- Insider Chris Dring claims that Xbox only considers Game Pass profitable because it doesn’t count first-party costs.
- It also doesn’t count the lost revenue that first-party studios are seeing as a result of Game Pass.
- It is only profitable if fees paid to third parties, marketing, and service costs are considered in metrics.
Update: Insider Chris Dring has clarified his comments, claiming that sources reached out to confirm that Game Pass remains profitable, even when considering the lost sales for first-party teams and the lost revenue associated with first-party games.
Even when providing value for money, Game Pass has always been considered a controversial subscription service by analysts and a big part of the gaming scene. Notable developers are also blaming it for contributing to the massive layoffs that also targeted Xbox.
Amid these discussions, popular insider Chris Dring argues against the claim that Game Pass is profitable. Chris says he confronted Xbox for calling the service profitable, only to find out that the company doesn’t count first-party costs in the metrics.
Why it matters: Xbox Game Pass might only be profitable on paper but may fall short if some of the biggest costs—like developing first-party AAA titles—were factored in while judging the metrics.
On Twitter, Chris Dring highlights that Game Pass is only profitable to Microsoft because only ‘fees paid to third parties, marketing, service costs…’ and the like are considered.
Some of the biggest costs, such as developing AAA games in-house and the revenue loss these first-party studios face because of Game Pass, are not factored into the metrics. Therefore, there is a very steep chance that the service is only profitable on paper.
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.
Additionally, if Game Pass was profitable even with first-party costs included, then why would Xbox leave that highly important part out of the calculations in the first place?
Microsoft also wants Game Pass to grow by 40% yearly and triple in size by 2030 to reach 100 million subscribers for optimal results. However, the situation looks bleak as fans are already boycotting the service.
Do you think that Xbox Game Pass is only profitable because first-party costs are never included in the metrics? Let us know your thoughts in the comments below, or join the discussion on the Tech4Gamers forum.
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Shameer Sarfaraz has previously worked for eXputer as a Senior News Writer for several years. Now with Tech4Gamers, he loves to devoutly keep up with the latest gaming and entertainment industries. He has a Bachelor’s Degree in Computer Science and years of experience reporting on games. Besides his passion for breaking news stories, Shahmeer loves spending his leisure time farming away in Stardew Valley. VGC, IGN, GameSpot, Game Rant, TheGamer, GamingBolt, The Verge, NME, Metro, Dot Esports, GameByte, Kotaku Australia, PC Gamer, and more have cited his articles.
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