Microsoft’s Xbox Game Pass has made considerable strides in improving its subscriber numbers and available titles, but it has recently come under fire. Interestingly, the criticism doesn’t come from consumers, but rather, from the video game publishers, by way of the Sony Interactive Entertainment CEO and president, Jim Ryan.
In his pre-recorded testimony for the Federal Trade Commission (FTC) hearing involving Microsoft, Ryan candidly claimed that publishers are not keen on the Xbox Game Pass model, deeming it “value destructive.”
According to his discussions with several unnamed publishers, the service is financially damaging.
Despite its benefits, including the array of games available at launch and the appeal of a single subscription covering a host of titles, Ryan suggested that Game Pass erodes traditional sales and profits. He contends that Microsoft itself is incurring a significant loss due to the Game Pass model, even though Spencer maintains that the service is not “burning cash.
Further amplifying the discord, Microsoft recently announced a price increase for Xbox Game Pass and Game Pass Ultimate (excluding PC Game Pass), effective from July 6.
The odd timing of this announcement amidst the ongoing debate adds a different layer of complexity to the financial implications of the Game Pass model.
Of course, what’s most interesting is that these comments are surfacing as part of Microsoft’s ongoing trial as it defends it proposed acquisition of Activision Blizzard.
Within this context, Ryan’s testimony gains added significance, possibly indicating the potential future of blockbuster titles like Call of Duty under the Game Pass model. He expressed doubt that Activision Blizzard CEO Bobby Kotick would include Call of Duty in the Game Pass service if the acquisition fell through, adding another level of intrigue to the conversation.
Don’t forget that Microsoft has already promised to bring Call of Duty, among others, to the Game Pass, as soon as the acquisition is closed and finalized.
Despite these criticisms, there have been numerous success stories surrounding the Game Pass model, particularly among indie developers. Xbox has highlighted the positive experiences of many creators who have returned to the service with successive releases. Furthermore, major publishers like EA and Ubisoft have joined the service, offering extensive portions of their catalogs.
Nevertheless, Sony appears to be charting a different course, electing not to release its first-party games on its rival service PS Plus at launch. Instead, the company seems focused on preventing the cannibalization of regular game sales, a strategy that continues to prove effective.
The discourse around Game Pass underscores the disruptive nature of subscription-based services in the gaming industry. There’s a balancing act between ensuring profitability for publishers and providing value for players. In a rapidly evolving industry, the sustainability of such services is increasingly coming under scrutiny.
Ultimately, the essential tension highlights the importance of delivering value to players while ensuring sustainable profits – a challenge that will likely define the next phase of the gaming industry even more.
