Got Game Pass? Here’s what will happen to it after the Xbox cancellation

Resetting the business after unfulfilled expectations

These drastic measures come as a consequence of the fact that Game Pass has not reached its growth targets. The new executive director of Xbox, Asha Sharma, announced a “reset” of the business, admitting that the previous strategy, strongly focused on the growth of the subscription service, did not bring the desired results. As part of the restructuring, about 3,200 employees were laid off, which is almost 20 percent of the gaming division’s workforce, and four studios were closed. In an internal memo to employees, Sharma pointed out that Xbox’s business “is not healthy today” and that it operates with margins that are three to ten times lower than those of competitors. She admitted that they “bet on Game Pass”, but that the service “didn’t grow at the pace they expected”. These changes are taking place in the context of a wider crisis in the video game industry, where rising production costs and market saturation are putting enormous pressure on all major players.

Declining number of subscribers and expensive acquisitions

The data confirm the seriousness of the situation. According to reports, the number of Game Pass subscribers has dropped from 34 million recorded in February 2024 to 30 million. That’s a far cry from Microsoft’s internal projections, which predicted as many as 77 million subscribers by 2026. Even the acquisition of Activision Blizzard, worth 69 billion US dollars, did not lead to the expected increase in the number of users. One of the key elements of that strategy was adding big titles, like games from the “Call of Duty” franchise, to Game Pass from day one. However, it was recently confirmed that new titles in the series will no longer be available on the service immediately upon release, suggesting that “Call of Duty” generates more value as a premium release than as a tool to attract new subscribers.

Game Pass survives, but changes are inevitable

Despiteč despite all the problems, it seems that Microsoft does not intend to completely give up its subscription service, which brings in an annual income of almost five billion dollars. As reported by Game File’s Stephen Totilo, despiteč with the many changes that will take place in Xbox, one strategy will remain largely the same. According to sources privy to Microsoft’s plans, the company still plans to release its next-generation console, codenamed Project Helix, and will continue to run Game Pass and “continue to sign new deals” for it. The survival of the service as such is not in question, but the content and value it will offer to subscribers in the future are the subject of intense discussions within the company.

From revolution to burden?

Xbox Game Pass was launched in 2017 as a Netflix-style service offering access to a large library of games for a monthly fee. The service has been praised for its value over the years and is considered revolutionary in the industry. Microsoft has invested huge resources in strengthening the offer, including the purchase of large publishers such as ZeniMax Media and the aforementioned Activision Blizzard. However, the perception of Game Pass has changed over time. What was once considered the best offering in gaming is now increasingly perceived as one of the pillars that contributed to the Xbox’s current ailing state. There have been rumors that Microsoft is halting negotiations with some studios about adding their games to the service, indicating a change in content acquisition strategy. Some analysts and gamers speculate that the Game Pass model could be closer to that of the competing PlayStation Plus. This could mean that the biggest, so-called AAA games, will no longer be available on the service from the first day of release. Such a turn would be a logical step in the “reset” of business and the search for a more profitable model at a time when game production costs reach over a billion dollars.