With Microsoft’s long list of poor messaging and poor decisions this week, combined with rumors of behind-the-scenes problems with some of its top games, one frequent point that keeps coming up is how much weight has been thrown behind Xbox/PC/Ultimate Game Pass.
The crux of the argument is great for players. Subscribe to Game Pass, get all first party Xbox games for free, indefinitely, plus loads of other games. If you own an Xbox, there is little reason to not get Game Pass given the vast catalogue it offers.
Game Pass was positively rocketing up in subscriptions during the COVID era, when mass lockdowns were causing surges in boredom and in turn, game spending. But those big reported numbers ended at 25 million subscribers in January 2022, and it took two years later for Microsoft to report new numbers, 34 million.
But that growth figure has caveats, namely unclear classification of the conversion of Xbox Game Pass Core (formerly Xbox Live Gold) members as part of that count, and how much of a gain was due to new Game Pass subscribers. To this day it has still not been revealed how exactly things were broken down inside that new figure.
Back in FY 2022, court documents said Microsoft expected 110 million Game Pass subscribers in 2030. More recently, analyst Michael Pachter predicts 200 million by 2034.
My question is…how? Where are these new subscribers supposed to be coming from? Here’s how the math, and in turn, possibly Microsoft’s entire gaming model, does not really work at this point with Game Pass growth dramatically slowed, if not stopped. They are simply running out of wells to find new subscribers.
Xbox Console Base – This is without question the primary place you’ll find Xbox Game Pass subscribers, as if you own a console you play frequently, Game Pass is almost always going to be a good value option. However, Xbox has heavily de-emphasized console sales since even the previous generation, no longer reporting numbers and shrugging off big declines as it remains at what’s estimated to be around half of PlayStation sales for two generations now. And if you are not selling lots of new hardware, you are not growing Game Pass in the area it is most likely to grow.
PC Gaming – Of course, there is also Game Pass on PC, but that’s complicated. Part of Game Pass PC play may be the same people already playing some games on Xboxes itself, so that’s not a sub that wouldn’t exist otherwise. But dedicated PC players are buying and playing most of their games on Steam, or if they have to, various other launchers from Epic or Ubisoft. So the idea there are PC players without Xboxes that also feel the need to pay for a yearly Game Pass subscription to get a handful of games there is not a wide market nor one that is poised to expand dramatically. Many Xbox games can be bought on Steam anyway, and you aren’t locked into a yearly subscription doing that.
Cloud Gaming – Far and away, this is where these “big dreams” Game Pass subscriber number predictions seem to come from. The idea here is that the cloud gaming market, where you can play on tablets, laptops, smart TVs, whatever, without a high end PC or Xbox, is set to explode. I have seen no evidence of that, nor do I think even conceptually this makes much sense.
First, cloud gaming is not the best way to play any games right now, especially with North American internet. It may be serviceable, but given the choice between playing on hardware or playing on the cloud, you’re going to choose hardware. If you don’t want to pay for hardware, as Microsoft believes people don’t, you are mainly going to get people…not buying Xboxes, which cuts into that side of the business. You may not even gain a subscriber if someone with an Xbox and a Game Pass subscription thinks cloud gaming is suddenly good enough and sells their Series X to GameStop but keeps the same GP sub. You did nothing there but remove someone from your hardware ecosystem entirely.
Then, there’s this fantastical idea that there is some giant, untapped market of current non-gamers that would play Xbox video games if only they didn’t have to spend $300-500 on console hardware. Again, tech issues aside, there is no evidence this is a large market. Mobile gaming exploded because that was an entirely different genre of games. No subscription, free games, casual games, essentially nothing at all like 90% of the games that are on Game Pass. I don’t know how you are going to convince someone who is not into core gaming at all and at best, is playing whatever mobile flavor of the month is big, that they need to pay almost $200 a year for a new subscription because Starfield came out. Who are these people meant to be?
Call of Duty – This is one of the only series big enough to generate a potentially somewhat significant amount of Game Pass subscribers on its own, and Microsoft is considering doing just that. And yet it will then in turn lose out on an incredible amount of sales revenue on its own platform by giving it away in that fashion. This is also a trick they can only pull once, as there is no way on earth something like say, GTA 6 is going to launch on Game Pass (unless Microsoft just buys Take Two which I mean, is not impossible at this point). It’s also easy for players to subscribe to Game Pass for a couple months, play COD, then cancel the sub.
Game Pass on Rival Hardware – I don’t even understand this one. Why would Sony accept Game Pass on PlayStation if Microsoft just gets a cut of everything there and it undercuts their own offerings? But in contrast, why would Microsoft put Game Pass on PlayStation (or Switch) to dramatically boost rival hardware while running the quite literal risk of killing their own? Nothing about this makes sense.
I do not know where Game Pass growth is supposed to come from here. Microsoft does not have a good answer for this, and the longer this goes on, the more I think this is all going to start to come apart.
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