Considering the recent Microsoft layoffs, many have been wondering if the tech giant's video game efforts have actually been working, including Game Pass, which is still the best consumer deal in the industry but perhaps not so great for the industry itself.
Well, The Game Business' Christopher Dring has taken to X to share a bunch of information about Game Pass, including that because of the way it is fundamentally structured, it is still profitable for Microsoft.
Dring notes that Game Pass is designed in such a way that development costs aren't directly balanced against subscription sales and what not. The reason behind this is that developers can generate revenue from additional sources, such as microtransactions, DLC, and additional unit sales, even on platforms like PlayStation. This means that while it might cost millions and millions to make a first-party Xbox Game Studios title, it doesn't need to bring in a certain number of subscribers to 'break even'.
This setup however does reveal some concerns and questions all the same, with Dring explaining: "I was told that first-party games have their own P&L separate to Game Pass as they make money via other means. I felt this piece of internal accountancy might mean Game Pass is profitable, but it sure does put pressure on the margins for its internal games and POSSIBLY means some studios don't make as much profit (or any profit at all)."
However, he has since clarified that others have reached out to him to explain "that even when you include lost revenue associated with first-party party games (not just unit sales, but microtransactions), Game Pass is still profitable."
<social>https://x.com/Chris_Dring/status/1942469649423052857</social>
What are your thoughts on Game Pass?