Summary

• Xbox Game Pass may result in up to 80% loss in premium game sales, affecting developer revenue.
• Games on Xbox Game Pass can see a sales benefit on other platforms such as PlayStation.
• Microsoft admits Xbox Game Pass can cannibalize sales.

Xbox Game Pass offers gamers an enticing proposition: access to a vast library of games for a single monthly fee. However, this service can significantly impact the premium sales of games, leading to up to an 80% loss for developers and publishers, according to industry experts. This financial hit can also affect a game's visibility on sales charts, as seen with the recent performance of Hellblade 2, which, despite its popularity on Xbox Game Pass, did not meet expected sales figures.

Xbox has acknowledged its struggle in the console market, with sales trailing behind the PlayStation 5 and the Nintendo Switch, which has even outpaced the PS2 in lifetime US sales. Yet, Xbox remains buoyant, largely due to the success of Xbox Game Pass. Still, the question lingers: is this service beneficial for all stakeholders?

Christopher Dring, a respected video game business journalist, shared his insights on the Install Base podcast. He highlighted that while Xbox Game Pass can lead to substantial losses in premium sales, it can also boost sales on other platforms like PlayStation. Games that perform well on Xbox Game Pass may attract more players on PlayStation, as gamers can experiment with titles at no additional cost. Dring's perspective on gaming subscriptions is nuanced; he acknowledges their potential to increase visibility for indie games but also notes the challenges these games face outside the service on Xbox.

Microsoft itself has admitted that Xbox Game Pass can cannibalize traditional game sales. Despite this, the service experienced a notable slowdown in new subscriber growth by the end of 2023. However, the launch of Call of Duty: Black Ops 6 on Xbox Game Pass was a resounding success, setting a new record for subscriber additions on launch day, as stated by CEO Satya Nadella. This surge offers hope for Xbox, though sustaining this growth will be crucial.

$42 at Amazon$17 at Xbox