Gamepass is profitable

[Tober]

Otter said:

SvennoJ said:

"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.

I feel like people who are pointing at gamepass forgot where Xbox was last generation... 

MS wasn't going to justify or sustain huge investments in modern day first party exclusives with a dwindling <50m userbase who have a predominant preference for online shooters and 3rd party offerings.

Without gamepass there would be no competitive edge to Xbox the last decade, there would be even less first party development & way less investment overall. You would still have a dwindling <50m userbase but it would likely be even smaller, as the limited exclusives Xbox has would not be packaged in such an attractive deal. So you have an even small userbase and yet still ever increasing game budgets. Xbox would absolutely need to put their games on other platforms.

Accountability means you can't just blame gamepass for people not doing their jobs properly. The "supposed custodians" of these mismanaged projects have all the autonomy to put good management in place but Xbox was not built on that principle. Projects like the Initiative failed because Xbox did not put importance in management not because the Activision acquisitions meant they could not manage.

It would be like blaming live service games for Sony failing with Concord instead of blaming Sony for not identify what makes a promising GAAS in a saturated market. Gamepass is being used to explain away 15 years of bad Xbox management.

I won't argue gamepass was that best innovation they could offer but it clearly gave them a competitive edge and kept them in the market where they otherwise lacked any meaningful recent software output.

If you removed the recent acquisitions and looked at Xbox's output of big hitters since the series X/S Launched you are essentially left with Halo Infinite & Forza Horizon .. It's not a reasonable assessment to even suspect that a quarter of the revenue Gamepass has generated would somehow be replaced by premium sales of the meager 2-3 games from Xbox's slim 1st party  line up. Gamepass was a lifeline,  They'd honestly be doomed without it making their offerings more attractive.

The question should be how did their output become so bad that they needed to buy the likes of Activision & Bethesda to make themselves look worthwhile to stakeholders. Gamepass is not the culprit, It's the consequence.

I do agree with this. Without 'inventing' Gamepass, the Xbox1 era would have been even worse.

Since then one could say MS has been A-B testing Gamepass/Xbox to see what works to grow or make it more profitable. At least if viewed from a positive angle. From a negative angle, it's trowing things at the wall and see what sticks.

1) In a time of few 1st parties, offer money for 3th parties to enter the GP service.

2) Buy Studio's to buy content.

3) Buy even more Studio's to buy content.

4) Offer 1st party on PS and Nint

5) Close studio's

6) Introduce Tiers with first day releases only at the higher tiers 

7) Everything is an Xbox.

8) Close more studios

Anyone's guess what happens next, but I don't think we've seen the last of changes.