Is Game Pass Profitable?

Is Game Pass Profitable?

Since, Microsoft stopped reporting specific sales data for obvious reasons during the Xbox One generation, we don’t know exact sales details. Since then, one of the industry disrupting changes that Microsoft have done was introducing Xbox Game Pass, which is arguably the best value in gaming, but is Xbox Game Pass profitable?

Phil Spencer has said multiple times that Game Pass is profitable and makes up about 15 percent of the total revenue for “Content and Services” for the Xbox division of Microsoft. The good news is that with some recent documents that were made public during Microsofts court case about their Activision Blizzard acquisition, we can get a better idea how the numbers break down, including how much it costs for Xbox to get games on the service.

One recent document reveals what Microsoft estimates the cost of bringing high profile titles to Game Pass. The documents are just estimates, but it’s likely based from experience bringing comparable titles to the service. Star Wars Jedi: Survivor was estimated at 300m, Mortal Kombat 1 was estimated at 250m, Assassins Creed Mirage was estimated at 100m, and Baldur’s Gate 3 would be only 5m (before its popularity went through the roof) and yes, games like Starfield are there day one, but the Bethesda acquisition was 7.5 billion, so that has to be factored in as well. Im sure when it comes to deciding if the cost is worth it, they have internal estimates for how many new subscribers they will gain and the average time as user stays subscribed after joining.

It would be tough to figure out how much they profit because we would need to know the revenue and the expenses, but with all the info we have, we can make estimates. Revenues can be figured out roughly by finding the amount of users and multiplying that by the average monthly cost. The most recent official numbers from a Microsoft Earnings Report was 25 million in January 2022 and during the trial with the FTC, Sony estimated subscribers to be around 29 million. It’s probably safe to assume it’s around 30 million by now with games like Sea of Stars, Lies of P and Starfield.

If you take the core price and the ultimate price you have an average package price of about 13.50 per month, which works out to about 405 million dollars of revenue a month, but that can easily be wiped out by acquiring one high profile game, as we have just learned and that’s only one game. There are constantly hundreds of games on the service, as well as the constant additions, plus you have to keep in mind all of the expenses including Human Resources, Logistics and Marketing.

Phil Spencer has said it’s profitable, but it is always interesting to get a peek behind the curtain sometimes and get a little more clarity on the situation. Is Game Pass Profitable? Yes, but although we may never know by exactly how much, we now have a better idea.