Microsoft’s quarterly financial report revealed plenty of good news for the company’s gaming business, as CEO Satya Nadella touted an Xbox console launch for Xbox Series X|S with “the most devices ever sold in a launch month,” alongside impressive levels of engagement with Xbox services. A big part of that is further growth for their Xbox Game Pass service, which has to 18 million subscribers.
That figure is up 3 million on the 15 million users reported back in September, coming after heavy investment in the subscription service.
Xbox Game Pass is available in three forms: Game Pass for Console for $9.99, Game Pass for PC for $9.99, and Xbox Game Pass Ultimate for $14.99, which includes access to both Console and PC libraries (with Android streaming support), as well bundling in Xbox Live Gold for online gaming on Xbox.
Microsoft have continued to rotate new games in and out of the service as usual, such as Among Us, Yakuza Remastered, Control and much, much more, but has also made significant strides forward by incorporating EA Play (EA’s own subscription service) into Game Pass for Xbox last November – the PC roll out is delayed until sometime this year – as well as announcing an acquisition of Bethesda parent company ZeniMax for $8 billion, which will see all of their games added to the service as first party exclusives.
However, even with 18 million subscribers, there will be inevitable question marks over the service’s profitability. Microsoft typically run a promotion for a first month for $1. Part of the allure is that taking up this offer also allows you to convert any existing Xbox Live Gold or Xbox Game Pass subscription to Game Pass Ultimate with a 1:1 conversion rate. It offers a huge saving compared to Game Pass Ultimate’s $14.99 price point.
Microsoft have previously admitted that Game Pass is not a terribly profitable part of their business right now, and the trials and conversions will be a part of that, but are committed to putting more and more resources into making it a long term success. They’re certainly keen for more users to sign up, and it’s widely thought that this was the reasoning behind last week’s poorly judged attempt to raise the price on Xbox Live Gold (which would have doubled the yearly cost of simple online play). Following an intense backlash, Microsoft cancelled the change, keeping Xbox Live Gold prices the same and even reversed a long-time policy to make free-to-play games no longer require a Live Gold subscription for multiplayer.
Back to Microsoft’s gaming business as a whole, this was one of several areas of major growth for Microsoft through 2020 as the world adapted to the Covid-19 pandemic. Last quarter saw year on year growth of 40% through “Xbox content and services”, and while Microsoft have avoided going into specific sales numbers, there was also an 86% increase in Xbox hardware sales, spurred on by the launch of its next-gen consoles, Xbox Series X|S in November.