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Microsoft removes Game Pass subscriber growth as a KPI for Nadella

Windrunner

Windrunner

Sly
Banned
Oct 25, 2017
6,626
Game Pass growth is no longer a metric used to determine Nadella's compensation package:


Details: For 2023, the portion of Nadella pay relating to Xbox content and services revenue, was tied to a growth target of 4.4%, but the division achieved growth of 0.7%, when adjusted for currency exchange rates, according to a new Microsoft filing.

  • Other sections of Nadella's performance-based pay came closer to their targets or exceeded them, as was the case with goals tied to total LinkedIn sessions and growth in Microsoft Teams usage.
  • Nadella's overall cash and stock compensation for 2023 is listed by Microsoft at $48.5 million, down from $54.9 million in 2022.
Between the lines: Game Pass subscriber growth exceeded Nadella's pay target for the popular all-you-can-play service in 2020 but fell short the following two years.

  • In 2022, the Nadella pay target called for 73% growth for Game Pass but it achieved growth of 28%.
  • Microsoft said in January of last year that Game Pass had 25 million subscribers.
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We can assume from this that Game Pass has missed its growth targets for a 3rd year running.

2021: https://www.axios.com/2021/10/19/xbox-microsoft-subscription-gaming
2022: https://www.axios.com/2022/10/27/microsoft-xbox-game-pass-miss
 
Golding

Golding

Member
Oct 25, 2017
3,851
At this point they just need to let game pass keep on cooking .. with all those games coming soon.
 
Kalor

Kalor

Resettlement Advisor
Member
Oct 25, 2017
19,672
Of course they missed it if its like last year where they expected a 73% growth. That doesn't seem realistic.
 
Dan Thunder

Dan Thunder

Member
Nov 2, 2017
14,158
Must be nice to able to say "I only want anything successful to go towards my compensation package."
 
Super

Super

Studied the Buster Sword
Member
Jan 29, 2022
6,981
Missing 4.4% growth and only achieving 0.7% is rough.
 

Jerry.S

Banned
Aug 31, 2023
81
If you don't sell hardware your subscribers doesn't grow, but according to some people MS doesn't care about Xbox sales anymore...
 
Angie

Angie

Best Avatar Thread Ever!
Member
Nov 20, 2017
40,105
Kingdom of Corona
"Nadella's overall cash and stock compensation for 2023 is listed by Microsoft at $48.5 million, down from $54.9 million in 2022."

dog-humor-dog-playing-violin.gif
 
JahIthBer

JahIthBer

Member
Jan 27, 2018
10,401
Realistic. Xbox just isn't doing that great as a platform right now sales wise. They need a reset next gen and i guess hope Sony drop the ball.
 
Fudus

Fudus

▲ Legend ▲
Member
Sep 18, 2020
1,835
As many already have pointed out, I'm not sure the subscription model works as well for games as it does for movies and music.
 

Dis

Member
Oct 27, 2017
6,023
Jerry.S said:
If you don't sell hardware your subscribers doesn't grow, but according to some people MS doesn't care about Xbox sales anymore...
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Never understood it. Lots of folks like to claim PC growth is the answer but gaming PCs aren't the mass market appeal devices that gamepass needs in order to get mass market adoption. Cloud sure as shit isn't that with the state of internet infrastructure as it currently is. Consoles are the easiest option but it's been brushed aside as being a non issue when they aren't selling like they need to sell to boost sub numbers.

That's all ignoring the fundamental issue I think exists which is that the mass market doesn't see or have much value in gamepass that people who play lots of games like era members do. The mass market is full of folks who play 1-3 games a year, and it's cheaper for those users to buy and own those few yearly games than it is for them to sub to gamepass year round for them. I honestly don't see where the value is for them and it's a thing I realise when someone tells me they want a new console and the moment I've explained gamepass they tell me "I don't play or need that many games". It's even more of an issue when 1 of the games they play year round is a f2p game as well like Fortnite or warzone because they aren't going to think of the 100 games they're missing out on when they're playing those free games so much.
 
Damien1990

Damien1990

Member
May 23, 2020
2,103
Kalor said:
Of course they missed it if its like last year where they expected a 73% growth. That doesn't seem realistic.
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Guess they thought rolling it out to TVs would increase the numbers more than it has, plus that Keystone thing which was scrapped. Instead the rollout to TVs was pretty limited and they cut back on the cloud.

On console hardware, there's going to be a cap/limit which Sony have reached the last few years around 45-50M with not much room for growth beyond that. Expanding beyond that seemed to be their aim but they've gone about it half heartedly.
Jerry.S said:
If you don't sell hardware your subscribers doesn't grow, but according to some people MS doesn't care about Xbox sales anymore...
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Shifting more console hardware isn't going to massively increase the number of subscribers - there's going to be a limit there which the cloud/TV initiative was supposed to make up for as there are vastly more TVs out there than consoles.
 
OP
OP
Windrunner

Windrunner

Sly
Banned
Oct 25, 2017
6,626
Golding said:
Huh? So game pass only is only tied to the Xbox hardware now ?

News to me.
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PC hasn't been the growth market for Game Pass subscribers it was hoped to be and XCloud is horribly dated, there are far better cloud options.

Xbox is still where the vast majority of Game Pass subscribers play.
 
Shairi

Shairi

Member
Aug 27, 2018
8,785
Seeing how much money they all still made, there needs to be a cap on executive bonuses.

On topic, makes sense to drop Gamepass as KPI if you failed it 2 years (probably 3 years now) in a row and use revenue growth instead.

Achieving revenue growth will be easier to archive moving forward with ABK under their belt while Gamepass growth flattened so much that even with a boost to the numbers through ABK games hitting the service, I don't think it will grow enough to hit the previous targets.
 
PlanetSmasher

PlanetSmasher

The Abominable Showman
Member
Oct 25, 2017
116,866
Of course they did. Scumbag CEOs can always change the rules when things aren't going the way they want. Normal employees don't get that luxury, though.
 
2CL4Mars

2CL4Mars

Member
Nov 9, 2018
1,734
I think the ultimate test for game pass is going to be Activision Blizzard, if it doesn't help then something else is going to need to happen.

But who knows when 2024 COD games comes out and it launches on game pass I think it's going to do numbers and I think that's what MS is hoping for.
 
Pyro

Pyro

God help us the mods are making weekend threads
Member
Jul 30, 2018
14,505
United States
Golding said:
Huh? So game pass only is only tied to the Xbox hardware now ?

News to me.
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You don't, but it greatly helps. Feel like folks will quickly point out MS is a services company instead of hardware and, while true, GP isn't doing as well as it should in part because of slow hardware growth.
 
BarcaTheGreat

BarcaTheGreat

The Fallen
Oct 27, 2017
4,068
0.7% is really slow. This will 100% change for better for MS once Activision acquisition games comes on board.. especially COD, but by how much? Even if it doubles the growth it's still gonna be less than 4%.
 
CJohn

CJohn

Member
Oct 30, 2017
1,084
I am still waiting on GamePass being available on LG TVs, and since I have a 2021 model I will likely never get it...
 
Iwao

Iwao

Member
Oct 25, 2017
11,867
Fudus said:
As many already have pointed out, I'm not sure the subscription model works as well for games as it does for movies and music.
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Agreed. There's inherent value in passive mediums like music, TV and film where you can consume it in tandem with a busy life. You have to take time to engage in video game content. It requires concentration that a lot of people don't have the energy for at the end of a day. I doubt they'll ever hit their goals if their point of comparison is Spotify and Netflix.
 
Smokey

Smokey

Member
Oct 25, 2017
4,179
JahIthBer said:
Realistic. Xbox just isn't doing that great as a platform right now sales wise. They need a reset next gen and i guess hope Sony drop the ball.
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Sony doesn't need to drop the ball. Microsoft just needs to get it together, in whatever way that may be. You can still be successful while not being #1.
 
Dyle

Dyle

One Winged Slayer
The Fallen
Oct 25, 2017
30,136
It's inhumane for a CEO like this to only make $48 million
 
Izanagi89

Izanagi89

"This guy are sick" and Corrupted by Vengeance
Member
Oct 27, 2017
14,871
PlanetSmasher said:
Of course they did. Scumbag CEOs can always change the rules when things aren't going the way they want. Normal employees don't get that luxury, though.
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Failed to meet your KPIs? Well your yearly increase gets docked. CEOs? Let's just change my KPIs lol This is why I really don't give a fuck about these suits when people go to bat to defend them. People fighting on Twitter while they're living it up in the Bahamas.
 
Kayfabe Bebop

Kayfabe Bebop

Member
Oct 28, 2017
100
Magic City of Vane, New Jersey
IMO GamePass (and PS+Extra/Premium as well) are "perks" for the enthusiasts who play multiple games per year of varying genres and don't mind the subscription fee. I don't see services like these gain any major growth on a casual consumer based level. Would like to be wrong for those who prefer the method.
 
Johnny Blaze

Johnny Blaze

Avenger
Oct 29, 2017
4,246
DE
Gaming subscriptions will stagnate no matter what, the market for such a sub seems small and prices will increase just like with other media.

Casuals play COD and one sport game (fc/madden/nba) throughout the year, you won't get growth from them unless the yearly GP is cheaper than just buying cod+ paying for online pay. (Which is possible with GP but prices will go up eventually)

So where else should it come from?
 

Yamajian

Member
Oct 30, 2017
1,150
Kind of crazy that in a year with Starfield as an Xbox / PC exclusive they couldn't grow Game pass numbers more. Anyone know what kind of sales numbers it hit?
 
Bigjig

Bigjig

Member
Jun 4, 2018
1,220
Ahhh Director compensation.. If you don't hit your targets just... change the targets lol. Reminds me of the old Warren Buffett quote about watching out for CEOs that fire an arrow and then paint a bullseye around it.
 

Dis

Member
Oct 27, 2017
6,023
Kayfabe Bebop said:
IMO GamePass (and PS+Extra/Premium as well) are "perks" for the enthusiasts who play multiple games per year of varying genres and don't mind the subscription fee. I don't see services like these gain any major growth on a casual consumer based level. Would like to be wrong for those who prefer the method.
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This is why I don't think CoD is going to do what some seem to think. People I know who play CoD play CoD. They may sprinkle in a couple of other games like FIFA or gta in between but they aren't in the market for 10s let alone 100s of games a year. The value of gamepass and other subs entirely goes out the window for them at that point over just buying the games, especially when they don't buy every game they play each year at launch and can play CoD etc while waiting for a discount on their sports game or gta or whatever.

Gamepass would have to be far cheaper a year for those gamers to take notice and find value in it at that point and it seems if anything prices need to go up over time for all sub services not down so the likelihood of it happening aren't great.

The good news for MS and Xbox is that CoD selling well outside of sub service still benefits them now, even those sold on other platforms. So even if it doesn't lift sub numbers it's making them money. Doesn't help sub numbers go up as much as they would like but it's still a good thing overall for them
 
Sydle

Sydle

Member
Oct 27, 2017
3,376
Can't have 18-month droughts between big releases or have tent pole GaaS (e.g. Halo Infinite) struggle with post-launch content when running a subscription service.

It will grow as they get to firing on all cylinders.
 

level

Member
May 25, 2023
822
Fudus said:
As many already have pointed out, I'm not sure the subscription model works as well for games as it does for movies and music.
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I have to agree with this. I think casuals are more than happy to buy the yearly games they want, rather than sign up to an ongoing subscription service for games they have less or no interest in.
 

TitanicFall

Member
Nov 12, 2017
8,335
Yeah, I don't see how Activision acquisition will change GP growth. It will contribute to their profits because the same people who buy CoD every year will keep doing so, but if they were already doing that, why would they suddenly subscribe to GP?
 
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