Upfront Payments vs. Royalties
When a developer creates a game for Game Pass, they have two main options for payment: upfront payments and royalties.
Upfront payments are essentially advance payments made to developers by Microsoft before the game is even released on Game Pass. These payments can range from hundreds of thousands to millions of dollars, depending on the size and complexity of the game. However, developers must agree to a certain number of units sold or subscriptions in order to receive these upfront payments.
Royalties, on the other hand, are payments made to developers based on the revenue generated by their game after it has been released on Game Pass. These royalties can be calculated in a variety of ways, including per unit sold, per subscription, or as a percentage of total revenue generated. However, these payments are typically made over time, and developers may not see their first royalty payment for several months or even years after the game has been released.
Factors that Influence Pay
There are several factors that can influence how much game pass developers are paid. These include:
- Game Quality: The quality of a game is generally considered to be the most important factor when it comes to pay. Games that are well-designed, polished, and engaging are more likely to generate revenue and attract subscriptions, which can result in higher payments for developers.
- User Acquisition Cost (UAC): UAC refers to the cost of acquiring a new user or subscriber for a game. This can include advertising costs, as well as the cost of incentivizing existing users to refer their friends and family to the game. Games with lower UAC are more likely to generate revenue and attract subscriptions, which can result in higher payments for developers.
- Market Size: The size of the market for a particular genre or type of game can also influence how much developers are paid. Games that are popular among a large number of users are more likely to generate revenue and attract subscriptions, which can result in higher payments for developers.
- Game Release Schedule: The release schedule for a game can also impact pay. Games that are released on a regular basis (e.g., monthly or quarterly) may be more likely to generate revenue and attract subscriptions, which can result in higher payments for developers.
- Developer Experience: Finally, the developer experience can influence how much developers are paid. Microsoft has made efforts to improve the development process for Game Pass games by providing resources and tools to help developers create high-quality games that are optimized for the service. Games that are developed more efficiently and effectively may be more likely to generate revenue and attract subscriptions, which can result in higher payments for developers.
Real-Life Examples
There are many examples of game pass developers who have been paid in different ways. Here are a few:
- Forza Horizon 5: Microsoft paid a substantial upfront payment to developer Turn 10 Studios for the development of Forza Horizon 5, which was released on Game Pass in late 2021. However, the game also generated significant revenue through subscriptions and DLC sales, which helped boost pay for Turn 10 Studios.
- Minecraft: Microsoft acquired Minecraft from developer Mojang in 2014 and has since made it available on Game Pass. While the game was not developed specifically for Game Pass, it has become a staple of the service and generated significant revenue for Microsoft.
- Halo Infinite: Microsoft paid a substantial upfront payment to developer 343 Industries for the development of Halo Infinite, which was released on Game Pass in late 2021. However, the game also generated significant revenue through subscriptions and DLC sales, which helped boost pay for 343 Industries.
- The Outer Wilds: Developer Annapurna Interactive received a substantial upfront payment from Microsoft for the development of The Outer Wilds, which was released on Game Pass in 2019. However, the game also generated significant revenue through subscriptions and DLC sales, which helped boost pay for Annapurna Interactive.
- Guiltbook: Developer Mundfish received a substantial upfront payment from Microsoft for the development of Guiltbook, which was released on Game Pass in 2019.
