It’s been two years since Microsoft announced that Game Pass had hit 34 million paying subscribers. That’s the last time the company released updated metrics showing whether the service has grown or not. With Xbox head Asha Sharma now signaling that Game Pass is too expensive and in need of an overhaul, there are fresh questions about what the long-term health of the Netflix-like gaming service might look like.
“They are trying so hard to will this into health, despite unfavorable diagnostics and a grim prognosis,” former PlayStation Studios chairman Shawn Layden wrote on LinkedIn this week (via Respawn First). “A clarifying post mortem would do the entire industry some good.”
Game Pass has long been a lightning rod for game industry hot takes. Some developers say it’s an important lifeline for projects that wouldn’t otherwise be feasible, while others claim it’s driving a race to the bottom that devalues games and trains players to not want to pay for them. Microsoft maintains that the service is profitable while outside critics wonder how subscription revenue alone can sustain a massive fleet of first-party studios and their ballooning budgets while also funding outside projects.
Balancing the bottom line of the service with the people making content for it
Upcoming co-op dungeon brawler Awaysis is a perfect example of Game Pass’ largesse. The seven-figure development budget was fully paid for by Microsoft in return for it being a Game Pass title in perpetuity, Game File reported this week. “They basically made a kind of unique business group to fund this,” game designer Jake Kazdal said. “They really liked it and wanted it to be on Game Pass, so they basically just funded everything.” Will there still be room for that in Game Pass’ future?
“I’m not a big supporter of the ‘Netflix of gaming’ idea,” Layden told GamesIndustry.biz last year. “I think it is a danger. I mean, look what happened to music. In the popular mind, music costs nothing. Music should be free. Spotify, what is that? It’s 15 bucks a month or something, but virtually no one buys music anymore.” That fee-for-service model, while good for some, cuts against the hit-driven business model that blockbuster games have traditionally relied upon.
Some former Xbox staff have also been uneasy with the trade-offs of Game Pass. “When you talk about a subscription that relies on content, if you don’t figure out how to balance the needs of the service and the people running the service with the people who are providing the content – without which your subscription is worth jack sh*t – then you have a real problem,” former Bethesda marketing VP Pete Hines said last year. Another veteran of the platform agreed, saying it creates “weird inner tensions” for first-party studios.
The Call of Duty albatross around Game Pass’ neck
For current Xbox leadership like Sharma, there’s also the immediate challenge of whether Game Pass can still grow or has hit its ceiling. Microsoft once internally forecasted that the service could reach over 110 million subscribers by 2030. But stocking Game Pass with new releases, let alone compelling evergreen games from the back catalog, is expensive. Previous estimates from former Xbox executive Sarah Bond put the cost of having games like Red Dead Redemption 2 on the service for a year at $60 million.
Add the cost of cannibalized sales from games like Call of Duty: Black Ops 7, which can cost nearly $1 billion to develop and market, and it’s not hard to see why Game Pass might double in price in just one year’s time. One way to square the circle is to offer a nearly free tier of limited games that brings in casual users while charging the most hardcore players even more money to access the service’s full catalog. Microsoft has also been inching back from putting its biggest games on the service day-and-date with things like paid early-access loopholes for folks who buy premium editions of games.
It’s easy to imagine Game Pass getting even more confusing and complex in the future, with more caveats and trade-offs in an attempt to charge every potential subscriber the max they’re willing to pay to be a part of the service. What’s much harder to see is Microsoft ever giving a thorough accounting of where Game Pass succeeded or failed.
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