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News - Xbox Game Pass Is A New Paradigm

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Xbox Game Pass Is A New Paradigm

Xbox Game Pass has been one of the biggest, most talked-about developments in the gaming landscape of the past five years, both for Microsoft and the entire industry. The subscription-based service has shaken things up in a meaningful way as it relates to how games are released and consumed. Game Pass has generally excellent consumer sentiment, too, so much so that "hundreds of games for one low price" has become a meme. But the service also has its fair share of critics, those who wonder and worry about Game Pass' impact on the gaming ecosystem as it relates to the devaluing of games--perceived or real--and if the subscription-based model is sustainable or only possible because Microsoft is literally worth more than a trillion dollars. Given that the service is so new, there is no long-term data available, and one can only speculate about the impact Game Pass might have in the future. But that hasn't prevented there from being a lively, ongoing debate and discussion about Game Pass, with headlines seemingly popping up every week with people weighing in.

The Numbers Are Hidden

Like most other entertainment companies, Microsoft keeps its business dealings and contract details hidden as it relates to Game Pass. This is a common practice, of course, but it also means we have no good way to think about or measure the economics and business realities of Game Pass. Phil Spencer and other Microsoft executives have gone on and on about how great a value Game Pass is, but what else would they say? And the company, despite its overall size, does seem to have placed real significance on Game Pass, with subscriber growth even representing one of CEO's Satya Nadella's potential bonuses. It is possible that Game Pass is a great value and it makes money and is sustainable, but how does it all work?

Speaking to GameSpot, Wedbush Securities analyst Michael Pachter offered some takeaways on Xbox Game Pass, acknowledging up front that he has never received confirmation of his estimates and is offering only general insight. Pachter said he believes one revenue stream for Game Pass comes through time spent playing games. Microsoft might pay publishers based on the number of hours people spend playing games on Game Pass, because "stickiness"--however gross a term it might be--is what companies love to see. More time spent on your platform instead of "bouncing" is good business.

Continue Reading at GameSpot

https://www.gamespot.com/articles/xbox-g...01-10abi2f
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