Axios: Microsoft misses Xbox Game Pass subscriber target for second year

Hobbygaming

has been asked to post in 'Grounded' mode.
We shall see if Game Pass adds another 5-7 million come January next year and the Activision deal is approved a few months after.

28% more of the current subscriber count isn't insignificant. Take it as damage control if you want. We will be having a very different discussion the January after Starfield launches. What drives Game Pass is not just the catalog. That's what gets people to stay, but it's new, big releases that draw in the largest number of new subscribers. The new subs basically server as substitutes for some of the regular 'buy to play' sales that will come to the game.
Phil and MS saying growth has already slowed on console and that GP will never be more than 10 - 15% of their revenue is very telling

Keep in mind this was with Halo Infinite which had a lot of hype, FH5 and Psychonauts 2. I don't think we'll see this sudden mass adoption
 

Hobbygaming

has been asked to post in 'Grounded' mode.
I remember famous statements of xbox higher ups(not sure who exactly it was) about goal for xbox one to reach 2b gamers, ofc was all pr talk but it was said somewhere around 2013 xbox one launch, just not sure if at reveal event or at e3, im sure its somewhere on the net still hahaha, would have to rewatch those conferenses again;'D

Edit found something even crazier, and legit info too, fairy recent tho, just shows u those ppl are either crazy or full on pr talkers https://www.techtimes.com/articles/...-players-without-consoles-publishing-head.htm
Chasing after mobile gamers who play stuff like Candy Crush was always silly. They dont care about console games
 

SenjutsuSage

Halo TV Series Promoter - Live from: Reach
Phil and MS saying growth has already slowed on console and that GP will never be more than 10 - 15% of their revenue is very telling

Keep in mind this was with Halo Infinite which had a lot of hype, FH5 and Psychonauts 2. I don't think we'll see this sudden mass adoption

Phil is trying to get a deal closed. One of the big concerns from CMA if you read it all was that they believe Game Pass will just turn into this massive juggernaut on console (why phil mentioned it stalling on console - CMA is most concerned about the impact game pass + ABK has on the console space specifically in regards to Game Pass) once amplified with Activision Blizzard's games and will overwhelm the entire industry, particularly PlayStation, and scare off any other potential multi-game subscription competitors, turning Microsoft into a beast that can foreclose all new entrants and existing competition.

Phil by stating he doesn't ever see Game Pass being more than 10-15% of content and services revenue is throwing cold water on that fear. Pay close attention to what HoegLaw says. Phil can be very cagey here, and isn't required to be accurate. GAAP in accounting isn't a rule, but just principles. Each can follow their own practice and guidelines. We don't know how Microsoft or Phil is arriving at saying game pass is profitable or how it accounts for 15% of content and services.

Also, Phil is being clever. By phrasing it that way it makes Game Pass seem much less significant than it truly is (but some on we know Microsoft is spending money for a good reason on these acquisitions), but what if he's speaking purely just on a monthly basis, and not quarterly, per Fiscal Year or Per Calendar Year?

Let's just use 25 million subs right now, and assume they're all paying $9.99. For one month that equates to $249 million out of significantly more money that comes from everything else in Xbox content & services. That $249 million sure seems like nothing before you multiply it by 12 for the rest of the year to get yourself $2.9 billion. We already know Game Pass on console made $2.9 billion JUST on console calendar year 2021 based on a slip up by CADE revealing numbers Microsoft didn't want out. They've since kept the table but removed the exact number.

We know Game Pass is already past 25 million subs. We know many subscribers pay for Ultimate.

You don't think we'll see a sudden mass adoption when the games lineup in 2023 far surpasses the one in 2021? I see you're underestimating the power of a new Bethesda single-player RPG. Don't. Their games have the staying power that they do for very good reason. Psychonauts 2 was an excellent game, but it didn't have some massive hype around it. As big as Halo Infinite is/was, Starfield was always going to be a far bigger release on a whole different level, especially on the PC side of things with Steam. Halo ain't as big in the rest of the world and Europe as Bethesda's single-player RPGs are, and that will be reflected in sales of not just the game, but adoption of Game Pass.

Forza Horizon 5, yes, massive hype and success, but will surely pale in comparison to what Starfield achieves.

To think Game Pass will remain in a state where it's "stalled" on console, when it has undergone tremendous growth with every new batch of big first-party releases on Xbox since its inception, I don't think is an assumption that will hold up.

But the fun part is finding out! Let's find out.
 

Pelta88

Member
We shall see if Game Pass adds another 5-7 million come January next year and the Activision deal is approved a few months after.

28% more of the current subscriber count isn't insignificant. Take it as damage control if you want. We will be having a very different discussion the January after Starfield launches.

The problem many of us will have with this post is that this was the exact narrative about Halo Infinite.
 

SenjutsuSage

Halo TV Series Promoter - Live from: Reach
The problem many of us will have with this post is that this was the exact narrative about Halo Infinite.

Halo hasn't been bigger than a single Bethesda single-player RPG since about Fallout 3 or Skyrim, especially not since Skyrim. Also, Halo did contribute to major growth in Game Pass subscribers, and it was also the biggest ever launch in Halo franchise history at 20 million players.

2021 started with 18 million Game Pass subs. After Halo and Forza Horizon 5's launch, it grew over 7 million subs to over 25 million subscribers. It's important not to mistake executive targets for bonuses for lack of impressive growth. 28% while not meeting their insane performance goals is still amazing. Also, just as we can't assume that all subscribers will come the moment a game releases, we can't ignore that people subscribe in advance of also. From the time the first Halo gameplay was shown to its release, Game Pass grew 15 million subscribers.

I see Game Pass is similar to buying a game. Whereas people like me will just stay subscribed while also buying games. There are many who stick to just buying their games the old fashioned way, and won't subscribe until something big they want comes. Starfield will be a far bigger launch than Halo Infinite was because Starfield and Bethesda are just plain a lot more popular throughout the world and especially in Europe. Bethesda RPGs are a lot more popular on PC than Halo ever was, which is common sense. And what's showing the most insane growth according to Phil? PC.

It is my firm belief that when Xbox is able to fulfill more demand for Xbox Series X|S, which they'll almost certainly be able to do come time for Starfield, Game Pass will grow. Phil has confirmed in his Wall Street Journal interview that they're selling more Xbox consoles than they've ever sold before this, and the problem they have isn't just one of supply chain, but also the demand is outstripping their ability to supply the consoles. I assume that has a great deal to do also with slowed game pass growth on console.

But as I will always keep saying, game pass growth is game pass growth regardless if it comes from PC or console. When the games come, the subscribers will come, it's as simple as that.
 
Phil and MS saying growth has already slowed on console and that GP will never be more than 10 - 15% of their revenue is very telling

Growth slowed because they need to sell more Xbox consoles. The more consoles sold the more growth.

Halo isn't telling us anything it died in 5 minutes, that was never going to heighten subscribers to the service in any meaningful way. They spend this whole year on delays so next year we should see a percentage growth.

For now, we will only see big growth this holiday because of the number of consoles that will be sold.
 
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SenjutsuSage

Halo TV Series Promoter - Live from: Reach
Growth slowed because they need to sell more Xbox consoles. The more consoles sold the more growth.

Halo isn't telling us anything it died in 5 minutes, that was never going to heighten subscribers to the service in any meaningful way. They spend this whole year on delays so next year we should see a percentage growth.

For now, we will only see big growth this holiday because of the number of consoles that will be sold.

And people keep ignoring that something increased game pass subs by over 15 million since 2020. Xbox Series X|S launch for sure, but Halo Infinite played a huge role in that. The 20 million player count out the gate more or less confirms Halo drove Game Pass adoption. The same can be said for Forza Horizon 5 as well, 15 million players right out the gate. Insane player accounts, showing those games definitely had to have driven the additional millions that ended up on game pass.

We will have this January to look at and see how the lack of big first-party games affected Xbox this year. The bar is 8 million and 7 million in each of the last 2 years. Will Game Pass not have cracked 30 million come January 2023? Will it be at 28 million or under? If I see anything 30 million and up that's a win with no major, brand-new first-party AAA release for the year.
 

PeteBull

Member
For me its simple, be it xbox user or pc user, if deal sounds good to u, u sign up, be it for a month/two(till u beat singleplayer games u interested in) or longer if u think its worth ur money, the bigger profit(not just more subs, but bigger profit, so more fully priced subs) gamepass makes, then bigger opportunity for it to have enough oomph to buy bigger/better games to have them in their catalogue,

It had/has pretty rough start but if it reaches some critical point(dunno if it did already, maybe it needs more, like 50m subs, but actuall fully priced, not those 1$subs) then it can be almost like perpettum mobile giving more and more value which will ofc attract more ppl.
We can see if it reached this critical point by the growth of userbase and by what games are or will be offered in the future.

Oh- and one more thing- blaming inflation for lack/slower growth isnt smart, those 10$/month(less with deals) is literally nothing to even avg/poorer westerner, hell even to kid who gets some allowance.
Only one thing should be blamed for slower/lack of growth and thats perceived value, if ppl think gamepass isnt worth it for them in particular, they dont sub, they can even unsub, and no shortcuts here- simply need more value, be it starfield, or cod or some other games, if no value is there ppl wont give a damn if its 1, 10(like currently on 2nd month and forward) or 20$.
 

DragonNCM

Member
15% - 20% income only from GP is real expectation & when you translate that in money that is a lot.
Maybe they will make growth even more with Activision-Blizzard acquisition (starfield, diablo, COD....etc.)
After all we will see spike in growth after this holyday & true numbers maybe in Jun.
 

Hobbygaming

has been asked to post in 'Grounded' mode.
Phil is trying to get a deal closed. One of the big concerns from CMA if you read it all was that they believe Game Pass will just turn into this massive juggernaut on console (why phil mentioned it stalling on console - CMA is most concerned about the impact game pass + ABK has on the console space specifically in regards to Game Pass) once amplified with Activision Blizzard's games and will overwhelm the entire industry, particularly PlayStation, and scare off any other potential multi-game subscription competitors, turning Microsoft into a beast that can foreclose all new entrants and existing competition.

Phil by stating he doesn't ever see Game Pass being more than 10-15% of content and services revenue is throwing cold water on that fear. Pay close attention to what HoegLaw says. Phil can be very cagey here, and isn't required to be accurate. GAAP in accounting isn't a rule, but just principles. Each can follow their own practice and guidelines. We don't know how Microsoft or Phil is arriving at saying game pass is profitable or how it accounts for 15% of content and services.

Also, Phil is being clever. By phrasing it that way it makes Game Pass seem much less significant than it truly is (but some on we know Microsoft is spending money for a good reason on these acquisitions), but what if he's speaking purely just on a monthly basis, and not quarterly, per Fiscal Year or Per Calendar Year?

Let's just use 25 million subs right now, and assume they're all paying $9.99. For one month that equates to $249 million out of significantly more money that comes from everything else in Xbox content & services. That $249 million sure seems like nothing before you multiply it by 12 for the rest of the year to get yourself $2.9 billion. We already know Game Pass on console made $2.9 billion JUST on console calendar year 2021 based on a slip up by CADE revealing numbers Microsoft didn't want out. They've since kept the table but removed the exact number.

We know Game Pass is already past 25 million subs. We know many subscribers pay for Ultimate.

You don't think we'll see a sudden mass adoption when the games lineup in 2023 far surpasses the one in 2021? I see you're underestimating the power of a new Bethesda single-player RPG. Don't. Their games have the staying power that they do for very good reason. Psychonauts 2 was an excellent game, but it didn't have some massive hype around it. As big as Halo Infinite is/was, Starfield was always going to be a far bigger release on a whole different level, especially on the PC side of things with Steam. Halo ain't as big in the rest of the world and Europe as Bethesda's single-player RPGs are, and that will be reflected in sales of not just the game, but adoption of Game Pass.

Forza Horizon 5, yes, massive hype and success, but will surely pale in comparison to what Starfield achieves.

To think Game Pass will remain in a state where it's "stalled" on console, when it has undergone tremendous growth with every new batch of big first-party releases on Xbox since its inception, I don't think is an assumption that will hold up.

But the fun part is finding out! Let's find out.
25 million in 5 years at a very low cost is decent but it clearly isn't taking off like the next big thing
 
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adamsapple

Or is it just one of Phil's balls in my throat?
Weird news just after saying they’re turning a profit on it.

Everyone's busy polishing their wood over this news, hardly anyone has read or commented on the fact that the target for the growth is set only for Satya's bonus, it is not a target set to gauge the service's health, which, still grew 28%. It did not fall flat or turn a negative.

Not meeting an arbitrary CEO bonus-defining growth target = / = services sustainability or profitability.
 
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DaGwaphics

Member
Everyone's busy polishing their wood over this news, hardly anyone has read or commented on the fact that the target for the growth is set only for Satya's bonus, it is not a target set to gauge the service's health, which, still grew 28%. It did not fall flat or turn a negative.

Not meeting an arbitrary CEO bonus-defining growth target = / = services sustainability or profitability.

Some Gafers are really invested in Nadella getting his coins. Relax people, he made like $40m+ I think he will manage.
 

PeteBull

Member
What would be the reason to set predictable growth so high tho?

Either MS CEO think service is still in its baby phase, or they predicted some major influx of users this year for some reason(delayed starfield?), or both?

Did they set predictable growth for gamepass next year crazy high(70% or more), instead of decent 15-20%?

And again is it by subscriber amount, or actual sub income, coz its huge difference., if its say close to 30m, lets assume 30m, but half of the subs are 1$ per month, other half standard 10$/month thats big difference in revenue and even bigger in profit, vs if most of the 30m(again using this number just for ez math) being full fat 10$subs.

Quick dirty math= 15x1$+15x10$= 160m total vs 1mx1$+29x10$=291m$ monthly, same amount of subs, 30m in both case, just in one half of them are bargain promotion subs, in 2nd case only 1m bargain subs, 29m proper subs.
160m $ --> 290m $ on same 30m userbase is growth of over 81% in actual monthly revenue.

My thoughts and question is- did MS CEO predicted growth of over 70% for gamepass and tied it to their salary bonus for the simple reason they banked simply, that majority of 1$ subs gonna naturally change into full fat 10$ subs over the duration of the year after the good deals/promotions run out, and failied miserably, coz simply many of those ppl unsubed instead?
 

ergem

Member
25 million in 5 years at a very low cost is decent but it clearly isn't taking off like the next big thing

Phil Spencer is slowly realizing that gamepass is not the saving grace that he initially dreamt it to be. He's now predicting that game subscription subs would hover around 10%-15% of overall revenue going forward. The same could be said for PS+ Extra as well.

That $1 conversion immediately spiked up the number of subs coming from Gold subs. But that's it. After that, it's back to normal where ordinary gamers would choose to play their favorite game not seeing the value in playing hundreds of games they don't want to play.

Game subscription has its audience. I, for one, has subbed to PS+ Extra. But not everyone has an appetite to play many random games. Most gamers would just buy the games, whether full price or at a discount, that interest them.
 
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ergem

Member
didn't Sony purchase a company to do the sane thing? build mobile games?

The difference is that MS is/was under the assumption that they could tap into the 2 billion gamers and bring them to play console type games thinking that the casual gaas-loving phone gamers would stream console-type games to their phones. During the last gen, they even designed the kinect to come in every xbone because they thought they could appeal to the 2 billion casual gamers by doing so. We know how epic fail that was.

Sony, on the other hand, is looking into participating in the mobile gaming sector itself by making games that are suitable for casual phone gamers. Sony has one of the most successful mobile games with Fate Grand Order. And another mobile game based on anime Demon Slayer is being developed at Sony I believe.
 

phil_t98

Member
The difference is that MS is/was under the assumption that they could tap into the 2 billion gamers and bring them to play console type games thinking that the casual gaas-loving phone gamers would stream console-type games to their phones. During the last gen, they even designed the kinect to come in every xbone because they thought they could appeal to the 2 billion casual gamers by doing so. We know how epic fail that was.

Sony, on the other hand, is looking into participating in the mobile gaming sector itself by making games that are suitable for casual phone gamers. Sony has one of the most successful mobile games with Fate Grand Order. And another mobile game based on anime Demon Slayer is being developed at Sony I believe.

Sony are doing exactly what Microsoft are doing. the mobile game market is expanding massively and they want as much of a chunk that Microsoft does and lets pretend they don't
 

ergem

Member
Sony are doing exactly what Microsoft are doing. the mobile game market is expanding massively and they want as much of a chunk that Microsoft does and lets pretend they don't

No one is pretending that Sony don't want a space in mobile games. Sony already has one of the most successful mobile games right now with Fate Grand Order, already $6.3 billion already in revenue. https://sensortower.com/ja/blog/fgo-ranks-2nd-in-revenue-growth There's bound to be more mobile games being developed from Sony right now. They have the right developers for this kind of game.

And no, Sony was not doing exactly what Microsoft was doing, at least until recently. It looks like Phil has come to realize that mobile gamers are a different kind of breed and he can't use console games to attract them. It looks like MS will use King and candy crush for mobile game presence.
 
Gamepass was never going to be sustainable. There’s a large swath of subscribers that only ever subscribed because of the $1 deal (which Microsoft knows about but keeps it running). People keep throwing out numbers like $2.9 billion but that’s just revenue - does not take into account license fees, server maintainence for Gamepass, support, etc. You really just have to look at the movie streaming industry, the evidence is there.

Don’t bet on starfield, what is that game the equivalent of the hype of elden ring? Yeah… that game is not going to be mass hype level to similar to a COD or Skyrim2. Those games will be the true big hitters, but I would not be surprised if they sold more on PS5/Steam anyways.
 
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Has Microsoft shipped 1billion Xbox one's yet? Because that was their target 😂.
Impossible, considering they manufacture 1 million consoles per month... it would take over 80 years.

What they mean is having a lot less consoles (in the cloud) and billions of subscriptions.

You could have let's say 100 million consoles and 1 billion subscribers (1:10 overbooking ratio).

Judging by GeForce Now, during rush hours it might be really hard to find an available slot. :)
 
Great! Thanks for saving me the search for three source 😂. What a bunch of geniuses! 🤡
If you make a sum of all PlayStation consoles (1 to 5), they're nowhere near 1 billion.

Let alone XBOX (which has had less generations and is less popular overall)...

Even Nintendo (since the NES era) would be a stretch.
 
That's just pie in the sky, NOBODY (Sony, Nintendo, Microsoft) can manufacture more than 1 million consoles per month!
That's only because demand isn't high enough. If there really were a billion people out there dead-set on buying an Xbox One, then Microsoft would find a way to manufacture them, just like Apple found a way to manufacture 200 million iPhones a year.
 
If you make a sum of all PlayStation consoles (1 to 5), they're nowhere near 1 billion.

Let alone XBOX (which has had less generations and is less popular overall)...

Even Nintendo (since the NES era) would be a stretch.
Don't tell that to me, MS set the target for 1 billion units of the Xbone to be sold.
 

Hobbygaming

has been asked to post in 'Grounded' mode.
But they bought a studio for it? Microsoft is doing the same
Anyone who is observing the way the two companies operate, can see that MS is really pushing services/cloud

Sony is dipping their feet in the water but they still have less focus on PS Plus and the cloud
 
That's only because demand isn't high enough. If there really were a billion people out there dead-set on buying an Xbox One, then Microsoft would find a way to manufacture them, just like Apple found a way to manufacture 200 million iPhones a year.
I'm not sure if they're comparable.

XB1 APU die size was 360 mm2 vs 100 mm2 for the typical mobile SoC die.

As you probably already know, Apple enjoys higher yields because of that (a wafer full of small chips vs a wafer full of big chips)...

They will never be able to manufacture that many consoles.

Not to mention stuff like copper for the heatsink/PCB becoming extremely rare these days:


ps: There are some rumors that Apple also wants to adopt a service/subscription model for iPhone devices.
 
The delay of Starfield, recession/inflation concerns, and a slow year for AAA titles I'm sure all factor in.

2023 and beyond should see much, much larger growth though.
This is literally their slogan at this point, unless this is a joke post... are you serious? Do you remember E3 2014? 15? 16? 17? 18? 19? 20? 21? (no e3 in the last few years .... bust still wait until next year, things will be better!)
 

adamsapple

Or is it just one of Phil's balls in my throat?
Thankfully someone else posted the link in this very thread!

They really thought that They of all people could pull this off 🥳.


This is why people should always read the article, and not react just on the headline.

The company also believes that the next-generation of consoles, including the Xbox One, could reach 1 billion in combined sales. Microsoft is hoping that mass-market audiences are enticed by the console's enhanced media and voice capabilities.
 
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Microsoft would be well aware that subscription numbers rise and fall with the new content added. Missed launches of first party games has hurt them.
But don't be concerned, once the games start dropping people will be complaining that they can't get through them all.
Once Activision drops the back catalogue will be amazing and I will expect that the long term vision is for them to take EA out of gamepass once they have a big enough library.
 

GhostOfTsu

Member
But they bought a studio for it? Microsoft is doing the same
OMG so now you're here pretending that small mobile dev Sony bought (I don't even remember their name) is the same as buying King, Blizzard and Candy Crush? Really?

 
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adamsapple

Or is it just one of Phil's balls in my throat?
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