Biggest misconception people have about gamepass, is treating it like you are buying the actual game.
That is just plain false. You dont own the games that are on gamepass. Once the sub is expired, all those games becomes unplayable. You will need to buy those games.
Gamepass has 6 month to 1 year deal to put 3rd party games on gamepass. There are other cases, where a game can stay for 2 year.
All 1st party games are on the service forever.
So, why doesn't gamepass affect 3rd party sales?
Gamepass nature is doing an advertising for the game, and providing a demo for players. It doesn't give them the full access of the game. If you want to play the game next month, you will have to pay the fees of gamepass.
Remember, games stay on the service for 6months to 1 year. But here is a catch to that. You must be available day1 for that. If you aren't, you won't have enough time to play the game.
Gamepass had red dead redemption 2 on the service for 6 months. People who subscribed to the service this year, were unable to play that game. This will apple to the future games.
Question: How do these devs make money of gamepass?
Answer: Ms pays them certain amount of money before the game hits gamepass. And in some cases, devs gets more money from players engagement.
Question: Wouldn't the devs lose money from this type of deal?
Answer: The biggest problems devs face is player base, and not the money. When you are selling a game, you need player base. You need people who will buy your products. Without some sort of consistent ads, deals, worth of mouth, or people praising it nonstop, your game won't have enough sales.
Gamepass is a perfect medium in this situation. Devs can secure a player base for the sequel of their game. They save alot of money from gamepass advertising, word to word mouth helps boost other non-gamepass platforms sales.
They still have the power to sell their games. Gamepass isn't giving out the games for free, like epic or ps+ (you will need the sub to keep them alive, but the game is yours). Their games have expired date on gamepass. Once that expiration hits, the game won't be on the service.
In that 1 year period, people will buy the game, to add it to their collection. That is extra sales, on top of the money MS gave them.
Question; Wouldn't gamepass hurt MS overall sales?
Answer: the problem with sales is the hardware limitations. Its mainly dependent on people who bought the hardware. Devices gets broken, people play f2p games. In these cases you dont see that much sales, and will need to rely on whales, who will buy every game that is expensive, or would spend tons of money on f2p games.
Gamepass provides a form of revenue, that is not affected by hardware limitations. People pay 10$ to 15$ for the service. 1$ is just a promotion. Its not meant to be forever. After the promotion ends, people will pay 10$ to 15$. This much money means nothing.
But if you have 20m users paying that monthly, that would be $200m to $300m monthly revenue from 20m users. This number would keep going up in the future, and won't slow down.
The more users they get, the more revenue gamepass generates.
Question: how does gamepass make money, to sustain these 3rd party games?
Answer: "PlayStation 4 was the highest source of income from player spending in Fortnite at 47 per cent of all total revenue from March 2018 through July 2020."
This is from mtx on fortnite that was on Playstation.
When gamepass gets games like that, it will generate more mtx money on top of the sub fees. Any dlc those 3rd party games have, will translate to sales, of players buy them. In short, gamepass has ways to make money from 3rd party games, in order to sustain itself.
Again, GAMEPASS 1$ PROMOTION IS LIMITED. ONCE YOUR TRIAL ENDS, YOU WILL PAY 10$ TO 15$. PEOPLE WONT BE ON THE 1$ ALOT. EVEN IF YOU CHANGE ACCOUNTS, YOU WILL STILL HAVE TO PAY THE 10/15, BECAUSE OF THE LIMITED TIME PROMOTION.
