By Nicolas Ng

It’s happened again. After seven years, the next generation of consoles have been released.

Microsoft’s Xbox Series X and S have practically launched alongside Sony’s PlayStation 5. Naturally, comparisons have been drawn about every aspect about the consoles. The hardware, the exclusives and even the controllers have all been discussed to death. 

However, one factor often mentioned in passing is Microsoft’s Game Pass, a subscription service that gives subscribers over a hundred high-quality games to play at a reasonable monthly fee. There’s little doubt that it’s generous, so what does it mean for Microsoft’s strategy and how did it come about?

This service comes as a logical extension of digital downloads. These allow gamers to buy licences to download their games at will. Even those who still buy physical disks often need to download massive day-one updates before they can play their newly purchased game. 

As such, it didn’t take long before a new subscription-based business model emerged. Taking advantage of players subscribing to play online, both Microsoft and Sony began offering free digital games on their platforms on a monthly basis. Sony began in 2010, bundling it with PlayStation Plus. Microsoft started with Games with Gold in 2013. Both companies treated it as an extra piece of value to their subscription service, only offering dated games for free. 

In 2014, Electronic Arts launched EA Access on the Xbox store, allowing subscribers to download some of their biggest games as part of their subscription and offering a discount on all of their games to subscribers. This same scheme was offered to PC players in 2016 as Origin Access.

And this business model just kind of sat there… until 2018.

Microsoft expanded Games with Gold into the Microsoft Game Pass. It offered subscribers day one access to their latest first party games starting with pirate game Sea of Thieves and promising to bring future Halo and Gears of War titles in, bucking the trend of only offering the scraps and instead giving subscribers the main course. 

EA wasn’t far behind, expanding on its service to include EA Access Premier and Origin Access Premier. They charged players much more to access all of their games as part of their subscription, even offering them ahead of their official release date. The new Battlefield games, Star Wars: Jedi Fallen Order and even Anthem (though they might prefer if you don’t remember the last one) are some of EA’s biggest releases that were given the Access Premier treatment. 

But now at the beginning of the ninth console generation, the Game Pass is at the forefront of Microsoft’s strategy. 

In stark contrast to the typical console strategy of selling consoles at a loss to make money off game sales, Microsoft has instead opted to put its line-up of launch titles on the Game Pass, moving the emphasis from direct game sales to subscribers. Its own collection of first-party studios (which Bethesda Games studios has just joined) seems geared to produce consistent and frequent releases similar to Netflix’s original content strategy.

Sony seems to have realised the potential of this business model, though they have embraced it with less enthusiasm. They expanded PlayStation Plus to include some of the biggest games from the PS4 to play on the PS5. While the games on offer were some of the best games of the last generation, they lack the promise of getting the latest and greatest games on the subscription. After all, Sony has doggedly stuck to the traditional launch strategy that Microsoft has bucked. Sony relies on having a strong line-up of first-party titles to draw people to their console instead. Their strong single-player game franchises such as God of War and The Last of Us are two examples that exemplify this strategy. 

The difference in strategy could be attributed to the PS4 outselling the Xbox One by an almost two-to-one ratio over their generations.

Sony’s focus on its single-player exclusive games gave them the advantage over the Xbox One, whose own exclusives were not nearly as popular. Instead of competing on the same metric, Microsoft has changed its strategy to be more generous to users and has even made an aggressive entrance into the PC market. Xbox exclusive games like Halo and Gears of War have left Microsoft’s store and entered Steam, the biggest game marketplace on PC. 

Sony has not made the same extensive transition to PC, only releasing Horizon: Zero Dawn in 2020 and Nioh 2 in 2021. 

Overall, it looks like the console market is becoming even more diversified. Microsoft is going to chase subscriptions to generate revenue instead of focusing on traditional game sales. Sony has decided that its strategy hasn’t broken and doesn’t need to fix it. Nintendo, absent for the entirety of this tale, has its own thing going on.