What's the economics of the Xbox Game Pass? How does it work...

It's not just EA getting a cut. I can understand it being a good arrangement for indies but for AAA and AA somebody has to be eating the cost and probably Microsoft.

Loss leader strategy. The point is getting people on your platform even if you have to lose money in the process, in order to gain a larger market share and secure future recurring revenue, as well as killing smaller competition.

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It's not about making money, it's about giving a deal that seems too good to be true, and destroying the more healthy business model that gives the consumer more power.
Microsoft can bleed as much money as it wants until it potentially creates a world where physical ownership or even the possibility of storing files locally is no longer a thing. The future they want is one where you pay for access, and they're the gatekeeper. They will dictate the terms for game devs AND gamers, and you will call it "refreshingly modern".

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Microsoft is making money from 20+ million people paying $15/month. It's a more stable revenue stream than ~5 million people buying a $70 game, and then ~5 million people who decide to wait a few months for a discount, and then there's ~5 million who recieve that game from a console bundle. When you think about it, only Nintendo makes bank from the exclusivity model. Then there's those people who buy games second hand which is money that the publisher doesn't see. Microsoft also makes money from people buying games after they've been taken off game pass, since they get a %30 cut from sales on the Xbox store. Publishers make money from Microsoft paying for their games to be on Game Pass, and they also get a cut from sales.

It's all dependent on MS increasing GP's sub numbers. How can MS increase GP's value proposition? By adding more games to the service. How can they add more games to GP without paying off a lot of 3rd party devs? By increasing the number of studios they own.

>and destroying the more healthy business model that gives the consumer more power
The existing business model isn't healthy. It's reliant on increasing the price of games to offset the ever increasing costs of games development. If things were left as is, we'll eventually hit the point where standard retail games are $100 USD.

the very definition of a fifa nigger is only playing fifa. you could maybe scam him into paying monthly for it instead of a singlr big payment, but he would still keep on only, exclusively playing fifa.

Governments invent money for financial institutional investors. Microsoft makes more money from investors than they would consumers.
Welcome to clown world economy. You are not the target audience. You are a statistic being sold to speculative investors. Their speculation is always right, since they decide how much something is worth.

>It's reliant on increasing the price of games to offset the ever increasing costs of games development.
What would be nice would be if companies didn't keep ballooning their dev costs and then feeding us this narrative that games absolutely need to cost $500m+ to make.
"It's the consumer demand, it's what THEY force us to do!"
Meanwhile pixelshit/voxelshit like Minecraft made by some lone autist is the most popular game in the world. Really makes you think.

microsoft's gaming department can operate at a loss since its mother company is worth trillions, they have always lost money in exchange for expanding their userbase, or do you think they really don't know how to deal with all the people pirating their os? the point of gamepass at the moment is to grab people and bring them into the microsoft ecosystem or to establish a firmer hold on those who were already in it, then in the future they'll probably start making money off of it once sony is dead

en.wikipedia.org/wiki/Embrace,_extend,_and_extinguish

Because most of the games on the service are indies or older aaa games
For every Halo or Forza that cost $100m to make, there's 10 indie games that cost $1m or less to put on there or back catalog titles like Doom and Nier Automata that have already sold 95% of what they're ever going to sell
Danganronpa just showed up on gamepass this month, that game would have sold 10 copies on xbox probably, so it was cheap to put on there
And fifaplebs don't give a shit about Danganronpa, but if they're paying their $10 every month they're paying for it even a little
So for every game you like that you think "wow, this would've cost me $20 to buy", there's a million people each contributing a penny to it who aren't interested
And same for you and the hundred games on there that you don't care about but are paying for
It's like distributed cost sharing

>What would be nice would be if companies didn't keep ballooning their dev costs and then feeding us this narrative that games absolutely need to cost $500m+ to make.
You can blame the graphics whores for this.

>So I don't understand how anybody is making any money with this arrangement.

First of all, any public corporation is funded by bonds. They can literally give away their products and services for free and still reap billions. The credit they receive from bonds are issued by pledging individual men and women as surety (you). This is why Amazon's retail never turns a profit and yet continues to slog on putting small shops out of business. Same with walmart, same with all of them. As long as they are allowed to issue bonds they have been paid up front for whatever they claim to do.

That aside, more people are likely to pay a small annual fee to access many games even if they don't play them. The reality is most people will only play a small handful of games even if a full library of games is available to them, and this brings in revenue that would otherwise not be coming in from people who choose not to buy games at retail.