Microsoft misses Xbox Game Pass subscriber target for second year

Subscriber growth for Microsoft's all-you-can-play Game Pass subscription service fell far short of an annual company target tied to CEO Satya Nadella's pay, according to a new financial filing.

[Knushwood Butt]

Well, they can't go back on Gamepass now.

[EvertonFC]

Yep all eggs in one basket

[Eonjay]

This explains why prices will be going up. They are expecting a certain return on investment to GP. One way is to increase subscribers. The other way is to increase the cost of the service.

[Army_of_Darkness]

No. I believe the price for GP would have went up regardless. Look at Netflix for example, as soon as it got extremely popular with a shitload of subscribers, the monthly cost just kept going up nearly every year!
Which is why I switched to Disney plus😁 and personally, I think it's a lot better than Netflix.

[tay8701]

yep been saying this for months now. if they dont manage to vastly improve their gamepass numbers, they are screwed. that is why the activision deal is so crucial to them. they have nothing to pivot to, its been gamepass, gamepass, gamepass with them.

[ABizzel1]

@Army

It was going up regardless, but what Eonjay said is primarily the reason why it HAS to go up ASAP. They were expecting a 73% growth rate for the fiscal year and only ended up with 28% which is nearly 10m less subscribers than they expected, and as Eonjay said you either increase subscribers (and to your point have a small increase in price), or you don't get the subscriber count your want so now you have to have a noticeable price jump to keep things going.

We'll see what happens. 2022 was a complete dud for MS with nothing notable releasing from 1st party, but 2023 should be a better metric especially if the Activision deal goes through and we start to see if they can play catch up or if subscriber growth remains down YoY.

If it's still down YoY Xbox is in a little bit of trouble, because they're going to have an EXTREMELY hard time recovering from this until they can get the new CoD launching day and date into GamePass, but I don't see that doing anything but getting them to the 35m they hoped for this fiscal year.....except instead of hitting 35m in 2022 it's unlikely to occur until 2025.

Acquiring the other major publishers is the only way I see them getting to 50m GP subs, but those acquisitions are going to be blocked.

[SullysCigar]

Oof. Bad day for Sadya Nutella.

[Lightning77]

MS wouldn't have this issue if they could get their AAA games out. Sucks but There loss.

[gamer9]

No the price of game pass is going up in 2023 because they are releasing a bunch of games. You don't raise the price now and then give us Deathloop and Plague Tale, that's just not enough to retain customers.

The games being pushed to 2023 is also a reason why they missed on sub numbers for 2022.

[sparky77]

They don't need to since it's already profitable.

Considering they delayed pretty much their entire lineup it's no surprise they missed their target.

[RaiderNation]

Lmao! It's cute that you actually think that.

MS saying Game Pass is "profitable" is not the same thing as saying Game Pass is making a profit. That's just PR speak to appease shareholders. When they say it's profitable, all that means is the Game Pass model shows that a profit CAN be made from it once it reaches a specific number of subscribers at a specific subscription price. However that does NOT mean it's making a profit currently (and its not).

[sparky77]

You just admitted yourself that it's profitable lol.

Seriously though just be happy with your games, Game Pass is profitable just accept that and move on and if you are a MS shareholder you should be even happier.

[rippermcrip]

Well since you don't understand the explanation already given to you...ask yourself this.

Why would Spencer say that they will have to increase the price? Because they aren't making a profit currently. If they were,they wouldn't have to make it more expensive.

[jznrpg]

Making 0.01$ could be said to be profitable . They make 1 cent more than they spent and it’s profitable . But after spending 7.5 Billion on Zenimax and 65$ Billion on Activision potentially and all the other money they spend to get games on game-pass they won’t be profitable for a very very long time .

[sparky77]

@rippermcrip

Ask yourself this, why did Sony increase the price of the PS5? Because it's making Sony go bankrupt and they need every penny they can get, right, right?

@jznrpg

Acquisitions don't come under gaming, that money won't count towards Xbox profits it's an investment expense, and it will make it's money back very fast.

Like I repeated said Game Pass is profitable this is a fact you can all try and spin it as much as you like but it won't change facts.

[EvertonFC]

It's not profitable for the 3rd time of telling you.
Do you not understand it's revenue not profit and about 10 people on here have explained that too you now.
Don't you want to learn in life, it's great listening and learning new things.
The embarrassing thing is it's not even hard to understand ffs, whatever you do in life dont open a business ffs you'll go bankrupt and lose everything.

[sparky77]

Keep spinning all you want, facts are facts and this will be the last time I say it.

Game Pass is profitable. Period.

Anyone still struggling to comprehend that, it might be a good idea to go touch some grass.

[Crows90]

But is it profitable? Because they may be fudging the numbers and misleading. For instance. If I run a service that only costs 1,000 to maintain and I make more from subscribers then I can say it's profitable. However, am I taking into account every single one of my first party IP's development costs into the equation? Or even 3rd party day 1 launches. As more and more people move to gamepass that means more and more of these games will depend on game pass covering its development costs. I'm pretty sure none of that is being looked at in their reports. That makes any statement half false because they're only looking at their costs for putting the games on the service which does not include development costs.

[crazyCoconuts]

None of us really knows if they're profitable or not. Even from an accounting perspective, they could be accruing expenses in a way to paint a picture where it looks profitable. Or even not counting the reduction in sales of a 1st party game due to GamePass as an expense for GamePass and just count it as a missed target for the game. Dunno, but intuitively, once you saturate your market, you can't keep buying huge studios just to turn around and give the games away on GamePass without raising the price and expect to make money.

[Chevalier]

Sparky definitely isn't an accountant if they're even considering this as profitable.

[Christopher]

***Ask yourself this, why did Sony increase the price of the PS5? Because it's making Sony go bankrupt and they need every penny they can get, right, right?***

Because profit margins are a thing they pay attention to and can't ignore like other companies.

***Game Pass is profitable. Period.***

I mean, other than the whole division literally not being profitable for years on years until they pay off the current purchase, there is absolutely no proof that GamePass made a profit for the company and only revenue data.

[Lightning77]

I disagree with the first part of your comment. Your second comment is right however.

Can't believe Im saying this but damn it MS needs to start crunching and pressuring their teams now. It's doesn't need to be toxic but we need results. This is MS fault for now setting boundaries and expectations you have to admit that.

[Charlieboy333]

Sparky....you definitely aren't a bright one

[VenomUK]

This thread has made me laugh. EvertonFC trying to explain and reading the frustration in his words!

[FinalFantasyFanatic]

They already went all in, all they can do is double down on Game Pass, unless they finally get those studios churning out some games.

[Jin_Sakai]

“Game Pass achieved 28% growth for the fiscal year ending June 30, 2022, but the target was 73% growth rate. This fell short of a target tied to the pay of CEO Satya Nadella and other top executives.“

Who sets the bar that high? It’s no wonder it didn’t hit the target. 28% growth is good regardless.

[RaiderNation]

Because they need it to grow at that rate so they can start making money off of it. Again, saying Game Pass is "profitable" is not the same thing as saying its turning a profit. Too many people are conflating these two terms.

[RauLeCreuset]

No, 28% growth is not "good regardless." You know who sets the bar that high? Those who need the growth to be that high. Is 28% growth "good regardless" if you need 40% growth to break even? Is 500% growth "good regardless" if you need 5,000% growth to break even? These percentages mean little on their own. They exist within a set of expectations based on relevant factors.

[Lightning77]

There a part of me that believes that MS could be making themselves look weak again in order for this ABK deal to go through. Not hitting target numbers. Slower growth in adoption etc.

If the deal goes through more ppl Will dual scribe and our numbers will go is what MS is thinking.

[porkChop]

This is being taken the wrong way. This isn't Microsoft's regular target for subscribers. This is a separate, higher target specifically for Satya Nadella and is tied to his pay and performance bonuses. Most large businesses have these extra performance targets for their CEOs. They're intentionally very difficult and are designed to motivate and push the CEO.

[italiangamer]

Time to lower that $1 dollar subscription to $0.50!

[ocelot07]

50p for 3 months ultimate!!!!! I think £1 for 3 months is expensive.

[EvertonFC]

There's hardly anything AAA on GP, I'm betting 90% of GP games is filler BS.
If I had GP I would have exhausted it's library that interested me in about 3 months

[ocelot07]

@EvertonFC

I agree I do believe it will one day. They have said they want gamepass everywhere.

Why pass on millions of PlayStation and millions of Nintendo players.

[MontyeKristo]

Everton, that's the nice thing about GP.. I've tried soooo many games, I would've never tried before, if I didn't have GP.

[roadkillers]

Lol, Gamepass is a huge success. They will raise the price within the next year. It’s company’s being overly ambitious to have employees reach an unattainable goal in a short period. Gamepass is going to take over the industry… like I’ve been saying for 3+ years. Sony will need to accept Gamepass on PlayStation in the future.

[tay8701]

lol now thats some next level trolling. so let me get this straight, phil made comments that eluded to the prices of services, consoles and games on xbox would be going up and xbox MASSSIVELY underperformed in the gamepass subscription goal for this yr and sony is the one in trouble. gtfoh. lol.

sony has managed to outsell xbox over the last 2 years even though their console has been virtually unattainable to its consumers while xbox series s had been sitting on shelves at reatailers the entire time. the chip shortage for sony is coming to an end. by march of next yr the 6nm chips will be widely available. sony is forecasting 30.5 million playstations will be sold next yr. they are going to increase their lead on MS substantially next yr. gamepass is not going to appear on playstation, that is only a pipe dream. lol

[EvertonFC]

GP will no doubt be on Playstation within 5/10years.

[XiNatsuDragnel]

So much for it being financially stable imo

[rlow1]

Well it’s not a surprise due to all the AAA games delayed. For gamepass to really grow it’s going to take consistent, fresh and exciting content. They really need to make 2023 a banner year if they want to hit the numbers their looking for.

[CBaoth]

but not 73% like what they were targeting. That's a really unattainable number. 28% is decent growth considering no noteworthy 1st party titles releasing like you said. Clearly MS views GP as the gateway to PC integration to the Xbox platform since console numbers were stagnant. Sony, after acquiring Bungie, is also releasing 1st party ports and a plethora of GaaS focused titles to that end. Different philosophies, same goal.

MS just really needs for their all their studios to start pumping out games. Once that occurs GP can be supported by 1st party tentpole IPs and MS can quit relying on day1, AAA 3rd party games. It's a big paycheck that's essentially a 50/50 gamble on the payoff. That should significantly reduce costs as that money can go back to subsidizing internal development. Sizable growth will naturally happen when they get to a point where one flagship game releases a quarter.

[crazyCoconuts]

Developing the 1st party games themselves just to put them on game pass isn't theoretically any cheaper than paying a third party for some period of time. It's probably more expensive actually, especially if it's on GamePass forever and never gets released to PlayStation where it could get more sales.

[notachance]

meanwhile nintendo and sony have been releasing big hitter one after another this year, most recently bayonetta 3 and soon god of war...
at this point I'm not sure if MS is still interested in making games or not

[MrDead]

They don't make games anymore, they buy multiplatform publishers and remove competing companies access to them. One of the world's least popular gaming platforms gets to dictate what multiplatform publisher games you're allowed to play.

[crazyCoconuts]

They're interested, they're just not really good at it

[Tedakin]

They just bought Bethesda for 8 billion and are buying Activison for 70. You're right, no intersting in making games.

[notachance]

lol they can throw cash all they want, I don't care, I only care about the results. Hell I'd ride to the store and snag an Xbox right now if they can prove they can keep up with Sony and Nintendo's release schedule.

it's actually hilarious how after all those buying spree, this phrase is still applicable to them, but.. where are the games MS?

[Father__Merrin]

When you have something good to be playing. Just scroll down the all games list on your xbox there's not much there tbh

[sagapo]

I expect a raise in sub’s when the new Forza and especially Starfield get released, but for how long?

[MrDead]

Starfield was a multiplatform title that spent a decade in development, MS are hoping to make up gampass numbers after banning a huge amount of gamers from accessing it on competing platforms.
Makes you wonder what will happen to future titles, will they be forced to fill them with MT's to make up the loss of banning so many gamer's from future titles that were meant to be multiplatform?

[GamingSinceForever]

I think GP works for shorter single player and indie games.

When it comes to games like Starfield and Forza that are intended to be played for months and even years long it is probably best to just outright pay for the games themselves.

That’s just my take on it.

[S2Killinit]

Honestly when you look at the list of games in gp, there really isnt much there to he had.

[The3faces]

I'm curious to see what happens next year when heavy hitters such as Redfall, Forza Motorsport and Starfield release.

[MrNinosan]

Probably as much as the other heavy hitters, Scorn, Crackdown 3, Forza Horizon and Halo... not much at all that is.

[The3faces]

I'm curious because the games I mentioned are true current gen games and aren't cross platform, unlike some first party games I could mention.

[MrNinosan]

So why would it be better with games that can be played on 15 million Xboxes than the games that can be played on almost 70 million xboxes?

[SullysCigar]

^ @TheFa3ces, those games will all be on series S too. That same series S that can't run some last gen games at the same level of performance as the last gen xbox one X.

"True current gen" might be a disappointment for those games, so don't get your hopes up.

[Jericho1337]

Ok so how about when the next Elder Scrolls, Fable, Doom, Gears and Hellblade hit? What about when all the CoDs turn up on GP day 1? I know it’s fun to revel in GPs slow growth so enjoy it while it lasts.

[MrNinosan]

@Jericho1337
I recognize that wording... oh that's right.
It's the same thing we've heard sin X360 days.
We're waiting for E3, and now we're waiting for GamePass to get hitters.

[Chevalier]

Cross gen or being 'next gen' doesn't mean they can't be bad though. Remains to be seen if these games will be 'heavy hitters' or not. All Xbox talks about is 'record engagement' like Forza Horizon recently for example. Considering that didn't really move the needle for Xbox or Gamepass then I highly doubt a new Forza or the other games you mentioned really doing anything either.

Heck if games like Back4Blood which was supposed to be big and was multiplatform didn't do all that well I have a hard time believing Redfall which seems similar except replace zombies with Vampires and isn't multiplatform doing anything really for Xbox. Starfield? Hmm.... I'm curious to see with the hype it has, if it will deliver.

[Charlieboy333]

If you really believe that then I would say the only heavy hit is one you must have got against the head

[CaptainHenry916]

I've been using gamepass for free for years because of Microsoft reward points 😃

[Father__Merrin]

No you haven't and even if you did that would mean religiously completing all cards, religiously making sure you use bing search constantly in a nut shel always on xbox just to get the points needed to get GP for a month

[CaptainHenry916]

I've use it a lot since I've signed up to gamepass. 💯

[Charlieboy333]

Congratulations.....so you've contributed absolutely nothing monetarily....and so will receive nothing of worth from your gaming company of choice.

[jznrpg]

Will people who play Call of Duty mainly subscribe or just buy the game solo ? It may not get as many subs as they hope and it’s going to go up in price . Will they stop selling the actual games to force people to sub eventually ? Of course they need the deal to go through but they won’t be giving away games at a loss like they have been. Profitable is PE speak

[MIDGETonSTILTS17]

Good, this is what you get for doubling the price of Live, not giving away any more games for Live, and all in an effort to push GP on people who prefer to buy games outright.

[giovonni]

The arm chair CEO’s are at it again.

[MIDGETonSTILTS17]

You mean the consumers that have to pay what they say?

[Ristul]

Yes, lets not have opinions about anything like mindless drones.

[r2oB]

@ Giovanni

You forgot about the arm chair psychics. "Wait until next year when such and such happens." It's as if they are in a perpetual state of disappointment and therefore look to the future for potential hope.

[giovonni]

Exactly,

[Ninver]

Wow that sounds like the definition of insanity.

[shadowT]

maybe that is the reason Phil Spencer announced price hikes.

[gold_drake]

would explain the potential price hike

[AnotherGamer]

The problem is that they don't have those strong AAA exclusive games. So far the latest "AAA" games have been questionable in their quality, I mean look at Halo Infinite.

[Jericho1337]

Hmmm, it got 87% on metacritic. Forza 5 got 92%. Both games are live service and have staying power. Otherwise I agree that having to go back 12 months for a major release is a bad look. A lot of people are sleeping on Grounded though, an excellent survival game.

[Charlieboy333]

Ok sure whatever....no one is talking about or playing those games anymore. The only staying power Xbox games have is the power to consistently stay uninspired.

[Orchard]

Not super surprised, a ~75% target is pretty aggressive - but I guess it’s also the target for the CEO of a major corporation to get a bonus so it should be high.

Not hitting it doesn’t mean GP isn’t a success though - exec bonuses are different targets - and the key takeaway IMO is that GP is profitable which hopefully means it’ll continue to be a service we can subscribe to.

[giovonni]

No,no, no, let them talk like they run Fortune 500 companies. The truth is the ones that don’t want GPs to be successful will find something to fuel their dislike. Phil didn’t even hint at a price raise, all he said was “they would have to raise prices at some point.” This is basic business knowledge, And they ran with it “ oh, see I told you they were going to raise the price.” “ it’s not profitable,” So, we not gonna account for inflation, expanded man power, adoption of more assets, and the adjustment to market?” Just because prices are raised doesn’t mean it isn’t profitable, or a company is failing. All they doing is looking at the half of the picture to satisfy their dislike. Just sit back and enjoy the Armchair analytics. Hell, they so passionate about this you’d think they’re receiving dividends from all this analytics.

[Lightning77]

Yeah sorry I don't care about Bonuses for ppl who are worth millions already. If they're so worried about bonuses and setting the bar so high for subscriptions that they themselves couldn't possibly reach. Maybe they should release the games or at least give us updates and release dates. Stop "waiting for E3" and give us more than one major showcase. Then people would sign up for the service faster.

[Orchard]

Yeah it’s hard to care - I doubt he even misses the bonus, it’s probably pocket change to him.

Plus, I bet it’s one of many bonuses - he likely has similar bonuses for Azure etc that are probably much bigger dollar amounts than gaming.

[jjb1981]

I canceled my sub after the 3 years for $1 deal ended. It's a great deal for some but not for me. The only games I finished during that time were Outer Worlds, Halo Infinite and Dishonored. It allowed me to dodge a lot a bullets from games I would have took a chance on. Game Pass has definitely taught me to be more cautious with what games I buy.

I mainly play Destiny 2, CoD and PS 1st-party titles and other AAA titles in between. That's why it doesn't work for me. I'd be paying $120 for one year to mainly play CoD IF, and I mean IF it was on Gamepass. Even then it wouldn't be worthwhile unless they included the Battlepass with 20 skips every season.

[ALMGNOON]

look at them increase the price soon.

[Lightning77]

They will but not right now. They will once they get a steady stream of 1st party games out on gamepass. They know good and well they can't afford to do that in tye near future. People will flat out cancel if they did that now.

[RGB]

Not a surprise, absolutely not worth the price of admission this year, the majority of core gamers, and especially hardcore were abandoned by Xbox this year, considering they have 30~ studios + Phil said years ago he plans to have 1 AAA game release every 3 months, it's kind of shocking they've not had 1 in 12 months, and won't for another 5 at least. David Jaffe said it right, management at Xbox is at an all-time low.

[rakentaja]

Microsoft will go down in history with 2022 as the emptiest first party studio lineup in video game history...no wonder it didn't help grow Game Pass.

[chobit_A5HL3Y]

i'd be subscribed on my pc right now but they decided to put an adult filter on my account that they couldn't reverse, so i cancelled it after the first month. if they're gonna go all-in on a subscription service like this, they should at least know how their own infrastructure works so they can actually deal with user accounts. pretty sad and pathetic how a ms service, developed specifically for ms, run on a ms os, and they still don't know wtf is going on lol

[Knushwood Butt]

What is an adult filter?

[got_dam]

I've had a lot of fun with gamepass pc. Guess I'll enjoy it while it lasts. Played the furst couple hours of Signalis last night. Gonna throw the $20 at the devs tonight. Gonna give persona 5 a trial run soon as well.

[Lexreborn2]

The fact that MS has lured me into their ecosystem twice now with empty promises has just left me jaded. I was expecting so many games to hit the last 2 years from perfect dark, fable, avowed and others.

Instead there was 2 years of mediocre games and things I already owned. I’m not praising a service for giving me titles I’ve already owned like dragon quest, persona 5, yakuza franchise, Nier etc. and games like the medium, ascent and outriders aren’t great excuses for the service.

It’s why I’m not renewing because I’m not paying more for things I just don’t need.

[HyperMoused]

Game pass seems good to me if you play a lot, if you dont have the time to play a lot that sub is just ticking away, and with not much time, i have a back log and by the time i do get to a game it will be cheaper anyway.

[anast]

This is too much.

[MegaLogic]

I see the usually crabs came out of their Sony holes, please go back in so gamers can have an actual grown up conversation

[YourMommySpoils]

Dear Christopher, please read this and weep. Your so called revenue.

[Tedakin]

Missing a target doesn't make it a failure. It's making 2.9 billion a year and is profitable according to Xbox. I know most of you will say that's not proof, and you can't trust Xbox's word, but it's the only evidence there is to go on. 2022 was undoubtedly a terrible year though for Xbox first party games, maybe the worst ever.

[Tex4242]

Hilarious seeing all these people argue about whether a company is making money or not.