Phil Spencer himself, head of Microsoft’s gaming division, has stated in the past that the Game Pass subscription service was profitable. However, there seems to be a big “but” in that statement.
According to journalist Christopher Dring, Microsoft itself confirmed that, when calculating the profitability of Game Pass, it only takes into account spending on third-party games, ignoring costs on first-party titles (produced by Microsoft’s own studios) and the impact on sales of these games.
According to Dring, the service is indeed profitable when you only consider the costs of adding third-party games to the library and marketing them. However, if you also take into account the costs of including your own games, the picture would be different:
“The costs considered in calculating Game Pass profitability include things like fees paid to third-party studios, marketing, and operating costs of the service. Based on these costs, the service is considered profitable. What is not being considered is the revenue that Xbox’s first-party studios forgo by putting their games on the service.
I imagine that if Microsoft’s first-party studios were compensated in a similar way (as third-party studios are), then perhaps this alleged profitability of Game Pass would not actually exist. I asked for clarification on the claim that Game Pass is profitable, and was told that the costs of games from first-party studios are not included.”
For users contradicting Dring’s information, the journalist simply said that it was “literally what Xbox told me” .
