Xbox Game Pass Is Profitable But Requires $1 Billion Yearly Investment

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Financial Model Is Viable, Says Phil Spencer!

Story Highlights
  • In the past, many publishers have expressed doubts about the financial model of Xbox Game Pass.
  • Phil Spencer recently confirmed that this service makes money but requires an investment of around $1 billion each year.

Xbox Game Pass has been dubbed the best deal in gaming. Starting at a low monthly cost, this service offers instant access to hundreds of great games, including numerous first-party titles from 2023.

However, the subscription-based model for AAA games has led to mixed feedback from the industry. While the likes of Jim Ryan claimed publishers hate the service, others believe it can be beneficial to the industry.

Many have also questioned the profitability of Xbox Game Pass, claiming that Microsoft is taking huge losses on the service. During a recent interview, Phil Spencer directly addressed this point, stating that the subscription model is viable.

Why it matters: Phil Spencer’s statement confirms that Microsoft can look toward a future with Xbox Game Pass at the heart of its gaming platform.

Xbox Head Phil Spencer

Phil Spencer recently spoke to Windows Central. During the interview, he clarified that Xbox Game Pass is not planned for PlayStation and discussed the future of the subscription after gaining ownership of Activision Bizzard.

According to Phil Spencer, Microsoft invests around $1 billion annually to bring third-party support to the service. While some may find this shocking, Microsoft thinks this spending is worth it. Phil Spencer said:

“We have a service that is financially viable, meaning it makes money, in Game Pass.”

Recently, the likes of Lies of P and Wo Long: Fallen Dynasty became major third-party titles on the service. Since Microsoft also offers EA Play as part of the service, it benefits from EA games like Dead Space on the highest tier of Xbox Game Pass.

All of this results in millions of subscribers. We already know that at least 25 million are part of this growing ecosystem, and Microsoft is likely pleased with these results.

Phil Spencer Xbox

With price hikes expected in the future, Xbox Game Pass will become more profitable as it ages. The service is still finding its footing in the industry, and the future is full of potential.

Phil Spencer is confident in his current vision for Xbox. The Xbox boss has placed his trust in the subscription and hopes to continue improving the model in the future.

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