multiplayer titles) and back catalog sales. And it’s likely that Call of Duty is so big that Activision didn’t see any real benefit in it.
Microsoft has spoken of these additional, not necessarily promotional, benefits before. In 2018, Matt Percy, then Director of Business Development at Game Pass, claimed to Polygon that Game Pass took players — and therefore buyers — deeper into the franchise of the games that appeared in the catalog. As evidence, Microsoft has solicited comment from Pete Hines, whose Bethesda Softworks was not owned by the company at the time. 2019 also Percy told the Sydney Morning Herald that “on average, we’re seeing a 25% increase in franchise pre-orders and a 10% increase in franchise sales from games going into Game Pass.”
As for Microsoft’s own games in 2019, gears 5 was the biggest launch title in Game Pass history at the time, and Microsoft was clearly pleased with the audience growth and attention the shooter franchise’s launch of the game drew. “During its lifetime now 40% of Gears of War 4 Players first tried the game through Xbox Game Pass,” Ben Decker, Percy’s predecessor at the time, told Polygon. “We’ve seen that commitment, we’ve seen that discovery evolve over time across the Gears catalog, and then we’ve seen it really come to fruition with the launch of Gears 5.”
We asked Microsoft if its statement to the CMA covered all of the games listed on Game Pass or if it was a smaller segment, like the company’s first-party games or games launched day-and-date on the service . We didn’t get an answer. But when Microsoft talked about all the games available to Game Pass subscribers, many of them show up in the library months, if not years, after their original launch — when maintaining their numbers is less important to their respective publishers.
However, the pros and cons of Game Pass for publishers may not be the primary concern of UK regulators. In January 2018, with Xbox Game Pass, then six months old, several at once Retailer versus GamesIndustry.biz that Game Pass had rendered their Xbox business “worthless overnight.”
“We might as well go where we’re supported, which is Sony,” said a store owner at the time.
