Speaking at Wall Street Journal’s Tech Live presentation, Microsoft’s head of gaming Phil Spencer says the growth of Xbox Game Pass is “slowing down” – at least on console.
As of January 2022, the Game Pass service boasted over 25 million subscribers. Spencer says the company is experiencing “incredible growth” in terms of the PC version of Game Pass, but on the console side: “I’ve seen growth slow down, mainly because at some point you’ve reached everybody on console that wants to subscribe.”
Indeed its growth is now happening mostly off-console, with PC Game Pass subscriptions increasing 159% year-over-year. Xbox cloud gaming is also helping on that front and that’s despite the company having no major AAA exclusives this year due to “Starfield” and “Redfall” being pushed to 2023.
Spencer claims that Game Pass sits at around 10-15% of Microsoft’s overall Xbox content and services revenue and says that: “I think it will stay in that 10-15% of our overall revenue… we don’t have this future where I think 50–70% of our revenue comes from subscriptions”.
He adds that the service is profitable for the company and reportedly generated around $2.9 billion in revenue on console alone in 2021.
However, like almost everybody else right now, Microsoft is going to have to raise prices soon. With most third-party publishers and rivals like Sony charging $70 for new games, he says Microsoft are not going to be able to do what they’re doing now in the long term at current prices:
“I think at some point we’ll have to raise the prices on certain things. but going into the holiday we thought it was important to maintain the prices.
We’ve held price on our console, we’ve held price on games… and our subscription. I don’t think we’ll be able to do that forever. I do think at some point we’ll have to raise some prices on certain things.”
Microsoft’s first-party games are largely priced at $60, but due to Game Pass the reliance on sales of individual games has largely decreased with the company instead touting GamePass user numbers.
Both Microsoft and PlayStation have in the past said they don’t believe subscriptions will ever be the dominant model in video games.
