Xbox Game Pass is the main service to enjoy video games in the cloud and although it is a great option for those of us who want to try a great library without spending a lot of money, it has its detractors. The biggest of them was the CEO of Activision because of his statements about his monetization model.
During the purchase between this company and Microsoft, he stated the following: “Personally, I do not share the vision of a subscription service that covers multiple games as a commercial proposition in the future.”
Despite this, “However, we can agree that there is disagreement about it.” Kotick shares a sentiment similar to that expressed by PlayStation head Jim Ryan, who stated that the game publishers he has spoken with are also not enthusiastic about the Xbox Game Pass subscription model, seeing it as bad for their business.
And, these words are now supported by what happened to two large indie game studios, Devolver and TinyBuild, who have suffered significant losses due to competition from this video game streaming model, as confirmed by the Goodbody firm.
Patrick O’Donnell, Gaming and Technology Analyst at Goodbody, comments: “We’ve seen that the subscription model is putting pressure on Devolver and TinyBuild right now.”
“The revenue coming from Sony and Microsoft is no longer as substantial as it was in the past, which creates difficulties if your focus is on that segment of the market. In this sense, TinyBuild was the most affected company, although Devolver was also impacted, although to a lesser extent.
Is Xbox Game Pass bad for indie studios?
It may not just be the Xbox Game Pass subscription model that’s the only bad thing for indie game studios. The recent decline in the case of Devolver came after the company decided to postpone the release of several major titles planned for the current year.
Additionally, it has experienced a challenge due to unfavorable comparisons to the previous year, as the publisher released a hit title last summer called “Cult of the Lamb.” O’Donnell, an expert in game analysis and part of the Goodbody firm, adds: “Revenue expectations for Devolver in the current financial year ranged from $115 million to $120 million, but they had to reduce them to $90 million.”
Additionally, while its back catalog remains resilient, prices have declined by 5%, negatively impacting its earnings before interest, taxes and amortization (EBITA). In addition, they no longer have the significant new titles needed to offset these losses.
So while the decline in revenue brought by Xbox Game Pass and PlayStation Plus has had a negative impact on some indie game studios like Devolver Digital, there are other factors that have tipped the balance.
In fact, there are other studios that have chosen to release their video games on day 1, such as the recent Sea of Stars, which has accumulated 250,000 copies sold in its launch week. A number that has exceeded its original sales projections.
We may also see a reduction in the interest of some titles for being in this subscription model. Remember to subscribe to our Newsletter to be aware of more news like this.