Phil Spencer, head of Xbox, said that the current state of Xbox Game Pass is sustainable and will only become stronger in the future. In an interview with foreign media Axio, Spencer was asked that some people say Game Pass is not sustainable because players can play masterpieces such as Starry Sky without spending $60.
Spencer responded: You can count Game Pass. I guess you don’t know how many subscribers we have or how much each subscriber spends, but you can make some pretty wise decisions. It’s purely Calculate what we think Game Pass might ultimately be-you can do this for every part of your business. However, Game Pass is absolutely sustainable.
Spencer added that Game Pass’s growth is part of Xbox’s strategy, not the company’s only focus. Game Pass is not the only growth point for Xbox, nor our only focus. But individually, its current situation is very sustainable. I know that many people outside say that we are burning money to make big money in the future. No. In this way, Game Pass is now very, very sustainable, and it will continue to grow.
Xbox Game Pass was launched in June 2017. In the Q4 financial report held in July, Microsoft CEO Nadella said that Xbox Game Pass is growing rapidly. Subscribers play 40% more games than non-subscribers and spend 50% more than the latter. Previously, former SIE US CEO Shawn Layden had asserted that Xbox Game Pass was unsustainable.
If you want to be sustainable, you need at least 500 million subscribers. The reason is that today’s game development costs are getting higher and higher, and selling 3A masterpieces through the subscription model will require a considerable amount of players to pay back. It’s difficult for you to launch a $120 million game on a monthly subscription service of $9.99. You must have 500 million users to start recouping your investment. So in order to grow this base, you must first lose money.
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It is worth mentioning that in May of this year, The Verge senior reporter & senior editor Tom Warren revealed on Twitter that Xbox Game Pass has not yet achieved profitability. Xbox Game Pass may be the biggest trump card of Microsoft’s generation. The service provides users with hundreds of games, and the monthly subscription price is also very reasonable. In an interview with GQ Magazine, Microsoft’s head of game ecosystem Sarah Bond revealed that Microsoft’s initial vision for Game Pass was not like this, but a rental service.
The XGP project is code-named Arches, and the initial idea is to provide game rental services. However, the Microsoft team noticed the shift in the current market game sales cycle and decided to change this plan to become a subscription model like Netflix. Bond told GQ: 75% of a game’s revenue used to be completed within two months, and now it is generally more than two years.
In addition, the report pointed out that the Xbox team was generally rejected when they came to the publisher with the Game Pass concept. Bond recalled: The publisher’s reaction at the time was: No way, Game Pass will devalue the game.
In order to convince publishers, the Microsoft team experimented with older games. Nowadays, Xbox Game Pass has achieved considerable success. Through the acquisition of the studio, Microsoft has allowed new first-party games to land on Xbox Game Pass every quarter.