Xbox Game Pass Exclusivity Hurts Microsoft More Than It Helps

At CES 2017 back in January, Sony president and CEO Kazuo Hirai took to stage to talk about the company’s newest innovations. Hidden in the various announcements was a mention of the PlayStation 4 total sales figure: 53.4 million. That was impressive even by Sony’s own standards – the last quarter of 2016 proved to be the best in the console’s history since its launch in November 2013.

By contrast, Xbox One has sold about 26 million units, as per most recent available third-party data, since Microsoft doesn’t share official figures. Despite the two consoles launching almost simultaneously, that’s a steep difference – almost twice in favour of the Japanese electronics behemoth. Xbox One’s initial pitch as a home media centre, as opposed to the traditional gaming console that the target audience was clearly looking for, did it no favours.

Microsoft has tried its best to appeal to the core gaming market ever since, and it has managed to reap some benefits. For the months prior to the 2016 holiday season in the US, the Xbox One was the top-selling console over its Sony rival thanks to the launch of Xbox One S, but then Sony went on to have its best quarter since the launch, leaving the Xbox far behind.

At this point, it’s easy to say that the PlayStation 4 is a clear winner for this console generation. That doesn’t mean Microsoft has given up by any stretch of the imagination – the Backward Compatibility programme, which allows select Xbox 360 games to be played on the Xbox One, is one of its best facets, adding a lot of depth to the catalogue and keeping classic games alive – but its approach signals a shift in its combat strategy. The common theme seems to be unifying the two different gaming worlds Microsoft has a stake in: Xbox and PC.

The first step towards that was bringing Windows 10 to Xbox One, which brought game streaming, and Cortana, among other things to the console. But the much bigger step was taken last year, with Microsoft announcing Xbox Play Anywhere, a cross-buy program for Xbox One and Windows 10. That meant with a single purchase, gamers could enjoy the same game across their console and gaming PC, should the developers choose to facilitate that.

Nevertheless, it was a natural first step in merging the two separate worlds, and gave Microsoft a foothold in the digital PC market. Steam occupies 50 to 70 per cent of that space, and Microsoft is in the best position to provide worthy competition With around 10 games listed officially, and half as many planned for this year, few publishers seem to be overly excited in embracing that approach, but PC gamers are at least guaranteed all first-party titles from Microsoft moving forward.

For Xbox One owners, the two new features meant they could enjoy their titles on any Windows 10 PC in their homes – be it a gaming computer, or a Surface Pro – should someone take over the TV in the living room. For anyone who is primarily a PC gamer, it meant being able to enjoy Forza Horizon 3 without having to settle for an Xbox One.

And then came the newest announcement last week: Xbox Game Pass. Think of it as Netflix for Xbox, where the catalogue changes regularly, and you’ve a month to enjoy what’s on offer. Except the games are downloaded, unlike streaming on Sony’s PlayStation Now, which makes Sony's offering a lot more like Netflix in that sense. It’s also a bit different from EA Access (and its PC cousin, Origin Access), which has a permanent vault of games that you can play endlessly, with limited trials offered for upcoming titles. But the more important detail here is the one Microsoft took out, shortly after going public.

Xbox Game Pass was earlier mentioned to be for both Xbox One, and Windows 10. That’s how it was reported initially, before Microsoft went back and edited out any mention of Windows 10. It raises the question of whether it was merely a correction, or Microsoft decided last minute to keep the service away from PC owners. The only possible reason to do so would be to try and sell more Xbox consoles, but considering how well that strategy is panning out for Microsoft, it doesn’t seem like a wise move at all.

The announcement of EA Access two years ago hit GameStop’s shares badly, signalling that digital purchases (and subscription services) could well hurt the model of brick and mortal game retailers. Xbox Game Pass, alongside the company’s other efforts, has the potential to do something similar for Microsoft versus Steam, and its brethren on PCs.

In a world where Microsoft has done so much to bring Xbox and Windows closer to each other – Windows 10 Creators Update coming in spring this year will even bring Game Mode – it’s baffling that it would keep Xbox Game Pass away from a much bigger market. It’s something Microsoft is clearly invested in, with Eric Walston, of the Xbox Advanced Technology Group, saying as much in an interview.

“When we add new features to Windows, they transfer to Xbox,” Walston told Ars Technica. “[In 2017], the line between console and PC is continuing to blur. The line dividing Windows and Xbox continues to become more of a gradient of features and functionality.”

Xbox Game Pass for Windows 10 would be another step towards that, but its parent doesn’t seem to think so. The more harmony it can generate between the two worlds, the more profits Microsoft can reap from PC gamers. Plus, it also makes for unified opposition to the Sony world, and makes the latter look less appealing.

It’ll never win the hardware war, but if Xbox boss Phil Spencer is really about Xbox as a service, then surely this is the way to go. Hopefully, Microsoft can see that too.