Microsoft went all-in for Gamepass. There is no plan B. If Gamepass doesn't change the entire industry then it isn't worth doing on its own.
Well then it's already over. Wrap it up. Game Pass doesn't have the chops to change the industry because the model is not sustainable.
Console gaming was once about third parties living in the hardware ecosystem and pay the platform owner rent.
That's what console gaming still is. It hasn't changed; vast majority of industry revenue is still based on this proven model.
Now with Gamepass it is Microsoft paying developers rent to run their games on Xbox.
But look at the scale of the devs they pay. For Day 1, it's nothing but smaller indie and maybe a few AA devs, but nothing AAA 3P-wise. The only 3P AAA they pay for into the service are either extremely old titles, or games that were unmitigated bombs (Avengers, Guardians of the Galaxy, etc.). And in that case, Game Pass acts as a safety next. Not a great one, but it's something.
What is the difference? The difference is that with the original model, third parties do the hard work. The Gamepass model has MICROSOFT do the heavy lifting while the developers collect paychecks.
And the original model works better because the 3P's financial success is not beholden to payouts from a platform holder based on metrics said platform holder can easily change, or provide inconsistencies on, or obfuscate to their advantage (and to the disadvantage of the 3P).
The only reason the Game Pass model can even theoretically work is because of the cash flow Microsoft generates as a conglomerate, from non-gaming initiatives primarily, allowing them to subsidize the model as they do the payouts. But even they came to the conclusion that paying Day 1 for AAA titles is not feasible as they'd be paying hundreds of millions per game, and only for a limited period of time.
So to try and make the model sustainable in the long-term, they are buying publishers outright. But that isn't sustainable either because if the only way Game Pass can work is by acquiring all the big 3P publishers, that destabilizes the independent 3P market and removes options for all competitors wholesale in what should be a fair and open competition market. Eventually the acquiring of publishers for content just to make a model wholly specific to a single company sustainable, will be shut down.
If a third party lose money then for Playstation or Nintendo, they don't get affected by a failed game. But if a Gamepass Game failed, Microsoft already paid for the game and took the losses while the developer walks away unscathed.
Again, if you look at the scale of games MS have paid for Day 1 in the service, they are indies and smaller AA style games. Not 3P AAA, because MS even with their cash resources, have determined long-term that approach is simply not sustainable for the expected returns.
