Microsoft has shared new numbers showing the Xbox economy and how much money developers are getting who publish games through Game Pass and on ID@Xbox. This is notable as Microsoft rarely discloses dollar amounts for specific Xbox units, such as Game Pass and ID@Xbox in this case.
In a blog post, Microsoft’s Chris Charla revealed that Microsoft has paid “hundreds of millions of dollars” in Game Pass royalties to developers and publishers since the subscription service launched in 2017. “There are amazing games on Xbox (and other platforms! ) today that would never have happened without the support of Game Pass members, and it’s truly an incredible phenomenon,” said Charla. “Ensuring that millions of Game Pass users Members being able to experience some of the best independent games of all time has been paramount for Xbox players and developers.”
Game Pass has more than 25 million subscribers. After a low introductory price, the service costs $10/month or $15/month for Game Pass Ultimate. With 25 million subscribers, Game Pass undoubtedly generates big bucks for Microsoft, but the service hasn’t been without its critics either. Some have wondered whether or not the subscription-based model is good for gaming overall. For his part, Xbox CEO Phil Spencer recently spoke about how Game Pass isn’t trying to crowd out other publishing models like the traditional retail model or free-to-play games and other categories. They can all coexist, Spencer said, but how that all changes in the end remains to be seen.
Microsoft has historically shied away from sharing specific data about the economics of Xbox Game Pass, so the disclosure of “hundreds of millions of dollars” paid out in royalties is notable. Still, it’s nebulous and doesn’t answer the question of whether Game Pass is making a profit or not.
Spencer recently said Game Pass is already “very sustainable.” In his vague statement, Spencer didn’t say how the service is sustainable or who it’s sustainable for, but he does want to dispel the narrative that Game Pass is currently a money pit. “I know there are a lot of people who like to write, ‘We’re just burning money for a future pot of gold at the end.’ No. Game Pass is very, very sustainable right now as it sits and continues to grow,” said Spencer.
If Microsoft has paid “hundreds of millions” to developers via Game Pass royalties, then Microsoft’s cut as platform owner would also be significant, although an exact number hasn’t been disclosed.
Regarding ID@Xbox, Microsoft’s independent game publishing program, Charla announced that it has paid more than $2.5 billion in royalties to indie developers since the program’s inception, while the total revenue of ID@Xbox- Partners over Xbox have “nearly 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 the developers and gathered their feedback on their wants and needs, Charla said.
“Innovations like cross-play on other consoles came directly from ID@Xbox partners. Based on their feedback and requests, we’ve made many changes to our back-end publishing systems and even our app framework,” said Charla. “These changes may seem mundane, but they’re really important as we want to enable independent developers to easily deliver their game across Xbox and PC.”
ID@Xbox’s results have “exceeded our wildest dreams,” said Charla.
Microsoft also announced that more than 4,600 developers from 94 countries have signed up for the ID@Xbox program and more than 1,000 developers have signed up over the past two years.
The ID@Xbox program currently has more than 3,000 games in its catalog and Charla said that Xbox is encountering the problem that Steam is having and that is “discoverability”.
“Teams at Microsoft work every day to solve discovery challenges so players can find games they love and in turn ensure developers find audiences for their games. … We’re always looking for ways to connect developers 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’s no doubt that some games generated a lot more than this average and others a lot less, but Microsoft didn’t provide any further context.
Xbox is doing great overall right now, with Microsoft recently reporting that Xbox just had its best year ever based on revenue.