Microsoft should go into business as a close-up magician, as the last few months have seen it pull off the best trick of misdirection that the games industry has ever seen.
The focus has been on the hardware of late. The Xbox Series S tweet, the leaked launch trailer, prices, specs and launch dates. All the circus of a console launch, but amplified by Xbox’s own two console strategy, and compounded by the unprecedented year that (presumably) caused the big players to leave consumers waiting longer than ever for hard details.
And then Microsoft, impossibly, whips out a 300lb rabbit, from its perfectly-tailored sleeve. In a single deft move, with no hint of foreshadowing, it lands goliath-like in front of us, and reminds us all that content is king.
The EA – Xbox Game Pass deal is the biggest in gaming history. It redefines the gaming space, it reminds us of the kind of deals that are possible, it makes us wonder, if this, then what next?
I tried to come up with comparisons from the spheres of TV, film and music, and failed to match it. I guess if Disney had hypothetically partnered with Netflix instead, or in retrospect the deal that put the then fledgling Premier League on Sky?
There’s a song from the musical Hamilton, you’ve probably heard it, called ‘The Room Where It Happened’ where one of America’s founding fathers is distraught that he didn’t get to be at the private meeting where one of the greatest political deals of the era was hammered out.
“It redefines the gaming space, it reminds us of the kind of deals that are possible, it makes us wonder, if this, then what next?”
More so than anything in the history of games, I want to be in the room where the Xbox-EA deal happened. To know how it began, what both parties wanted and what the final deal consisted of. And that for me that yearning to be there makes it the biggest deal in modern gaming.
We can certainly see big advantages for both parties.
While we can say that content is king, Xbox Game Pass exists in a semi-walled garden, whose walls are built from console hardware. Yes, consumers can get it on PC, provide their own hardware and buy the rest of their games from Steam or Epic. But Game Pass largely brings people into the Xbox ecosystem, buying hardware, accessories, and of course more content from the Xbox Store.
For Microsoft, the EA deal puts it hugely ahead of PlayStation in terms of perceived value, just as consumers are totting up the next-gen cost of entry, and total cost of ownership. If you play EA games, and with FIFA, Madden, Star Wars, Battlefield and The Sims alone, that’s a lot of people, then Game Pass becomes a no-brainer, as does Xbox by extension.
So just how much is Microsoft paying EA for this privilege?
Maybe not as much as we might think. Oh yes, I’m sure the figure would make headlines, it’s a huge, huge deal. But remember that EA, as with many others, makes a massive part of its revenue from microtransactions.
Putting its games on Game Pass, available free to play for what it is likely to become the majority of Xbox owners, hugely increases the reach of all those titles and therefore the amount it can earn from those ongoing transactions. Which will help, to some extent, to offset the cost to Microsoft in the long-term.
Then there’s the intriguing footnote of EA titles also coming to xCloud, and how that will tie in with its own (much broader) Project Atlas initiative. Either way, it seems that EA sees the market opportunity in reaching console-less consumers with its premium titles today. It’s a potentially huge new market, as we’re so often told, and Microsoft looks to better positioned and more philosophically inclined to throw off the shackles of hardware than its competitors.
Still Microsoft undoubtedly will be paying handsomely for the privilege of having EA titles on Game Pass, whichever way you cut the cake, or whoever gets what share of which pie. So how does Game Pass make money? It probably doesn’t. Netflix lost money year after year for a long time, while Amazon reinvested all of its profits for many, many years too. It doesn’t matter if you spend to get the top in a global digital media format, it only matters that having spent, you do get there.
And this was the single biggest step to date in what is increasingly looking like Microsoft’s ascension to that throne. I only wish I’d been in the room where it happened.