Game Pass Reduces Risk and May Revive Mid-Budget Games

Games of all different sizes and scopes have existed for decades. Much like the film industry, there were always projects of different scopes and sizes. A game could be made from a handful of developers (or sometimes one person, as is the case with Bright Memory: Infinite) to hundreds of people.

With the advent of HD consoles in 2005, game studios had to beef up team sizes to meet the needs of the higher fidelity visuals consumers wanted. What we saw over the next decade was many studio closures, the rise of indie development, and the reduction of mid-tier games.

The game industry usually has a designation of projects based on team size and money spent. Indie titles or “A” games denote small titles made by independent developers that usually rely on crowdfunding (See: Hollow Knight, The Witness, Rocket League) AA games or “B” games, the games built by smaller teams that may be large in scope or do something out of the norm (See: Hellblade, A Plague Tale, Grounded) and the AAA game blockbusters that get the huge marketing pushes and expect to generate billions in revenue (Call of Duty, Assassin’s Creed, FIFA, etc).

What we saw last generation was the near extinction of the AA games. At the start of this generation we saw a binary output from developers; either AAA projects, f2p projects or indie titles. What’s more, the AAA games costing so much money to make meant publishers wanting to take less risk with unknowns. That lead to fewer new IP and many more sequels or spin-offs of existing titles. The new IP’s came from the indies.

The introduction of Game Pass and its financial incentive for developers and publishers has helped mitigate the risk of video games. Subscribers who weren’t sold on buying your game might try it on the service, buy it, or buy the dlc. Combined with the lump sum payment MS gives to put games on the service, XGP is a lucrative tool for developers to use.

The benefits also apply to first party developers. New IP’s don’t have to be home run hitters that fly off shelves’ day one. They can grow slowly and cultivate a user base over time (See: Sea of Thieves). Small side projects don’t have to generate huge returns on investments or worry about growing an install base quickly, the install base is already there (See: Grounded). With more financial security, developers can take greater risks with new IP or existing ones, leading to new gameplay types, pushing the envelope for sound, visuals, or interactivity. In the end, players win. There’s been more than a few new IP this gen that have taken risks, tried new things and had the support of Game Pass to help prop them up, providing an influx of cash to perhaps increase the scope of the game (Psychonauts 2 for example). What’s more, MS has provided data that XGP subscribers are spending more money on games than less, a reverse of the theory that was commonly held when XGP was announced.

It’s common for titles to get a second wind with Xbox Game Pass too. Most games make 90% of their money in the first 3 months from launch (GAAS or f2p titles are an exception of course). It’s common for a game to come to XGP 6-18 months after launch and see an uptick in user base, dlc sales, etc. Notable mid-size games that did this include: Darksiders Genesis, Rime, A Plague Tale, Man of Medan and plenty more.

With next generations focus on being about services, forward and backward compatibly, and game pass, the future is bright for video games. I predict we’ll see the rise of the mid-budget titles again that seemed to disappear 15 years ago. That would be great, because having a spectrum of video games that cater to multiple player types is always a good thing.