“We’re open [to] experimenting with many different partners, because we don’t think we have it figured out.”
– Xbox frontman Phil Spencer says Game Pass is, ultimately, about finding ways to work with developers.
If you haven’t tried yourself to get a game on Xbox’s subscription library Xbox Game Pass its hard to know what kinds of agreements are on the table for that kind of process.
However, Xbox head Phil Spencer says there really isn’t one standard formula the Game Pass team defaults to for partnerships. Rather, Xbox has some flex room to forge deals that meet the needs of individual developers, to a point.
Spencer shared a lot about Game Pass, and Xbox as a whole, in a recent chat with The Verge’s ‘Decoder with Nilay Patel’ podcast, noting also that third-party games are the real lifeblood of the platform (“Game Pass relies on third-party content. I want it to be that way. I want our third parties to have success”).
On the topic of the actual agreements developers make to get their games featured on Game Pass, Spencer says that Xbox’s deals are “all over the place.”
“That sounds unmanaged, but it’s really based on the developer’s need,” he continues. “One of the things that’s been cool to see is a developer, usually a smaller to mid-sized developer, might be starting a game and say, ‘hey, we’re willing to put this in Game Pass on our launch day if you guys will give us X dollars now.’ What we can go do is, we’ll create a floor for them in terms of the success of their game. They know they’re going to get this return.”
Some developers are keen to make their Game Pass deals based on usage and monetization. According to Spencer, this was actually the initial model it used for Game Pass partnerships but Xbox eventually strayed from making it a standard because, early on, developers weren’t confident that sort of compensation model would pay off for the then-fledgling subscription service.
“[In] certain cases, we’ll pay for the full production cost of the game. Then they get all the retail opportunity on top of Game Pass. They can go sell it on PlayStation, on Steam, and on Xbox, and on Switch. For them, they’ve protected themselves from any downside risk. The game is going to get made. Then they have all the retail upside, we have the opportunity for day and date. That would be a flat fee payment to a developer. Sometimes the developer’s more done with the game and it’s more just a transaction of, “Hey, we’ll put it in Game Pass if you’ll pay us this amount of money.”
He does note that, eventually, the Xbox Game Pass team wants to get comfortable with a more usage-based model similar to the interviewer’s example of Spotify, though he believes a more hybrid model would be a better fit for Xbox.
“I’m hoping we can get to a model, where as we see upside, they see upside. There’s some downside risks that we can help cover which gives us certain capability with the content, but also helps them go do some things that maybe they couldn’t get greenlit on a pure retail model.”
Find much, much more from Phil Spencer on Xbox production, the decision for its dual console launch, and thoughts on the concept of “console wars” in the full chat with The Verge, readable here.