Xbox Game Pass may not be as profitable as it seems

The Xbox Game Pass subscription model has been presented by Microsoft as a financial success, but recent information seems to demonstrate that service profitability may not take into account all the costs involved, especially those related to the production of internal games.

According to Christopher Dering, editor-in-chief of The Game Business, Xbox has confirmed that the production costs of their internal studios, such as Starfield or Avowed, are not included in game pass profitability calculations. The company only considers expenses such as the fees paid to external studios, marketing and operability of the service. In other words, the costs of creating their own games and the possible losses in the sales of these titles when they are made available in the service from the release do not enter this equation.

In practice, this means that game pass can only be profitable if investments made in Xbox’s own games are ignored. The issue becomes even more pertinent because when a game is included in the service on the day of its launch, it may have a significant descent in direct sales, in some cases, up to 80%, according to internal analyzes. Nevertheless, it is also true that many users only experience certain games because they are available in subscription, which makes it difficult to calculate the real loss of recipes.

Another relevant fact is that Microsoft invests more than 1 billion dollars a year to secure games of other companies in Game Pass. This information was confirmed by Phil Spencer, head of the Xbox division, and shows the size of the investment needed to maintain the attractive catalog. However, the lack of transparency on the total impact of internal costs raises doubts about the model’s true financial balance.

Criticism of the game pass are also growing within the industry itself. Raphael Colatoon, founder of Arkane Studios, considered the model “unsustainable” and warned that it could undermine creative diversity by forcing studios to adapt to a system that does not always reward risk or originality. These observations appear at a time when Microsoft has made cuts in various studios, such as Raven Software and King, showing that the game division is under strong pressure to justify their investments.

To see this content, please activate the targeting cookies.

Manage cookies definitions

Source