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My optimism is temperated on that front. I assumed the same when they spent mountains of money to subsidize the development of exclusives for the Xbox One, and we all know how that turned out. Remember that headline from 2013?As much as they’re lacking on the game front (for now anyway) at some point all those studio purchases they did over the last two years or so have to start paying dividends. It will be interesting to see what will happen then.
Microsoft spending $1 billion on Xbox One games
Their spending spree on Studios isn't a recent development, either. They've been trying this strategy, albeit less aggressively than in recent years, since the advent of the Xbox. The infamous Lionhead acquisition is perhaps a symbol of how well it has worked out in the long term. This article from a few years ago talks about that history. Nevertheless, you can see their centralization of Game Pass wasn't haphazardly thrown together.
Microsoft studio buying spree likely not over, says Xbox boss Phil Spencer
Indeed, Phil Spencer didn't just start talking about how he doesn't care about selling the most consoles last month. This strategy has been a laser focus of theirs for years.The Xbox brand has been dogged by a major conundrum since 2013. Console purchases are motivated in no small part by exclusives. Microsoft had a first-party games problem. Past tense. E3 2018 started to change that.
Nestled amongst Halo Infinite, Gears of War 5, Devil May Cry 5, and Battletoads announcements, Microsoft shared big news for the future of its first-party games. Four established studios—Undead Labs (State of Decay), Playground Games (Forza Horizon), Compulsion Games (We Happy Few), and Ninja Theory (Hellblade: Senua’s Sacrifice)—had been acquired by Xbox. Additionally, former Crystal Dynamics head Darrell Gallagher has been tapped to lead a brand new team, The Initiative, based in Santa Monica.
Xbox boss Phil Spencer isn’t ready to let off the gas yet. In a recent CNET interview, he says that his team isn’t done shoring up Microsoft’s first-party game offerings.
Building the Game Pass library
“They have been going after quantity at relatively low prices, so are likely going to keep chasing $100 million sized deals,” says Wedbush analyst Michael Pachter. Head of Microsoft Studios Matt Booty tells GamesIndustry.biz that Microsoft is looking at studios with 50 to 100 employees that release games every two to three years. A big theme in the interview is concerned with Game Pass, Microsoft’s Netflix-style subscription service. Game Pass marks another step for Microsoft looking at success as ecosystem-based rather than motivated strictly by console sales (as the newly announced Xbox All Access program reinforces).
The model has changed. It used to be that consoles were sold as loss leaders, with software licensing making up the difference (and then some). It was the old marketing paradigm of razors and razor blades, with the latter being a source of recurring revenue made possible by practically giving away the former.
This is where I'm more optimistic. I think if they do a good job of communicating the great idea to minivan moms, they could make a real dent not just against Sony, but also Nintendo. The great idea is this: for $22.99/mo-$34.99/mo, nothing upfront, you walk out of the store with a box, and you can tell your kid to shut up. That's an all-in-one monthly fee. You don't have to commit more. It covers everything. There's more game content included with Game Pass than your kids could ever hope to exhaust. Next Christmas, you won't have to worry about blowing more money on some unforeseen viral game-- aka the Elmo Toy craze effect-- because all the biggest games on the Xbox come with that Game Pass.

