Microsoft has told Christopher Dring that the “Game Pass is profitable” claims it has stated in the past does not include first-party costs.
“I asked for clarification on the ‘Game Pass is profitable’ claim, and was told no first-party costs are included,” said Dring.
The costs from Game Pass includes fees paid to third-parties, marketing, and service costs. With those metrics alone the service is profitable.
“So costs associated with the Game Pass business is fees paid to third-parties, marketing, service costs… and by that measure, it’s profitable,” said Dring. “What they don’t count is the lost revenue that Xbox’s first-party studios are seeing as a result of the service. I have to imagine if first-party studios received similar compensation, that profitability might not be correct.”
The last update on the number of Game Pass subscribers was 34 million as of February 2024. This would be before Activision Blizzard games, including Call of Duty, started to release on the service.
The founder and former president of Arkane Studios Raphaël Colantonio over the weekend said he thinks “Gamepass is an unsustainable model that has been increasingly damaging the industry for a decade, subsidized by MS’s ‘infinite money’, but at some point reality has to hit. I don’t think GP can co-exist with other models, they’ll either kill everyone else, or give up.”
A life-long and avid gamer, William D’Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.
Full Article – https://www.vgchartz.com/article/465157/microsoft-says-game-pass-is-profitable-claims-does-not-include-first-party-costs/
