Xbox boss Phil Spencer has given a rare insight into how the business model of Xbox Game Pass works for developers.

In an interview with The Verge, the exec said the subscription service originally paid studios based on the usage of their game, but deals have now varied to the point where they're "all over the place."

"That sounds unmanaged, but it's really based on the developer's need," he said. "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.' We'll create a floor for them in terms of the success of their game. They know they're going to get this return."

Spencer noted that in some cases, Microsoft pays for the full production cost of a game's development, but still allows developers to generate more revenue by taking their title to retail -- even for other platforms, including PlayStation, Steam and Nintendo Switch.

"For them, they've protected themselves from any downside risk," Spencer explained. "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."