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Xbox changes its tone on Game Pass

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Microsoft’s latest financial situation and Phil Spencer’s subsequent comments at the Wall Street Journal Live event felt like a change of tone.

The key takeaway for some is that for the second quarter in a row, Microsoft Missed target for Game Pass subscription growth rate.

I’m reluctant to draw any conclusions from the results posted over the past six months. actually I went on vacation. It was inevitable that video game targets would be missed, and Microsoft wasn’t the only one to experience it.

But what got more attention were the comments that accompanied the news. Phil Spencer estimates that Game Pass will only account for about 15% of Xbox content and services revenue going forward.

15% sounds low considering the billions Microsoft has spent on games and studios to grow Game Pass.

15% sounds low considering the billions of dollars Microsoft has spent on games and developers in the name of Game Pass. Surely this wasn’t a dream?

Xbox did a great job with Game Pass. The branding work and messaging around the service has made it the industry’s leading subscription platform. The number of users may not be as high, but all other services are compared, from PS Plus to Apple Arcade.

I also became a system vendor. For the first time since his PS2 with a DVD player, a game console has a killer app that isn’t a specific video game. In its financial report, Microsoft said half of those who bought a cheap Xbox Series S machine were unfamiliar with the Xbox ecosystem, and Game Pass could play a role in unlocking those new players. You can easily imagine what happened.

Despite these successes, Game Pass’s momentum has been hampered by a series of obstacles. First, we have a spotty release schedule due to COVID-19 and the subsequent shift to hybrid work. This should be a temporary situation, but the ideal of large games dropping onto Game Pass on a regular basis is still a long way off. And the situation is made more difficult by the fact that AAA publishers are reluctant to put big new titles on the service.

Then you can play for free. Game Pass’s true competition isn’t $70 games, it’s that the biggest titles on the market, like Fortnite, Call of Duty Warzone, and Roblox, are all free. Microsoft is trying to find a way to make it free to play within Game Pass. Partnership with Riot Gamesbut it still doesn’t understand.

And the reality is that for most people who only play a few games a year, subscription services don’t make much sense.

All of these are good reasons why Microsoft is downplaying Game Pass’s potential, especially on consoles, which Spencer says is starting to slow down.

For many people who only play a few games a year, a subscription service doesn’t make much sense.

While this may sound negative, and may be a big shift in Xbox tone, it’s really not radically different from what we’ve heard so far. I interviewed Sarah Bond last year.she told us Microsoft doesn’t expect subscriptions to become the dominant business model. seems to be lower than

And we have to consider the context in which these comments are being made. Microsoft’s massive acquisition of Activision Blizzard is currently under scrutiny and debate by regulators around the world. Some of the data Microsoft chooses to share is undoubtedly related to that.

one of the big concerns The UK Regulatory Authority (CMA) is considering Game Pass and Microsoft’s potential dominance in the game subscription and streaming space. By revealing that Game Pass only makes up 15% of its content and services business, Xbox says that even if Game Pass becomes the most popular subscription service for gaming, it will eventually become one. One business model, not even the biggest.


The availability of so many popular free games on Microsoft devices is a bigger threat to Game Pass than $70 games.

Another message for regulators was in Spencer’s comments on PC and mobile.

Microsoft revealed Game Pass grew 159% on PC. This is consistent with recent comments received from indie publishers about the service’s growing popularity.speak anonymously GamesIndustry.bizone indie publisher predicted that Game Pass, rather than the Epic Games Store, would soon emerge as Steam’s main competitor.

As for mobile, Spencer spoke about his desire to end Apple and Google’s dominance, and even said that Call of Duty mobile is more interesting to Microsoft than the famous console version.

Microsoft is moving the conversation away from consoles and Game Pass to present a broader view of the gaming business.

this doesn’t change much Our own analysis of acquisitions earlier this yearBy acquiring Blizzard, Microsoft will have major PC brands such as Diablo and Warcraft, which will bolster PC Game Pass alongside Call of Duty and provide a worthy competitor to Steam. And through titles like Candy Crush (and Call of Duty), Microsoft will have a bigger presence in mobile and be able to expand its business there.

By speaking about this, Microsoft is responding to concerns that the acquisition could hurt competition in the console space by highlighting how the acquisition will boost competition on PC and mobile. increase. In other words, it’s not just about competing more strongly with Sony, it’s also about competing with Apple, Google and Valve.

While this is a compelling argument, it still raises some questions and concerns. When it comes to PC, Game Pass is not an equal competitor to Steam. And some of the indie publishers we spoke to are concerned about what the popular PC subscription service means for their premium indie titles. One publisher also noted the impact Netflix has had on movies, especially smaller theatrical releases.

These concerns are not currently substantiated by data, but they are something that the industry (including Microsoft) should be aware of. Microsoft wants to ensure that competing with Steam creates more opportunities for developers, not less.

When it comes to mobile, it’s not clear how Microsoft intends to seriously compete with Apple and Google. Combining Candy Crush and Call of Duty with Xbox Game Streaming gave the company a stronger mobile presence than ever before. But it doesn’t feel deep enough to give Google Play or the App Store significant competition.

Nonetheless, through the latest results and Spencer’s comments, Microsoft seeks to move the conversation away from consoles and Game Pass and present a broader view of the gaming business. We expect the $69 billion acquisition of Activision Blizzard to show that the market is becoming more competitive, not less.

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