Gamepass as a subscription to make sure you always have something to play, that has a lot of old games or indie games and other games that have no commercial value makes sense to me. The back catalog for any of the current consoles is plenty deep with games that have lost their ability to move units independently but still have a lot of value and can also give that perception of value. Such a plan is picking up pennies, but it's a lot of pennies.
I've never understood putting your new releases out on gamepass and bragging about that as your primary value proposition. Many new games are, say, 20-30 hour experiences, assuming you play them from start to finish once. One does not need to spend too much time with "this % of other players got this achievement" to see how many players tend to drop off of a game even that long. So if you put your new game that you would have sold for $60-80 dollars to me directly and it translates to three weeks of engagement on your $15-ish/month (depending on level) subscription, it's hard to see how that is an economic win. Put that game on Gamepass in a year or two, sure, that can make sense, but on release? And that not as a mistake, but a deliberate strategy? I can not fathom the mindset that leads to that.
As a deal for customers it seems to have been pretty good but I've never understood how Microsoft expected to make money on that plan. The streaming-video proposition of making a high-budget release to keep your subscribers makes quite a bit more sense, you could never have counted on getting $70 out of a customer for those anyhow, and even that economic proposition I think has proved more complicated than the streaming companies expected. The Gamepass model has just seemed insane.
I expect it to move to more like what I described at the beginning. As a way to turn a lot of old and hard-to-monetize content into a subscription stream it's brilliant. As a way of releasing new AAA titles it's crazy. Movie studios played with that model and I don't think they liked it at all.
I think that's what I thought it would be, too. XboX has a really good track record of backwards compatibility. I can (and do, occasionally) play 360 games on my series X.
A model where people can buy the latest games, can not only keep them but play them forever on future consoles, and can have access to an increasingly vast back catalogue of older games, seems like a huge win. And maybe each full price new game gets them a bit of a discount on their next month's game pass, to make it slightly better value than the playstation equivalent full priced game.
But they didn't seem to want to do anything like that.
By this I meant via a subscription.
I _think_ the thinking is that not everyone is going to buy more than a couple full priced new releases per year (in general). $80 or whatever is just too much for most people to drop on a game they "might" like. On the other hand, most people would have few reservations being perpetually subscribed to a service that lets them play every new game "for free" (so long as they keep rolling in on a monthly basis). Theoretically, the subscription money would exceed what they'd normally collect from the average person buying the usual 2 or 3 full priced games per year.
Where I think it breaks down is quite a number of gamers are hopelessly addicted to playing all the latest games, all day every day. MS is surely losing money when those guys substitute buying physical games for a subscription.
I don't entirely understand... well... from a rational perspective anyhow, of course companies are not entirely rational... why it didn't become clear that this was a silly idea and not working. It's easy to make Gamepass stop cannibalizing your main game sales. You don't need a big announcement, you don't need to advertise your plans. You don't need a huge internal political fight. You just... stop. You just stop putting your brand new AAA games on your cheap subscription service plan. You don't even have to remove the old ones, they turn into your old AAA games naturally in the fullness of time. Nobody has to lose face. It's easy. It's like falling off a log.
Compare that to my nephews who have a lot of time for gaming, but they’re always fighting to scrounge up the money for another month of Nintendo online or Xbox online and go without it for at least half the year