Microsoft has missed out on the forecasted subscriber target for its subscription service, Xbox Game Pass, by 10 Million subscribers.
In its response to the CMA’s issues statement published on 14 October 2022, Microsoft has stated that it has fallen short of hitting its estimated subscriber target for Xbox Game Pass by 10 Million subscribers.
According to Microsoft, Game Pass accounted for less than 5% by value of digital distribution of gaming content globally. Even just looking at multi–game subscription services alone, it is Sony which is larger in revenues today. Since its launch in 2017, Game Pass has gradually grown to approximately 25 million subscribers. As mentioned above, this is 10 million fewer subscribers (28%) than what was forecasted by the company for Fiscal Year 2022.
The software giant states that much of the existing growth has come from an undisclosed number of Xbox console users account for an undisclosed percentage of subscribers across all Game Pass tiers. Microsoft argues that, in reality, Game Pass has no market power today. The company asks the CMA to show that Activision content, specifically Call of Duty, is important to subscription services, but it has enough market power to “power up” Game Pass and accelerate its growth way beyond anything that the service has been able to achieve thus far. It also asks CMA to show that this alone will undermine and weaken all other subscription services that either do not exist yet or currently do not rely on Activision content for any of their offerings. Microsoft finds either scenario “extremely implausible”.
Previously, it was reported that Microsoft has invested less than between $1 Million to upwards of $100 Million on deals for its Xbox Game Pass subscription service. According to the LinkedIn profile of Xbox Game Pass content strategist Ben Favreau, he has worked at Microsoft on Xbox Game Pass deals of all sizes, ranging from less than $1 Million to over $100 Million opportunities. Such content investments have grown Game Pass from 10 Million to over 25 Million subscribers.
