After the recent Microsoft layoffs, we need to talk aboutXbox Game Pass. Launched eight years ago in 2017, Game Pass has been the best deal in the industry for practically its entire lifespan. Its crowning jewel is the promise that every title coming out of Xbox Game Studios – an enormous conglomerate of talent – will be available on the service day one. I’ve had concerns about the model for years, but with Microsoft’s confidence in the product, its clear success, and my own personal experience using Game Pass, maybe it really was going to be the future of the industry.
Last week, though,Microsoft laid off more than 9,000 employees, affecting numerous workers fulfilling all sorts of roles in the Xbox division. This is merely the latest and most heartbreaking occurrence in a trend that has seen tens of thousands of gaming industry professionals lose their jobs in the last few years. There are certainly larger socioeconomic issues at play (for one, Microsoft raked in over $25 billion in profits last quarter), butthe gaming industry seems to be actively backing itself into a corner with services like Game Pass.
Xbox Game Pass Has Become Unsustainable
First-Party Xbox Games Have Been Devalued
To be completely clear,I do not put blame for the layoffs solely on Game Pass' stagnated growth; I believe Microsoft has cruelly culled jobs to further enrich its executives and improve its market position. If you takePhil Spencer’s insulting letter to laid-off employeesat face value, Xbox is by all accounts successful and poised for continued success. The recent direction of the Xbox brand would indicate otherwise, though, and I believe Game Pass is a major contributing factor.
There are numerous economic factors at play – and I won’t pretend to be an economist – in addition to untold amounts of internal data that consumers are not privy to, but there’s a very clear flaw in the Game Pass model that’s been present for years:what would be full-price, first-party games are available on launch day for the price of a single month of Game Pass.
For a recent example,DOOM: The Dark Agescarries a common MSRP of $69.99, but you’re able to play it for $11.99 on PC Game Pass or $19.99 on Game Pass Ultimate. Plenty of people will buy the game outright, but there’s a massive incentive to play it through Game Pass, andthis is the case for every single first-party game coming out of Xbox Game Studios.Call of Dutyis basically a money printer, and Microsoft putBlack Ops 6on Game Pass day one last year.
The rising cost of games is controversial, and I’m not here to defend the recent increase to $80 (things getting more expensive for consumers is bad, period), but those price points are set for a reason.Selling modern, AAA games that would have been platform exclusives in a bygone era to a wide audience for essentially 80% off on PC on release day is simply not sustainable. Microsoft has plenty of money to throw around, and I wish it would have thrown it at those 9,000+ former employees, but the numbers surrounding Game Pass aren’t adding up.
Game Pass Is An Incredible Deal, But A Problem For The Industry
Sales Matter, Who Would’ve Thought
There are numerous examples of Game Pass helping developers by providing funding, so a game can actually ship, butthe model at large is likely not profitable. Worries have once again surfaced after the recent layoffs, with Arkane Studios founder Raphael Colantonio and Larian Studios director of publishing Michael Douse vocally broaching “the elephant in the room” (viaEurogamer).
Colantonio thinks “Game Pass is an unsustainable model that has been increasingly damaging the industry for a decade, subsidised by [Microsoft’s] ‘infinite money.'” Douse questions, “What happens when all that money runs out?” Both discuss howMicrosoft’s early assurances that Game Pass availability doesn’t have an adverse effect on sales was plainly not true. The price disparity has obviously incentivized players to use the service.
Separately,The Game Businesseditor-in-chiefChristopher Dringjoined a discussion on social media, and said, “I asked for clarification on the ‘Game Pass is profitable’ claim, and was told no first-party costs are included.“This means Game Pass is only profitable when its revenue is weighed against “fees paid to third-parties, marketing, service costs,“and not “the lost revenue that Xbox’s first-party studios are seeing as a result of the service.”
Modern AAA game development is incredibly expensive, and many industry professionals seem to agree that Xbox Game Pass does not adequately cover those costs. It’s currently a golden age for consumers, getting so many great games at such a comparatively low price, but it feels destined to crash. Microsoft’s layoffs indicate, at least in part, that the company is not willing to allocate enough resources to continue the Game Pass experiment;it has not become ubiquitous enough to dominate the market completely.
Game Pass Needs To Abandon Its Best Feature
Sadly, First-Party Day-One Releases Need To Go
It’s the devaluation of Xbox’s first-party releases that is actively causing problems for Game Pass. Why would I ever pay full price for a single Xbox game when I can play a few in a month for $20? Games sell an extremely vast majority of their copies close to release day;Microsoft is leaving an exceptional amount of money on the table by putting all of its in-house titles on Game Pass day one.
Microsoft has spent the last handful of years purchasing some of the biggest names in game development, including Bethesda, Activision, and Blizzard, only to make their premium, expensive-to-produce products available for relatively cheap. It is currently an incredible situation for consumers, but it’s going to become disastrous ifXbox Game Passcontinues to cannibalize itself. I love being able to play a lot of great games for cheap, but I don’t want it to be at the expense of more jobs.
Xbox Series X/S
Xbox Series X and Xbox Series S are two consoles Microsoft released in November 2020. Like most Xbox models, the Xbox Series X/S was the main competitor to the PlayStation 5. The consoles were the successors to Microsoft’s Xbox One line. While the PS5 and Xbox Series X are comparable interns of graphics, the Xbox Series S provides less powerful graphics around 1080p-1440p and does not contain a disc drive.
