Xbox is exploring various payment models for studios on Game Pass, saying “we don’t think we have it figured out”

Xbox is exploring various models to pay studios who put their games up on Game Pass, with Xbox head Phil Spencer admitting that the company hadn’t quite worked out the specifics yet.

This comes from a wide-ranging interview with The Verge, in which Phil Spencer revealed that Xbox used to pay developers based on the usage of their games, but that the deals had varied so much now they were “all over the place”

“Our deals are, I’ll say, all over the place,” said Spencer. “That sounds unmanaged, but it’s really based on the developer’s need. One of the things that’s been cool to see is a developer, usually a smaller to mid-sized developer, might be starting a game and say, “hey, we’re willing to put this in Game Pass on our launch day if you guys will give us X dollars now.” What we can go do is, we’ll create a floor for them in terms of the success of their game. They know they’re going to get this return.”

In other cases, Spencer stated, Xbox will pay for a game’s full production costs – while still allowing the developer to earn additional revenue via retail sales, even for other platforms.

“Others want [agreements] more based on usage and monetization in whether it’s a store monetization that gets created through transactions, or usage. We’re open [to] experimenting with many different partners, because we don’t think we have it figured out. When we started, we had a model that was all based on usage. Most of the partners said, “Yeah, yeah, we understand that, but we don’t believe it, so just give us the money upfront.”

In response, The Verge pointed out the issues the music industry has often had with Spotify, showing the potential limitations of the usage model. Spencer speculated about a potential hybrid model of usage and upfront payments.

“My hope is we will get there, and maybe not 100 percent, maybe some hybrid model, which I think could work. We already have a revshare relationship with most of the content creators because we have a store, a digital store on our Xbox, which is basically a usage-based thing if you think about it. I buy the game, we take a cut, they take a cut, and we build success together. I’m hoping we can get to a model, where as we see upside, they see upside. There’s some downside risks that we can help cover which gives us certain capability with the content, but also helps them go do some things that maybe they couldn’t get greenlit on a pure retail model.”

In the interview, Spencer suggested that Game Pass was boosting Electronic Arts via EA Play’s inclusion in Game Pass.

“EA Play coming on to Game Pass was us working with our partners at EA to say, it’s not about a per-title thing, let’s actually bring the channel that you guys want to go drive and grow value in, called EA Play. Let’s bring that to Game Pass on console and PC, so you see growth in people’s attachment to your service through the distribution power of Game Pass. That’s real strength for them.”

As well as boosting EA, Game Pass can be a potential boon to indie creators. We recently explored how beneficial the service really is to indie devs, and what Game Pass’ recent changes might mean for smaller titles.