Gamepass is profitable

[SvennoJ]

Otter said:

SvennoJ said:

For how much longer though. Gamepass has benefited immensely from the back catalog, games that had already paid for themselves and went on gamepass for some extra revenue.

That back catalog is only getting older and further exhausted. We see it in the rising prices for gamepass. Where it will balance out remains to be seen. Fact is the 69 billion acquisition isn't providing the boost to gamepass that MS wanted. Continued layoffs and publishing games on competing platforms shows that. 

And the ultimate problem with MS is, it's not sustainable for MS if it's not growing fast enough. They simply pivot to something else, which is AI today.

I think it's a fair question to ask but it's also very separate from the layoffs. If Gamepass was majority driven by back catalogue I think we would start to see the dip now, 5 years into the gen but it seems clear new game releases are preventing that. PC growth is the highest it's been in the last year and Doom, Elder scrolls, Indiana Jones and COD in the last months are likely the cause.

When Sony closed Evolution, Japan studios, Firewall studios etc you don't suddenly question the sustainability of their whole game development division when they're clearly having success and growing teams elsewhere.

For me, this is the biggest misreading of this recent rounds of layoff. Everyone is talking gamepass like the vast majority of MS' 9000 cuts were game related, and that those that were game related belonged to teams which recently had big gamepass releases.

Gamepass doesnt magically make Perfect Darks' 8 year Dev Cycle healthy, it doesn't make Everwilds absense for sfor 5 years explainable... There's clearly been a lot of mismanagement at Xbox and it is not at all related to gamepass. MS cutting the weak links in favour of AI or other technology is not a gamepass specific issue imo but everyone is treating it like it is, mostly because of the words of one developer who has no insight into the topic.

"Everyone is talking gamepass like the vast majority of MS' 9000 cuts were game related"

Percentage wise they were. Less than half were reported to be gaming related while the gaming division is
Gamepass is not the main reason but has eroded the value of games, just like deep Steam sales. And MS has admitted that Gamepass day 1 titles are bad for revenue, hence launching them on other platforms to compensate.

The focus on growth and profitability, acquisitions etc, which are in part to drag Gamepass to 100 million+ subscribers, is the problem.

https://www.eurogamer.net/xboxs-absent-landord-execs-are-only-part-of-a-much-bigger-problem

These are not cursed projects or impossible ideas, nor wild, incompetent, untamable studios. They're games being made by people who are profoundly experienced and in many cases genuinely revered. Gregg Mayles, Rare's longest-serving developer, out in the latest bloodbath, had been there since 1989, joining the studio at 18 years old. Matt Firor, also gone - reportedly in protest at his team's widely-praised project getting canned - founded Zenimax Online Studios and had been there as its head for 18 years, overseeing the incredibly rare feat of running an actually successful MMO into 2025 with conviction and vision. These are instead creative projects that hit obstacles - maybe impassable obstacles - and were then simply left to continue banging their heads against them while their supposed custodians and ultimate bosses were busy buying more studios, turning the video game funding model on its head, and fighting the FTC, EU, and Competition Markets Authority to assemble their industry-gobbling megapublisher.

And the likes of Everwild sting, too, because this has happened before. In fact it's not just happened before, it's happened before that too! To the point where I've already done the article going "this has happened before" just last year. The echoes thrown up by the nightmare at Rare and co. here in 2025 harken back to fellow British development institution Lionhead, of course (via Arkane Austin, Tango Gameworks and the many more inbetween). A closure that happened in 2016, two years after Everwild's development got started and a year before it was revealed. Phil Spencer was there, at Lionhead, in 2014. He was part of Xbox's senior team when it was shuttered. That was his big lesson. The one do-over. The tortuous but, they say, necessary call that led he and Sarah Bond put out a video vowing never again.

Now, not just Firor and Mayles, or the Romeros, or even the old experts of Lionhead are out of a job. It's hundreds and hundreds more, career professionals from Zenimax, King, The Initiative, Turn 10, Blizzard, Halo Studios, Bethesda Softworks, Raven Software, Sledgehammer Games, High Moon Studios, Infinity Ward, Demonware and probably more. Those on top of Microsoft and Xbox's hefty share of the more than 17,000 developers laid off last year, the 8,000 the year before and 7,000 the year before that who are all out too.

When developers of conviction and expertise leave, at this extraordinary scale, video games only get worse.



And yes when Sony closed Evolution Studios, Japan studios and Firewall I did question the sustainability of Playstation as a platform for creativity. And we can see it now, where are the 1st party games that try new or lesser main stream things. As well as completely ignoring PSVR2 now, not even bothering to bring the greats of PSVR1 over. Oh can't, the studios are closed :(

Nintendo seems the only one left that holds on to talent, rather than exploit while waving the axe in hand if they stumble.


Actually VR works as a good analogy. The same reason why Sony ignores VR (It would only be 3-4% of their market looking at RE4 remake PSVR2/PS5 numbers) becomes more and more relevant to XBox (only 8% of MS revenue for quarter ending March 2025). It's a side business as XBox and Gamepass are failing to become the big earners shareholders want. 

Of course all this could have happened without Gamepass as well, but it's sure not helping / not the savior of XBox.