Microsoft Gaming CEO Phil Spencer has revealed that Xbox Game Pass is profitable. Speaking at The Wall Street Journal’s Tech Live conference, Spencer also revealed that Xbox Game Pass represents about 15% of Microsoft’s total revenue from Xbox content and services. Spencer says that he now expects Xbox Game Pass to hold around 10-15 percent of Microsoft’s Xbox content and services revenue.
The reason he doesn’t expect it to grow from that percentage is because even though Xbox Game Pass is profitable right now, Spencer thinks all the console users who were planning on doing so have already signed up. This is why Spencer has said that the growth of Xbox Game Pass subscriptions for consoles has slowed. Secondly, Phil Spencer has suggested a future price increase on Xbox.
Xbox Game Pass is profitable
The fact that although Xbox Game Pass is profitable, but that its growth in consoles has stagnated, puts Microsoft’s service in a strange state. This is an unusual view of the subscription business, especially since Spencer suggests that Xbox Game Pass won’t dominate Microsoft’s gaming revenue. There’s a reason for that, as there are only a set number of Xbox console owners who can sign up for the service.
Game Pass as a global share of our content and services revenue is probably 15 percent. I don’t think it will grow any bigger than that. I think global revenue grows so 15 percent of a larger number, but we don’t have this future where I think 50-70 percent of our revenue comes from subscriptions.
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Microsoft has just revealed that subscriptions to PC Game Pass have increased 159% year over year and that more than 20 million people have streamed games on Xbox Cloud Gaming, up from 10 million at the beginning of the year. PC seems like an obvious growth area for Microsoft, but there’s always mobile, too. The purchase of Activision Blizzard is part of a strategy to strongly enter this market according to Spencer.
The idea that Xbox Game Pass is not Microsoft’s core earnings strategy may lead to restating certain things about the company’s future plans for the service and the games that can reach this.