Xbox Game Pass missed annual growth targets by more than 20%

Xbox Clouding Gaming iPhone Android

Xbox Game Pass didn’t grow as quickly as Microsoft wanted it to through the last fiscal year, it’s been revealed in a new SEC filing, undershooting their target for fiscal year ’21 by more than 20% and with a growth rate that’s less than half what was achieved in fiscal year ’20.

However, these figures do need a bit of context in order to understand where Xbox Game Pass is as a subscription service.

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Through FY21, which ended on 30th June 2021, Microsoft’s subscriber growth was targeted to be 47.79%, but only managed 37.48%. That’s in comparison to FY20, where they were able to outperform the 71% target with an actual growth of a staggering 85.75%.

Microsoft hasn’t given an updated subscriber count since January 2021, where they had reached 18 million users. This was up from 15 million in September 2020 and over 10 million” in April 2020. As the timing of the growth percentage reports hasn’t matched up to the timing of subscriber count announcements, it’s tricky to piece together exactly where Microsoft now stands.

The current speculation is that the user count was around 21 million at the end of FY21. After Take Two CEO Strauss Zelnick suggested that Game Pass had around 30 million subscribers in a live discussion for The Wrap at the end of September, with Xbox boss Phil Spencer choosing to keep cards close to his chest, this number was quickly countered by Windows Central’s Jez Corden, who said the figure was around 21 million at the end of the previous quarter (June 21), and VentureBeat’s Jeff Grubb, who said it was around 20 million.

This adds up. If 15 million subscribers was actually reached at the end of June 2020 and not September, then a 37% growth over the following year would lead to 20.55 million subscribers. This would be an annual growth of around 5-6 million, compared to roughly 7 million for the previous year.

Those figures are, of course, speculation, but it would still mean that user acquisition is slowing, when Microsoft’s target was to keep growing at a steady rate. The company has employed various tactics to encourage more people to sign up to Xbox Game Pass.

Xbox Cloud Gaming iOS Sea of Thieves

Xbox Cloud Gaming has furnished a number of games with touch controls for people playing on mobile.

In 2019, they announced Game Pass Ultimate, which bundled together Game Pass with Xbox Live Gold for a single monthly fee, but they also offered the ability to upgrade all of your existing subscription time in either service for £1/$1, meaning that users could get up to 3 years of Game Pass Ultimate for a fraction of the cost. This promotion is still ongoing, but millions of core Xbox gamers will likely have taken advantage of it early on. Similarly, it will likely have been those early adopters who have been pushing the Xbox Series X|S consoles sales to be the fastest of any Xbox console, so Game Pass growth cannot necessarily map to new console sales.

Microsoft has also spent the last few years developing and rolling out Xbox Cloud Gaming (formerly known as Project xCloud), a feature that has been bundled into Xbox Game Pass Ultimate. After months of public testing, Cloud Gaming was enabled for all Android users last September, for iOS and Windows users in June, and the ability to play via the cloud  is bring brought to Xbox One and Xbox Series X|S consoles this autumn, and being integrated into TV platforms as well. It’s becoming a truly universal cloud gaming platform.

Further Reading: Is the Xbox Cloud Gaming Beta ready for primetime on iOS and Windows?

However, the main draw for Xbox Game Pass will always be the games. Microsoft has done an awful lot to bring larger game releases to Game Pass over the last few years, including bringing major third party games like OutridersBack 4 Blood, and the Sony-developed MLB The Show 21 to the platform on day one. They’ve also bundled in an EA Play subscription since last November.

Xbox Game Pass 2021 Lineup

Microsoft has put a lot into expanding the Xbox Game Pass library through 2021.

Despite that, it feels like the real test for Microsoft’s strategy (which has included the blockbusting acquisition of Bethesda) is yet to come. It will hinge on how Game Pass performs as their sprawl of first party studios kick into gear with exclusive games. If Halo Infinite doesn’t provide a bump this December, and if Bethesda’s space RPG Starfield doesn’t grow the subscriber count in November 2022, then we might have some real concerns for the Microsoft’s ability to turn Game Pass into the defacto Netflix of video games…

Source: Microsoft via Axios

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7 Comments

  1. I know Microsoft doesn’t announce how many consoles they sell but has there been any sales figures for the Series X/S and the ratio between the two?

    • Just for Japan, where it’s been where there has been 64k Series X and 38k Series S sold. Though that’s pretty meaningless.

  2. That wouldn’t be a fair comparison seeing as you can’t get hold an X for love nor money.
    Series S is readily available so guessing sales would be good.

    • Doesn’t the fact that you can walk into a shop right now and pick up a Series S suggest the sales are actually a bit shit? Nobody’s buying them, so they’re easily available?

      It looks like the Series X was outselling the S by about 2:1, maybe even more, for the first month or two, and both were difficult to get hold of. Now both are, like the PS5, much more easy to get hold of. If they’re still make the same percentage of each, and the S is permanently available and not selling out, I’d guess the X is selling 3 or 4 times as many as the S.

      It looks like the S might not have worked out how MS were hoping. A cheaper console clearly aimed at Game Pass? Sounds like a nice idea, but if it’s still sitting on the shelves not being bought, and the Game Pass subscriber growth isn’t as good as they hoped, it’s not looking great.

      Sony have the advantage of the full console for the same price as the X, and the digital only version for £100 less, or £100 more than the S. And both selling out straight away.

      It does look like MS are selling a lot more than last time, as are Sony. And at this point, the difference in sales between the X/S and Xbone seems higher than the PS5/PS4 difference. About a million more for MS and 500k for Sony. But Sony still selling a lot more PS5s than MS are managing to sell the X/S.

      MS are doing well though. A lot better competition for Sony, which is good. I’d even be tempted to pick up an X in a year or two. Just the S is looking like a mistake.

      • The one country where we do have sales figures is Japan, where there has been 64,284 Xbox Series X consoles and 38,307 Xbox Series S consoles sold. Obviously that’s a drop in the water, given the platform’s history in the region, but it’s the only indication we’ve got.

        When you see Series S on shelves, you’re seeing it in our bubble of privilege in the West. Microsoft is wanting to break into new markets like India, and that’s where the Series S price point and cloud gaming for a heavily mobile oriented gamer market will help.

        We have nothing like a full enough picture to be able to call the S a success or a mistake.

      • Cheers, It’ll not help with sales of S that there are reports that some games that are great on X but are crap on the little sibling.

  3. I’ve had game pass on & off. Currently not subbed as I’m trying to get through my backlog of games I’ve had for years in some cases.

    Game pass throws so many games at you, and I just don’t have the time to really focus on them.

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