Earlier this week, it was revealed that Tango Gameworks, Arkane Austin, and Alpha Dog Games closed their doors, while Roundhouse Games will join ZeniMax Online Studios. Who is to blame for this unfortunate situation? A former Microsoft employee has a clear answer.
In a lengthy post shared on his LinkedIn account, former Senior PR Lead at Microsoft, Brad Hilderbrand, shared his opinion on the recent closure of the 4 Bethesda studios. In particular, he blames two factors for this catastrophic scenario: Xbox Game Pass and the acquisition of Activision Blizzard.
The impact of Xbox Game Pass on the games in its catalog has been discussed for years. While some studios support this business model and argue that their titles reach new heights after joining the service, others claim that it negatively affects game performance.
Growth of Xbox Game Pass has stalled, warns former Microsoft employee
Brad Hilderbrand addressed the issue once again and explained that the biggest paradox of Microsoft's program is that "all games released on the service fail to meet their sales targets." Why? Essentially, because players prefer to pay the subscription and play them "for free" rather than purchasing them at full price.
The former employee explains that games debuting on the service get a big boost initially but are unable to stay at the top for more than 1 or 2 months. Additionally, he highlights that the growth of Xbox Game Pass has stalled.
“Then games like Hi-Fi RUSH, which are incredible, get a small revenue bump for being the most popular game for a month on Xbox Game Pass, but then crater when everyone moves on to the next thing. Poor Redfall was even worse off since its launch was so rough that it never had a chance."
Brad Hilderbrand goes on to comment that the subscription service "was fine" in its heyday but warns that its growth has slowed, and consequently, the amount of revenue it attributes to games doesn't match budgets. This is where the next problem comes in: the acquisition of studios, especially Activision Blizzard.
The former Microsoft employee explains that the drawbacks of the subscription service wouldn't matter 3 or 4 years ago, but that changed when large amounts of money began to be spent acquiring third-party studios. Now, top management expects Xbox to "start recouping those $70 billion or at least minimize spending."
While titles like Palworld and Starfield gave a significant boost to the paid program, Hilderbrand warns that they "didn't stimulate enough growth." The solution? Adding high-profile proposals to the catalog, like Call of Duty. This presents another situation: risking the sales of those video games in favor of the service.
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"I don't know what the plans are, but you put it on Game Pass and you lose money or you don't and subscribers revolt because they feel that's what they signed up for," explained the executive.
In a follow-up post in the comments section, the former Microsoft employee reiterates that Xbox Game Pass was the right strategy when announced but warns that as subscriber growth hits a ceiling, game budgets grow.
“The only chance (externally) is to put in service all the biggest games in the world and make them absolutely indispensable to players (…) the only thing left is CoD or GTA VI. It's impossible for GTA to come to Game Pass, and I think with Call of Duty, they do the same calculations and basically say it's too risky to give up sales revenue in hopes of gaining enough subscribers,” he concluded.
But tell us, what do you think of these statements? Let us know in the comments.
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