The XGP contract was exposed!

Recently, Sony and Microsoft have been the main subscribers to game-making services, and Microsoft in particular appears to be particularly “negative”. The recent 9,000-strong downsizing of Microsoft has affected many sectors, and unexpected information from a former Xbox executive revealed the staggering cost of the introduction of video games by Microsoft to its Xbox Game Pass (XGP) subscription service. According to Windows Central, a former Microsoft Senior Business Development Manager, Iain MacIntyre, was revealed in the “work experience” section of his British archives. During his term of office, he facilitated the negotiation of more than 500 transactions, “ranging from $50,000 to $50 million”, aimed at providing a full range of game support for the XGP “to ensure the participation of independent games and 3As”.

The explosion allowed the public to look at the cost of Xbox ‘ s construction of the XGP framework, which clearly illustrates the great difference in the cost of joining the XGP for different types and scales. From the frame of the game provided by the XGP, it is possible to reach or close to the top 50 million. According to an analysis of the report, if it wasn’t for Microsoft, it would have been like Mission Call or Darkness. When such a top-level IP was added to the XGP, its authorized cost would most likely be close to $50 million.

While the costs of tens of thousands, hundreds of thousands or even millions of dollars, compared to Microsoft’s annual income, are “one ounce of nine” — the cumulative costs are bound to be considerable, given the need to introduce new players for the XGP every month and to continue to pay for independent or medium-sized games. In the near future, discussions have focused on whether or not the XGP is really Microsoft profitable. Although Microsoft eventually clarified that even though the first-party development costs and initial input into the XGP were still profitable, McKintyre’s disclosure of the size of the contract amount partly explains why the industry (such as the former head of Arkane Austin’s studio) would question the XGP’s “sustainable” business model.

This also partly explains the reported “totally unrealistic” expectations of the earnings of Microsoft in the Xbox sector. The report notes that, while Microsoft does have the financial resources to support its investment in Xbox and its services, it expects that these investments will yield significant returns. The data leaked by McKintyre reveals the huge cost of acquisition of the content that supports the large game library of the XGP. Even if Microsoft maintained that the XGP was profitable as a whole, these high contractual fees undoubtedly increased external concerns about its long-term sustainability. If the Xbox sector is unable to meet the high income expectations set by Microsoft, the “good days are behind” for the Xbox and its flag studio. Continued content input and return pressure will be the sword of Damocles hanging over the Xbox business.