Xbox chief discussed Xbox Live Gold going free and Xbox Game Pass for other consoles in emails to Epic's Tim Sweeney

Switch (Image credit: Windows Central)

What you need to know

  • Epic is currently fighting Apple in court.
  • Many of the documents submitted as evidence are leaking to the public.
  • Some of the information reveals emails between Xbox's Phil Spencer and Epic's CEO Tim Sweeney, discussing Xbox Live Gold and Xbox Game Pass for other consoles.

There's a courtroom battle currently raging between Epic Games and Apple, specifically in regards to how Apple's App Store policies are monopolistic and anti-competitive. Epic Games' landmark case against Apple is being watched by the entire gaming industry right now, stemming from a disagreement over how Apple takes a cut for all purchases made through its storefront, specifically with Epic Games' Fortnite.

Since court battles are a matter of public record, a lot of the evidence being submitted in this court case have made their way into the public sphere, giving us a unique insight into the inner workings and discussions between the big companies.

The Verge recently got hold of some emails from the court case, specifically in reference to Xbox Live Gold and its free-to-play multiplayer paywall, now in the process of being removed.

The Verge Epic Emails (Image credit: The Verge / Tom Warren)

The Verge Epic Emails (Image credit: The Verge / Tom Warren)

Source: The Verge / Tom Warren

In the emails, Tim Sweeney CEO of Epic Games notes that Xbox lead Phil Spencer and he talked "optimistically" about eventually removing the paywall for Xbox Live Gold, although it seems as though this is in reference to Microsoft dropping the paywall for free to play games, such as Fortnite. Epic's Sweeney had hoped to line up Microsoft's removal of the free-to-play paywall with a big Fortnite reveal, which also coincided with the start of the big court case with Apple, and subsequent removal of Fortnite from iOS.

Additionally, Phil Spencer also noted that they "haven't given up" on getting Xbox Game Pass cloud streaming (xCloud) onto other consoles, i.e. like the Nintendo Switch. There have been rumors for a while about the possibility of Nintendo allowing some form of Xbox Game Pass onto its popular handheld consoles, although the business case might be hard to reconcile for Nintendo. If someone is using their Switch to play Xbox games, then they aren't necessarily spending their cash on Nintendo games. It's by no means outside the realm of possibility, however, if there's a way to create a win-win on both sides.

Source: Windows Central (Image credit: Source: Windows Central)

I've argued in the past about my belief that Xbox Live Gold's multiplayer paywall will eventually go free, given that it's a relic of the past and incongruous to their cross-play mission. Microsoft's marketing increasingly moves away from "Xbox Live Gold" as an entity, too. Everything is Xbox Game Pass now, essentially, adding credence to the idea of this vestigial aspect of the Xbox network eventually being removed. The emails reveal that, at the very least, it remains a topic of discussion among Microsoft's executive leadership team.

The reality is that modern consoles are subsidized by these types of subscription services, however, which is why they remain relatively cheap. Apple double-dips with high fees for developers, with high margins on its hardware for consumers too. Epic is essentially arguing against supply and demand, though — consumers are willing to pay the price of an iPhone, and developers seem to be (reluctantly) willing to pay the store cut fees as well. It remains to be seen who will emerge victorious in the court battle, but it sure is producing a lot of juicy confidential documents to read.

Jez Corden
Managing Editor

Jez Corden is the Managing Editor for Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by caffeine. Follow on Twitter @JezCorden and listen to his Xbox Two podcast, all about, you guessed it, Xbox!

  • You heard it here first: Xbox Game Streaming coming to (non-hacked) Switch consoles confirmed! We mean it this time!
  • Emails does not mean a contract. We also didn't hear it head first, this has been a rumor for WEEKS.
  • "If someone is using their Switch to play Xbox games, then they aren't necessarily spending their cash on Nintendo games." You mean Switch games? Microsoft releases Switch games as well. What they are trying to do is open a store within a Store, and avoiding royalty payments and licensing. Ask Microsoft if I can open my own store on Xbox and see what they tell you. I'm still confused by people confused by this, its 2021 and this model has been around since the 1980s i.e. Nintendo royalty payments and licensing. They are trying to avoid royalty payments, literally that Phil is about as smart as a rock. Try to put something on the Microsoft Store without a license agreement, same thing... they want to be the middleman where a middleman already exists.
  • Gamepass Isn't a store it's a subscription service. Deals could be struck regarding percentages of microtransactions made on games played through the service. Consoles already allow for competing stores on their platforms for purchase and streaming of music, movies and TV. So having Gamepass on the Switch isn't out of the realms of possibility. Nintendo could place Gamepass behind the paywall of their online service driving their own subscription base and curate out games available in the Switch store. Nintendo know that people buy their consoles primarily for long standing Nintendo franchises. I'd be interested to know how Nintendo handles microtransactions within Minecraft, Lego Worlds and Roblox as they are virtually storefronts in and of themselves. All it takes for this to happen is for both sides to see the potential for increasing their player base and profits. From all reports MS is trying to find the right pitch that convinces Nintendo execs this won't have a negative impact on their brand or sources of revenue.
  • Gamepass is its own store.... whether its purchases or rental is of no material difference. Its a competing store for software. "Consoles already allow for competing stores on their platforms for purchase and streaming of music, movies and TV. So having Gamepass on the Switch isn't out of the realms of possibility." Sure, if the platformer holder gets something out of it, in this instance there isn't anything to gain. The whole concept makes no sense what so ever as all it does is add additional middlemen where they aren't needed. "Nintendo could place Gamepass behind the paywall of their online service driving their own subscription base and curate out games available in the Switch store." And I could get a unicorn in theory.... in theory, Microsoft could just send me a check for $1 billion. "All it takes for this to happen is for both sides to see the potential for increasing their player base and profits. From all reports MS is trying to find the right pitch that convinces Nintendo execs this won't have a negative impact on their brand or sources of revenue." MS is doubling down on stupid, yet again. This isn't how the industry works. Heck, the GamePass app is technically against MS Store license agreement as it mimic or emulates a console. LOL
  • I disagree. There was no advantage for Sony to open up cross platform play until Epic negotiated one. There was no way Nintendo would let Xbox Live on the Switch until Minecraft gave them the financial incentive to do so.
  • @Daisy. On xCloud, which is what this is specifically about, none of the games have microtransactions and have in-app purchases disabled. Where I can see this working, is if it were a curated library of games the Switch isn't powerful enough to run natively. You probably shouldn't call Microsoft stupid when you don't really know what you're talking about.
  • Well Jez, "is if it were a curated library of games the Switch isn't powerful enough to run natively." Resident Evil 7 is a streaming game on the Switch. (game streaming is stupid btw) "when you don't really know what you're talking about." You want to redress that now? Are you trying to win the Jason aware for comedy? LOL Streaming is already available on the Switch. LOL Did Capcom bypass the Nintendo Store, nope. Does Capcom comply with licensing requirement, yup. Do you not know what licensing is? I sense you don't. Nintendo, Sony, Apple, and even Microsoft isn't going to allow someone to avoid licensing. <------- That stupid Phil has no idea what he is doing, still trying to figure out why they won't let his stuff on there. LOL Even if Nintendo didn't allow streaming (which they do), they don't have to.... and its their business and license agreement. You clearly need to educate yourself on how the industry works with that comment. (my comments above ignore the elephant in the room, why anyone would pay for game streaming... oh yeah they really don't) Slinging mud at me isn't going to change your bad articles, you are starting to get into Jason territory.... maybe educate yourself as to why Phil is stumped i.e. licensing model. LOL This really isn't hard to figure out why this is being rejected... it would be rejected on Xbox if it was third party. EA Access has made its way onto a few platforms (PS/Xbox) but all the games went thru licensing, are in the store, and EA probably has to pay for the special access i.e. a percentage. Microsoft can do the same thing... its trying to get around licensing and paying.
  • I do and all my friends who have game pass ultimate do stream so stfu... and half of what you say is wrong or at least half the truth.... but everybody is done arguing with you.... MS is so stupid they are making more cash yoy and even the supposed stupid xbox brand who is doing so bad is still doing well.... most other player in the tech industry and gaming industry would dream to be that stupidly successful.... now get lost you don't interest anyone with your half-baked false business analysis... oh and before you attack me I have 2 bachelor in marketing and 1 MBA and most of my papers over those years of studies dealt in the video game industry and on MS.... i'm God damn certain I know more than you'll ever do on that field.... peace
  • xCloud on Nintendo?
    Let Nintendo sell the client for $50.
    One time.
    Or MS charges $20 a month for Nintendo and kicks back $5 a month.
  • Problems: 1. Nintendo would have to charge Microsoft what they would lose plus a commission i.e. two middlemen.
    2. The games on the service wouldn't be a part of the certification/license process and outside of Nintendo to regulate.
    3. Thereby putting all other third parties developers and themselves at a disadvantage on their own hardware as they all have to go by the licensing agreement and certification. Its amazing this Phil has made it this long, he's been in gaming for 20+ years and he is still confused as to how all this works. There really is no reason for Microsoft to be the middleman see RE7 on the Switch for game streaming. This is very inefficient... why would people want more middlemen? (this is ignoring the fact that there is no real demand for game streaming which is really what the e-mail was about) If you get to play, Let's Make a Deal.... behind door #1 is Phil's head and behind door #2 is a box a rocks. Pick door #2. Edit: Actually, if the game is from a third party dev using a publisher for xbox than is a part of xCloud, there could be three middlemen involved.... the original Publisher, Microsoft and Nintendo. <--- they all will want a cut and Nintendo is going to want a premium on top of it. This is beyond stupid,
  • What they lose?
    What does Nintendo lose?
    xCloud extends the market life of their portable and gets customers access to games that can't work on switch.
    At $5 a month, free and clear, they are making about three games' profit a year.
    And it comes on top of their first party native games. You are too wedded to Apple (and Sony's) airtight, blood from a turnip, business model to understand there is more money to be made by making their platform more valuable to the customer even if it means somebody else makes a buck too. Nintendo's true competition isn't xCloud on Switch, but xCloud on phones, tablets, PC and browsers all over. As well as Switch sells, there's way more xCloud capable devices out there and most of their customers already own one. xCloud is real and it isn't going away. Their choice is a decent slice of their customers xCloud spending or none.
  • "What they lose?
    What does Nintendo lose?" The royalties for the games in the Nintendo Store and royalties physical copies that won't be sold. You really don't know how Xbox, PS, Nintendo, Apple, etc make money? Royalties i.e. an amount or percentage of sale per license sold. How exactly are they going to make money if all the developers can bypass the store? How do you think Microsoft makes money on Xbox? How do you think they thought they were going to make money on Windows Phone? Or the current Store? License fees. "You are too wedded to Apple (and Sony's) airtight, blood from a turnip, business model to understand there is more money to be made by making their platform more valuable to the customer even if it means somebody else makes a buck too." Yes, you are going to tell Apple and Sony they are doing it wrong. LOL You can add all the other stores and close systems to the list as well. "Nintendo's true competition isn't xCloud on Switch, but xCloud on phones, tablets, PC and browsers all over." Nobody cares about game streaming but there is nothing to gain from adding competition on your own close system. Ask Microsoft if I can build my own store on Xbox, and watch them laugh at you. "xCloud is real and it isn't going away. " Game streaming has been around for 15 years, no real demand for it though. Heck you can do it on your own equipment for almost 15 years. Game streaming services are well over a decade old now. Nothing new, and really nobody cares for obvious reasons. But even if there was some type of demand the close systems are not going to allow it on there without something in return and maybe not at all. Ask Microsoft... this is exactly how it works on Xbox and let's be honest that was really the intent of UWP/MS Store/RT i.e. close eco-system. I have no idea what the Rock Head Phil is attempting to do, it makes zero sense in a licensing fee model.... I would have thought Satya would have caught on to this nonsense by now.
  • I think that just means you are difficult to impress and convince. Personally, if I employed someone that was consistently delivering above and beyond projected growth in both revenue and profits, not to mention consumer engagement, I may be a tad more inclined to trust their decisions and instincts.
  • Satya has usually seen the end of the road for MS consumer products, and axed them. It maybe because of that they are doing well. What Rock for Brains Phil is attempting to do isn't going to work in this industry i.e. trying to open up competing stores on other's competing platform. If MS wants to sell software they are going to have to go where the customers are and play by the rules (license) of the platform holder (Valve, Nintendo, Sony, Google, Apple, etc.). It really is as simple as that.... they don't need MS, MS needs them.
  • You mean Satya has seen an end to the unprofitable consumer products. If Xbox or Surface become unprofitable, then yep then they too could be on the chopping block. That's how successful companies work. You fund R&D, trial products and cut or sell off the ones that don't align with your business, create additional revenue streams or turn a profit. Sometimes you keep aspects of them to inform further R&D. Apple, Sony, Nintendo, Valve, Google and Amazon all do the same. Also explain how, when MS is already making money hand over fist through xbox services and software, that the exploring different platforms for Gamepass is suddenly a 'need'. That makes no sense. They have something that is successful and they are exploring opportunities to expand that success. That's being smart. If it happens, great. If it doesn't, then they'll just keep making money anyway. You seem to have a real negative viewpoint on MS and Xbox.
  • Some folks see the world strictly as zero-sum so that for their prefered platform (or whatever) to prosper, everybody else has to suffer, even if they must conjure it out of nowhere. MS has a long tradition of such haters dating back to the 80's from different camps; mainframers, Unix-ers of various flavors, OS/2ers, etc. They all expect MS to suddenly vanish in a puff of smoke and brimstone.
    40 years and counting and they're still around, still growing, still raking cash in by the truckload. (Even under Ballmer.) The gnashing it induces isn't good for the teeth but dentists find it almost as profitable as hockey. 😁
  • fjtorres, I would say Microsoft has never been a consumer products company.... IBM comp PCs running Windows because the only thing else was Macs. There were no other real type devices... other than gaming consoles. As far as their consumer products, most of them were related to some software and selling Windows to consumers. Why because the consumer had little to no choice. Microsoft is and primarily has always been a enterprise business company. PC gamers don't game on Windows PC because of Microsoft, they do it because of legacy. Microsoft started trying at the consumer products market here and there, by the late 90s saw issues with Sony with PS. MS also started getting into phones, and other than things. The problem is.... all of this has failed. They have lost the consumer market, consumers constantly pick the competitors. I would say these are facts, you don't have to like or dislike it... but it is the truth. Certainly nothing to get mad about. If you are interested in specific business/enterprise cloud services or Windows (which is dual purpose) than I guess you can judge those as competition in the mix. As far as the purely consumer products, well, not much left really. Satya already axed most of it. Getting upset with people for pointing out the obvious, really isn't going to change anything.
  • Jombib, where have you been? - Games for Windows (formerly Games for Windows Live)
    - Windows Phone (plus all the Nokia stuff)
    - Kinect
    - Microsoft Band
    - Groove Music (formerly Xbox Music, which was formerly Zune Music) LOL
    - Zune (technically cancelled before he took over)
    - Cortana (more or less cancelled at this point as they removed support for the specific devices)
    - Windows Media Center
    - All the Windows RT non-sense
    - Ford/Microsoft Sync
    - etc. Original Xbox estimates losses I have seen are $4-7 billion in 4 years, nobody knows as they don't track individual products profit/losses.
    venturebeat(dot)com/2015/09/27/a-decade-later-the-former-chief-xbox-officer-revisits-his-critical-decisions/ Xbox 360 best guess is $2b a year in losses, again the true losses from Xbox will never be known.
    v1.escapistmagazine(dot)com/forums/read/7.833461-Microsoft-Loses-2-Billion-Per-Year-On-Xbox-Analyst-Says "Also explain how, when MS is already making money hand over fist through xbox services and software" Revenue != Profits (see article were they had all kinds of revenue, so? Losses) All this revamping, redesigning, redoing, restructuring, etc. are because Gaming (Store) isn't working, just like Games for Windows were not working. Revenue does not equal Profits, if you don't know that.... consider doing some research on basic accounting rules. MS does not give lose/profits for individual products, probably because the large shareholder will tell them to dump the losers.
    www(dot)theregister(dot)com/2014/05/05/bill_gates_sell_off_bing_nah_xbox_maybe/ "You seem to have a real negative viewpoint on MS and Xbox." MS is the new IBM, they're not the new Apple or Nintendo i.e. consumer company.... really only one thing left Gaming (I guess Bing, lol) which they are throwing money at to somehow stop the losses. Either way what Rock for Brains Phil is trying to do.... isn't going to work because well.... licensing. Its almost like has never had a tech job. You're either ignorant of history in this case or delusional.
  • I've been here and paying attention. The story around xbox division's initial losses is well known. They almost cut it but a pitch was made internally to go all in. That pitch was successful enough to secure support and the rest is history. Surface line was a tad different as it was part of a push to align Windows and MS with new form factors to compete with Apple products and extend the OS beyond desktop and laptop. It succeeded in not only creating a new product line for other hardware manufacturers but also became profitable in and of its own right. I'm pretty sure we've discussed the others in previous threads. In most cases MS decided they were unable to compete with a dominant market leader and/or failed to gain significant traction or support from developers or consumers. They all reached the point where they had to make a call on investing heavily or cutting it loose and they chose to cut them loose.Some if those products were loved and some were out right hated. Recent history on the xbox front makes it clear they've decided to invest heavily.
  • I actually mostly agree with your post, they are throwing money at something. The problem is they are throwing money at an unwinnable problem kind of like the Windows Phone with Nokia... basically threw $9 billion in the trash overnight. LOL I could see Microsoft hiring someone that is good at managing development studios as a traditional publishing arm, sack that Phil with the Rocks in the head. They than compete against the other large publishers like everyone has been doing for 30 years. I'm not saying they would be good at it, but trying to be middleman where MS isn't needed or desired as the middleman is the problem. All of their devices are basically gone (Windows Phone, Band, Zune, etc.)... its basically down to Xbox which has quite a shrinking user base for a decade. All of this UWP, MS Store, Games for Windows Live, Play Anywhere, xCloud, etc is junk. Even if game streaming actually was good (which it isn't) the platform holders are not going to allow a competing store and non-license game on their platform i.e. no money. To me its either transition into a large publisher, ditch all this middleman junk (which they clearly are not good at)... or slow sink to the bottom. Of course, they can keep the ship afloat by throwing money at it, like Windows Phone. Eventually, the day will come and they'll have to let it sink. In the meantime, Microsoft will show increasing revenue as they continue to buy revenue i.e. studios. The author will point to increase revenue as some magic pill that everything is well, the revenue should go up.... they've probably spent $9 billion in acquisitions. LOL The original Xbox and Xbox 360 had billions and billions in revenue and the Windows Phone did too. It doesn't tell the whole story.
  • The facts are that both xbox and Surface are consistently profitable areas of the business. Windows Phone died because, despite heavy investment, they couldn't gain enough market share to convince executives/shareholders they could turn the corner to profitability quickly enough to warrant the allocation of further resources. With regards to the acquisitions of publishers and developers MS/xbox is positioning itself as a major content owner. They basically own enough developers to continually and regularly feed games into Gamepass. Whether that works out in the long run as a viable business model is something we'll find out. Regardless of your personal opinion on its value, Gamepass has generated a massive amount of positive media coverage and consumer sentiment. As for the Gamepass on other platforms, pursuing deals that would further increase revenue and profits is a major part of the job. MS/Xbox loses absolutely nothing if it doesn't happen. What we don't know is what deals may come of these discussions? It may not be xcloud or Gamepass on the Switch but it could lead to more Minecraft type arrangements for Bethesda/Zenimax games.
  • Many documents have reveled : "La Ps5 elle ressemble à une moule "
  • And many others : " La Ps5 elle ressemble á une moule á démouler, une Bbox en fait"
  • Also : " T'as l'impression que Gaby of Valve il cherche à monter un Pc avec Apple et Epic, mais il a oublié le tournevis"
    "Apple essaye de se mettre Nvidia dans sa poche"
    "Nintendo, c'est 2 jeux qui se courent après, pas mal de followers, mais c'est bien pour faire semblant de faire du sport à la maison (La Wii, surtout)"
    "L'haptic en réalité virtuelle, c'est le summum du top"
    "En fait, les partages Netflix, tu les payes aussi"
    "Spotify, c'est pas de la qualité"
  • Lol. All the Xbox fanboys on this site on suicide watch at the thought of Game Pass coming to PlayStation or Switch. Further kills the reason to buy an Xbox, since you can just XCloud the service, without the need of buying an Xbox console.
  • I doubt that happens i.e. licensing. Microsoft's Game Publishing arm could potential survive if they ever learn to actually manage development properly. (History doesn't appear to support that though). Game streaming is a **** and has been for 15 years, I have no idea why these companies keep forking out money for the ****. Ole well. If Microsoft is going to survive as a large scale publisher they are going to have to go where the customers are i.e. Valve with Steam, Nintendo, Sony, Apple, EGS, etc. ... and logic would be they better start getting better at managing game development. This will mean competing with other large publishers (Ubisoft, EA, Take Two, Epic, Sony, Nintendo, etc.) on those platforms on more equal terms. Microsoft simply isn't needed as a middleman for third party developers/publishers, its actually very inefficient model. ---->Microsoft is simply a large game publisher at this point. <-----
  • I agree, but we didn't have things like 5G and smartphones 15 years ago. And all the biggest tech companies weren't involved with cloud gaming 15 years ago, like they are today. Either way, I'd rather stream or play Xbox games on a phone/smart TV device/PC, than buy an Xbox console. There's a thousand of other things I can do on those other devices compared to an Xbox; the Xbox is just a redundant and pointless device now. Once we get a proper native Android TV version of Game Pass (I'm currently sideloading it on my 4K Shield TV), there will be no point at all in buying an Xbox.