We have a good handle on what the next console generation looks like now, at least in hardware terms. We even know what most of the companies will be focusing on to beat the competition: Sony is leaning on highly desired third-party exclusives for the PS5, while Nintendo is hoping broad appeal and lots of indies will keep the Switch appealing.
But surprisingly, it’s Microsoft that’s pushing the innovation. Not with jaw-dropping number-crunching hardware power, or with a huge stable of exclusive games. The Xbox Series X and cheaper Series S don’t have those, at least not in the abundance that Sony and Nintendo do. It isn’t even competing that hard on price, as the Series S has the same retail price as the more mature Switch.
No, Microsoft is betting big on changing how people pay for their entertainment. And they might just win it all.
The “Netflix for Games” Has Arrived
A few years ago, it became de rigueur to label a new service as “the Netflix of ____.” That’s fallen out of fashion now, if only because replicating Netflix’s pay-once-and-get-everything success has proven much more difficult than it seems. But the Xbox Game Pass has done it.
Game Pass is Microsoft’s bid to at a subscription game service. It’s not unique: Sony has one, Nintendo has one, mega-publishers like EA and Ubisoft have one. Even Apple and Google each have one. But Game Pass is head and shoulders above the competition, thanks to an emphasis on brand-new highlydesirable games being added to its library immediately upon release, and on appealing to both Xbox and PC gamers.
Game Pass started with the Xbox One, but with the Xbox Series X and Series S, Microsoft is aiming to make the service and the hardware almost indistinguishable from one another. If you have a new Xbox, you want Game Pass Ultimate, if only because it presents a phenomenal value. For a few dollars more than Xbox Live (the online multiplayer component that has been in place since the original Xbox), you get access to a library of more than 100 full games to download and play at your leisure. Oh, and you get the multiplayer component, too.
You also get access to some of those games on a PC (assuming yours is powerful enough to play them), and as of this month, access to all of them streaming on Android phones and tablets. It’s an incredible sell, especially now that you don’t even need an Xbox to play the games at all. There are other tiers of Game Pass ($15 for everything, $10 for just the Xbox with a few perks removed, $10 for just PC), but Ultimate is the clear winner.
Microsoft is doubling down on Game Pass. The Pass currently includes AAA titles like Halo, Resident Evil, Forza, Gears of War, Minecraft, Sea of Thieves, and Minecraft, and much-loved indie games like Ori and the Blind Forest, Don’t Starve, Hollow Knight, Subnautica, and Dead Cells. But the Pass also gets at least some brand-new high-profile games: I played The Outer Worlds the day it came out on an almost-free Game Pass trial.
During Microsoft’s big showcase for the Xbox Series X (and by extension, the Series S) in July, it showed off 20 new titles, including Halo Infinite, Forza Motorsport, Psychonauts 2, a new Fable, and expanded content for The Outer Worlds, Destiny 2, and Phantasy Star Online 2. And all of them will be on Game Pass on day one, available to subscribers without paying a penny extra.
That’s some serious value. The fact that all the games in the EA Play subscription (formerly known as EA Access and Origin Access) are coming to Game Pass, for no extra charge, is just icing on the cake.
The Right Price at the Right Time
But beefing up Game Pass is only half of Microsoft’s strategy. Mobile streaming notwithstanding (especially because it’s restricted to Android), you’ve got to get people the hardware to actually play all of those games. And depending on them to have powerful gaming PCs isn’t an egalitarian approach.
Microsoft’s one-two punch is tying the Xbox hardware and the Xbox Game Pass subscription together. Starting with the launch of the Xbox Series X and Series S, you can pay a monthly fee for your console and your game subscription together. It has the same two-year term and interest-free pricing to which consumers have become accustomed now that high-end phones are cracking four digits.
For Game Pass Ultimate and the flagship Xbox Series X, you pay $35 a month for two years. For the cheaper disc-free Xbox Series S (which can play all the same games at lower visual fidelity), it’s just $25 a month. While it’s certainly been possible to buy a game console on credit or layaway, offering a combination subscription and zero interest financing like this is unprecedented.
And it’s a good deal, too. The Xbox Series X is $500, the Xbox Series S is $300, and Game Pass Ultimate would cost $360 for two years. So at $35 or $25 a month, gamers who go with this combination are actually saving $20 and $60, respectively. Unless you just dislike paying monthly, or you think you’ll tire of your new Xbox in under two years, there’s no reason not to choose the combination subscription option.
With a few years of experience selling Surfaces via the Microsoft Store (which includes financing options), Microsoft was ideally positioned to extend some of the same offers to its gaming customers. So, I’m inclined to believe that this subscription model for both games and the hardware to play them has been in the plans for a long time.
And while there’s nothing nice about the Coronavirus pandemic, the fact is that people have more time and less money than they otherwise would. That makes the appeal of a $25 a month subscription, for more games than you could play in 10 years, incredibly appealing right now. It’s fortuitous for Microsoft: They have exactly the right plan at exactly the right time.
A Bet on the Future
Sony’s still on top of the world from dominating the console landscape with the PS4, and the Switch remains the most popular console for more mainstream gamers and kids. So to say that Microsoft’s subscription strategy for the new Xboxes has already “won the console war” would be incredibly shortsighted.
But make no mistake: The Xbox is in a fantastic position as the new generation starts. We still need to see the rumored 4K upgrade for the Switch, and the future of streaming games is still very much in flux. But were I a betting man, I’d bet on Xbox to get a very strong lead in 2021.