Xbox's Spencer details how Game Pass developers are compensated

Xbox's Spencer details how Game Pass developers are compensated

The head of Microsoft's games arm Phil Spencer has detailed how companies putting their releases into its Game Pass subscription service are paid.

Speaking to The Verge, the Xbox exec said that the deals vary. For some, the Big M will pay out a flat rate for a project to come to the platform on launch – which seems to be a minimum guarantee-type figure, the same as exclusivity on the Epic Games Store. For other titles, Xbox is prepared to pay for the full cost of making a game.

"Our deals are, I’ll say, all over the place," Spencer said.

"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] certain cases, we’ll pay for the full production cost of the game. Then they get all the retail opportunity on top of Game Pass. They can go sell it on PlayStation, on Steam, and on Xbox, and on Switch. For them, they’ve protected themselves from any downside risk. The game is going to get made. Then they have all the retail upside, we have the opportunity for day and date. That would be a flat fee payment to a developer. Sometimes the developer’s more done with the game and it’s more just a transaction of, “Hey, we’ll put it in Game Pass if you’ll pay us this amount of money.”

"Others want [agreements] more based on usage and monetisation in whether it’s a store monetisation 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.”

Xbox Game Pass debuted for console in 2017 before landing on PC last year. Between April and September 2020, the service's user base rose 50 per cent to 15m.

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.