It has always been important for the Redmond tech giant to bring third-party games into its subscription service, but that may now be changing.
Xbox CEO Asha Sharma is reportedly restructuring the division radically at the direction of Microsoft CEO Satya Nadella in an effort to restore profitability. That could include reducing support provided to outside studios through the Xbox Game Pass program.
In Episode 59 of The Business of Video Games podcast, Fernando Rizo of Caboodle Games shared information he gathered in conversations with industry colleagues at the First Playable trade show in Florence, Italy, earlier this month.
Rizo, who co-hosts the podcast with Shams Jorjani, CEO of Arrowhead Game Studios, chairman of Hooded Horse’s board, and founder of the Almost Ready Games Fund, said Microsoft appears to have essentially stopped funding Game Pass deals with third parties, at least for the time being.
Jorjani speculated that this may be part of Asha Sharma’s major Xbox reset.
“I was at the trade show in Italy, having pleasant lunches and dinners with industry colleagues, and the word was that lots of people were in talks for Game Pass deals. Nothing had been signed yet, but the deals were already in advanced discussions, and suddenly everyone had the rug pulled out from under them.
I do not think Game Pass is over, given that the new leadership has talked a lot about Game Pass, but I think it is paused now. I think they are still trying to figure out what they want to do, at least that is how I read it. But yes, for the time being, it looks that way. We did one at Caboodle earlier this year, and I have the feeling that we were among the last.” Rizo said.
That is certainly not good news, especially for smaller developers who have often depended on agreements of this kind to make a living in recent years. As for Xbox as a whole, the move could form part of broader cutbacks affecting the entire division.
Analyst Joost van Dreunen has suggested that Sharma may currently be streamlining Xbox by removing anything deemed unnecessary. That could soon bring studio closures and/or major layoffs, but cutting expensive third-party deals may also be part of the strategy.
If that is true, it could mean Sharma is moving away from Game Pass as the central pillar of Xbox’s gaming strategy. Bringing fewer third-party games into the subscription service, while also removing some first-party releases such as Call of Duty from day-one availability, is unlikely to make the service more appealing to consumers.
Perhaps Microsoft is finally realizing that Game Pass can only supplement full-game sales, rather than serve as the main course.
