Microsoft removes Game Pass subscriber growth as a KPI for Nadella
- Thread starter Windrunner
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I think game subscription services are bad for the industry, so hopefully this a sign games pass is failing
I don't think they can do that. They put all their eggs in the GP basket and changed the consumer behavior on their platform. They can't walk that back anymore.
It probably has to be approved by the board of directors, and align with an agreed upon overall strategy. Only having revenue for gaming might be seen as a bit directionless as there's nothing really strategic about it.
In what world are we saying 20m+ subs is failing lol
This is MS. They've killed a lot of huge products and services over the years. I could easily see them killing things off if a new CEO comes in that isn't so concerned about games.
I also don't understand it, specially the COD argument.
For those that play COD all year round, it will still be cheaper to buy a retail or digital copy at launch than sub to gamepass to play it every month.
And the casuals will lose interest and just cancel and re-sub as and when. I personally don't know any casual gamers buying yearly subscriptions.
growing below expectations is considered failing in capitalism. especially if the below-expectations growth doesn't match increased costs
I was always very bullish about Game Pass's growth so I'm pretty shocked to see how the trajectory has changed over the last few years. COVID no doubt had an effect, exaggerating its growth a bit, but that noise will have worked out of the system by now.
If growing Game Pass further is no longer a key priority for Microsoft I can't really see how it doesn't lead to a significant strategic change for Xbox. The question that comes to mind for me is this: -
The rationale behind the business model revolves around getting large numbers of previously low spenders to subscribe so that you can offset the subscriptions of previously high spenders who will play games through Game Pass they might have bought instead.
If Game Pass is struggling to capture the first group, then what?
If growing Game Pass further is no longer a key priority for Microsoft I can't really see how it doesn't lead to a significant strategic change for Xbox. The question that comes to mind for me is this: -
The rationale behind the business model revolves around getting large numbers of previously low spenders to subscribe so that you can offset the subscriptions of previously high spenders who will play games through Game Pass they might have bought instead.
If Game Pass is struggling to capture the first group, then what?
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In the world of capitalism metrics stablished by a capitalist company.
Then the likely reason Game Pass Growth was removed from the KPIs is because it isn't a good indicator to measure the success of the company.
How is Humble Choice bad for the industry?
How is Amazon Prime Gaming bad for the industry?
How is EA Play bad for the industry?
How is Ubisoft+ bad for the industry?
How is Nintendo Switch Online classic games bad for the industry?
How is PS Plus bad for the industry?
How is Game Pass bad for the industry?
OP
OP
I don't think it's beyond them, they've made difficult decisions regarding the Xbox business in the past. If this business model isn't sustainable they need to have a rethink instead of sleepwalking into another failure next generation.
Microsoft has laid off over 10000 people this year (5% of its workforce) even though the company is experiencing record growth.
The beast that is capitalism demands that line go up, not flatten out.
There is healthy competition in subscription based gaming. You pick one or two and vote with your wallet. Or none at all.
It's not stopping 70$ games from being made if that's what you're worried about.
It isn't. It just isn't growing as quick as they'd hoped.
It's not failing, but growth has been quite slow the last few years.
I think the 28% growth was from last year. They didn't release the numbers for this period as far as I know.Per this article Game Pass grew 28% and revenue 0.7%
Microsoft drops Game Pass growth target for CEO compensation
Sign up for the GI Daily here to get the biggest news straight to your inbox For the first time in three years, Microso…www.gamesindustry.biz
They clearly expected it to grow faster than it has, but 30ish million subscribers is still a shitload of money. Its nowhere near failing, its growth has just slowed which the case for most subscription services post covid.
Nadella would have to face plant with Azure to get ousted. More than likely Phil either gets replaced or Xbox gets reintegrated within Microsoft and Phil doesn't report to Nadella. I err towards new leadership, if things don't improve. New CEO though? All bets are off. It can't be overstated how big a boon Nadella has been for Xbox.
It's load of money, as in revenue, but have they spoken about its profits? Genuinely asking, I haven't looked into it and would be interested to know.
It's a great value, but I only play one or two games at a time, and anytime I bought a boxed copy of a game I'd be playing for a long time it was impossible to justify playing a monthly fee for a collection of games I rarely touched.
That would basically kill the platform, they can't really backtrack on game pass after going all in on it. Xbox hardware wouldn't suddenly take off, it would just burn those who they got.
I mean 3rd party is always a realistic option for MS. The rest of their services and software are all third party and generally offered on every platform they can get it to. Software companies generally want to have the largest audiences they can. Also just from the court documents we know that they have evaluated the profit and loss from basically being a third party company. I don't think it will happen any time soon but I am sure they have researched it and might even have a detailed plan on how they would go about it.
I'd probably feel similarly and just sub when I wanted to play a few games that had piled up. But MS Reward points exist so I'm subbed until late August 2026. It's too easy to keep adding onto.
The funny thing is that they somehow still haven't learned their lesson... parts of their game platform on PC are still tied to the OS and have changes pushed in Windows updates.
I feel like the ultimate indicator that their PC game platform isn't doing well is that practically no games are put on it unless the developer is being paid to do so. Given Xbox's ambitions of making a "universal store", most game purchases only being applicable to one platform seems like a huge misstep.
The alternative is they just shutdown anything that isn't able to prop up their stock every quarter of whatever like Google. At some point you will hit a limit on subscribers and that shouldn't sink a service.
Frankly I didn't do the math of the price of CoD vs 1 year sub. But if it is close enough and combined with other exclusive Xbox games it might do the trick and push more people into the Xbox Ecosystem.
Unfortunately capitalism isn't ok with steady income. They want continued growth at all costs. So even if GP was profitable and stable if they growth was flat then it would be considered a failure by stock holders.
It always going to depends on the value folks can find in the service as well as the trouble they want to go through. If they only play COD then you are looking at $60 per year for Core and $70 per year for COD itself for a total of $130. For GPU you are looking at $203.88 for a full year with some discounts if you wait for sales on Amazon and others places for deals. For PC you are looking at $119.88 for a year and you have to stick to the MS PC store. PC GP is going to especially have a hard time because games go on sale very quickly on PC and are generally cheaper to begin with. At the same time as long as COD is still on PS and Nintendo then they are going to have to compete with the cost of playing over there as well. I am just not smart enough to even begin to imagine all the work the MS folks have to do to try to plan everything and balance being a profitable sector of MS at the same time. I am surprised Phil doesn't constantly look exhausted.
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It's definitely not worth it for everyone, it all depends on how you play games. To me it was only a anxiety subscription lol
FQ1 23: Xbox content and services revenue declined 3 percent and increased 1 percent in constant currency, driven by declines in first-party content as well as in third-party content, where we had lower engagement hours and higher monetization, partially offset by growth in Xbox Game Pass subscriptions
FQ2 (Holiday) 23: Xbox content and services revenue declined 12 percent and 8 percent in constant currency given the strong first party content last year. We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices. Guidance: We expect Xbox content and services revenue to decline in the low-single digits as growth in Xbox Game Pass subscriptions will be more than offset by lower monetization per hour in third-party and first-party content.
FQ3 23: Xbox content and services revenue increased 3% and 5% in constant currency driven by better-than-expected monetization in third-party and first-party content, and growth in Xbox Game Pass.
FQ4 23: Xbox content and services revenue increased 5% driven by growth in third-party content and Xbox Game Pass
The year suffered due to a dismal holiday season for Xbox more than anything. Game Pass itself was always increasing.
FQ2 (Holiday) 23: Xbox content and services revenue declined 12 percent and 8 percent in constant currency given the strong first party content last year. We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices. Guidance: We expect Xbox content and services revenue to decline in the low-single digits as growth in Xbox Game Pass subscriptions will be more than offset by lower monetization per hour in third-party and first-party content.
FQ3 23: Xbox content and services revenue increased 3% and 5% in constant currency driven by better-than-expected monetization in third-party and first-party content, and growth in Xbox Game Pass.
FQ4 23: Xbox content and services revenue increased 5% driven by growth in third-party content and Xbox Game Pass
The year suffered due to a dismal holiday season for Xbox more than anything. Game Pass itself was always increasing.
To be fair to Nadella, the Board of Directors did this, not him personally. He has bosses the same as anyone. More than likely they felt it wasn't a fair metric to judge his performance by vs say Phil Spencer. That plus he's a well liked CEO. If they wanted him gone this wouldn't have happened.
The boards of directors of most companies are cogs in this machine, not counterbalances to it. The fact that they award these CEO contracts in the first place, with their obscene compensation packages, golden parachutes, and absolute lack of any serious disincentive for failure, is proof enough of that.
EDIT: And let's not forget that many corporate board members are executives for other companies. It's a club.
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Why would it be any other way? Sub services pay for rights to have content they didn't create on the platform. It's how it goes. For any other transactions, that's what the Xbox store is for.
Game Pass is a great value for those who play many titles or want to try new games.
Assuming no deals, which I actually would say is the vast majority of subs:
Cod is $70.
PC Game pass is $10(for now) a month and is $120 for a year.
Core for console, not including full game pass, is $10 a month for $120 a year.
Console Ultimate is $17 a month and $204 for a year.
Objectively, if you only play Call of Duty and you have Core + the $70 game, it would come pretty damn close to the ultimate cost. This assumes their cost stays the same but I believe they will do another price increase once Acti-Blizz fully integrates.
I know how capitalism works. If GP growth is no longer of concern to the CEO for performance reviewed etc than its unlikely the shareholders are going to be to bothered by it or they likely would make a big deal about it. This likely just means GP is just apart of Xbox now and shouldn't necessarily be looked at in a singular light.
The store exists for games in general not just game pass games. It's very rare a game gets announced for the windows store that isn't launching on or coming to game pass down the road.
The same world where company shareholders expect double digit growth every quarter.
That applies more to a company like Netflix where subscribers are the entire business model. GP is just a very small part of MS and Xbox.
GP is quite literally Xbox's business model now. It is the core of the entire platform.
Consumers are dropping TV subscriptions that are $15/month.
I wouldn't be surprised if Gamepass goes to $20/month in the near future. At that price, it'll likely attract core gamers.
Microsoft could have a tiered system like Playstation where Day 1 games are only available on the highest tier, and there's a cheaper tier for older titles.
I wouldn't be surprised if Gamepass goes to $20/month in the near future. At that price, it'll likely attract core gamers.
Microsoft could have a tiered system like Playstation where Day 1 games are only available on the highest tier, and there's a cheaper tier for older titles.
they just spent nearly 80 billion on gaming shareholders now have eyes on it And what the plans are to maximize the largest acquistion the company has every had.
The target was based on Starfield (and Redfall lol) hitting last year, that's a huge chunk of revenue. But you know what they say, you'll shouldn't put all you eggs in one basket! Going forward they should at least be less reliant on only a couple of games a year delivering, and maybe get their studio management in order. Or cancel Xbox. One of the two.
All jokes aside, I've said for awhile the fastest way to grow Gamepass subs is to have exclusive "Gamepass" battle-passes and perks for the free to play games (and WoW) and/or make certain games only playable if you have an active Gamepass subscriptions on your account.
The vast majority of gamers play a handful (If that) of games a year. Gamepass offering those players something (Warzone players, Overwatch players, etc) is how you grow subscriptions.
You would think but at the same time if GP isn't growing then they are going to ask why they keep putting money into it that could be going to a growing business like AI or Azure. It sucks but that is how everything is looked at.
You can get a Core annual subscription for $60. It's only $130 for COD and a yearly subscription on Xbox if that and F2P games are all you really engage in.