The claim that Xbox Game Pass is profitable has been thrown into question ever sincethe mass layoffs last week. Amid these conversations, The Game Business editor-in-chief Christopher Dring revealed that"no first-party costs are included" in the calculations. So, when factoring them in, Xbox Game Pass might not be profitable after all.
But this morning, Dring penned another tweet to set the record straight. He stated that “sources have reached out” to tell him that “even when you include the lost revenue associated with first-party games (not just unit sales, but microtransactions), Game Pass is still profitable.”
Even when you include lost revenue associated with first-party games, Game Pass is still profitable.
Confused commenters noted that Dring mentioned first-partydevelopmentcosts yesterday, not sales, but Dring quickly clarified, “Yes, dev costs/spend does not come under Game Pass P&L [profit and loss]. Because obviously dev cost can also be recouped via microtransactions, premium sales, DLC etc…”
PS5 Ports Help Off-Set The Loss In First-Party Sales
Another interesting note from Dring’s tweet is the importance of PS5 ports in this equation. As he explained, “Studios can now make stronger margins on premium sales”, as we’ve seen already in recent months with first-party Xbox games skyrocketing to the top of the PlayStation charts.
In April, for example, Oblivion Remastered was the platform’s best selling game,with Minecraft, Forza Horizon 5, and Indiana Jones and the Great Circle following suit—such ports have clearly worked in Xbox’s favour.
However, not everyone is convinced that Xbox Game Pass—even if profitable—is good for gaming.Arkane co-founder Raphael Colantonio claimed that it’s an “unsustainable modelthat has been increasingly damaging the industry for a decade, subsidized by [Microsoft’s] ‘infinite money’, but at some point reality has to hit.” Larian Studios head of publishing Michael Douse agreed, asking, “What happens when all that money runs out?”
So, Game Passisprofitable, supposedly, but even still, many have called the service into question given that thousands of employees across Xbox have been laid off, with entire projects, fromRare’s EverwildtoZenimax’s unannounced MMOandThe Initiative’s Perfect Dark reboot, all being cancelled
“It’s a long game that involves throwing a tsunami at the entire ecosystem of the industry,” Colantonio said. “Only the gamers like it because the offer is too good to be true, but eventually even gamers will hate it when they realize the effects on the games.”
