People tend to forget that MS did a staggered release of GP, first Xbox, then PC, then xCloud (after separate beta) and xCloud is still to be released on all target devices (ios, smart TVs). Each of these stages took some time and I am sure that they have used that time from each phase to gather data and decide on the next steps, do they need to pivot or change. It surprising that people think that big companies make impulse decisions without first analyzing everything and assessing the size of the opportunity.
People tend to forget that it took Netflix almost 5 years to get to 80 ml subscribers, same took Disney+ only 12 months, it is not only about the content but also fact that adoption and "acceptance" of streaming media increased, and Netflix had a huge impact on this - showing customers that video streaming can work, that's why we see lots of new video streaming platforms being created constantly.
Microsoft is trying to create a service that anyone playing video games should subscribe to, video games are different than movies/tv series, but the goal is similar, to attract all people who play, regardless of the device to GamePass. I wouldn't be surprised if at some stage there will be additional tiers in GamePass, specifically one that is free, for casuals to play games like Sea Of Thieves and where publishers are making most of their revenues from microtransactions. People who play candy crush and don't even realize how much money they are spending on some in-game purchases. Then paid subscription, at current price with all included and more game. (I can see potentially 3rd tier for people who want to share one subscription on multiple devices to play at the same time).
Perhaps the most relevant post I've seen so far.
There's a few reasons why Netflix became as successful as it did. Most people tend to think that it's success was simply because of all the good content it had, especially early on.
The main factor responsible for it's success was timing. Netflix started as a business where you ordered what movie you wanted, and they mailed it to you, with no late fees. Once streaming became a thing, they offered that option as well, and created a bundle where you could get either or. As internet speeds got better, and streaming became a more viable option... More and more of their users migrated towards streaming vs mail in. At this point content was still cheap enough for Netflix to buy tons of it.
At that point Netflix's goal was to basically become the generic trademark, akin to Google, Kleenex, chapstick, etc... It might have actually achieved it, had its competition waited around a bit longer before gaining a foothold, such as Crackle and then Hulu.
Timing was the key to Netflix's success because they existed at just the right moment where they could gain customers using a mail in system, and then transfer them over to streaming as it became a more and more viable option. By the time streaming hit critical mass, Netflix was the defacto streaming app. If you were interested with the idea of streaming content, or perhaps wanted to break away from cable... You almost had to go with Netflix. It had the the most content, especially as far as what was popular or considered blockbuster movies.
Almost everyone comparing Gamepass to Netflix does so not really having a full grasp of the context to go with it. MS is trying to emulate certain aspects of Netflix. They studied how Netflix got to where it is, and why it got there. MS realized how important the timing aspect was, and realized just how small that precious window of time was. In my opinion, I'd guess that this was at least part of the reason why they stumbled so hard out of the gate last gen with the whole always online fiasco. In an attempt to get their userbase online, in order to then offer them a game streaming option. They effectively tried to open the window before it was ready to. It likely explains why they went the whole "tv tv tv" route. To attract customers likely already streaming content, who they could later turn into Gamepass customers. However, once the backlash hit, along with others not being particularly successful with game streaming... They likely put things on hold to reassess the market. Lo and behold, only a few short years later almost everyone was online anyway, and without a defacto market leader in place, they decided to launch.
MS is trying to emulate Netflix by giving people the option to get content however and wherever they want. They're trying to hit that window in order to be that defacto subscription for people who want to go that route. They're giving people the option of either playing via physical, downloading, or streaming in order to be able to transition their users over time as internet infrastructure, and speeds improve.
Saying all that, MS almost certainly looked at the number of Gold accounts, people using Live on pc, and those who spent a certain amount of time online using those things, and came up with some sort of ballpark range for what their potential market was.
What they didn't do, was attempt to do what Disney did, and they certainly never considered 3 billion gamers to be anywhere close to a potential market.
