Xbox Game Pass has been one of the defining features of the games industry for the past few years, altering the way that many people approach playing games. However, while it's hard to argue against the value proposition for consumers, the business model itself has raised some questions about its long-term viability. In a recent interview with Games Industry, former PlayStation Boss Shawn Layden touched on some of Xbox Game Pass' potential problems.
The primary concern Layden seems to have, much like many of Game Pass' other critics, regards the financial feasibility of including a diverse catalog of games for $9.99 a month. According to Layden, Xbox will need about 500 million subscribers to make Xbox Game Pass profitable in the long run, a number that simply isn't realistic given where the industry is at right now.
This is largely due to a stagnant audience. While it's true that the games industry has seen sizeable revenue growth in the last few years, Layden says that the audience has remained around 240-260 million people for decades now, not factoring in mobile gamers. The key to solving this is ensuring a diverse games market, which is part of the appeal for Layden at his new gig at Streamline Media Group, which "speak[s] 27 different languages throughout their studios and have people from 47 different countries."
Xbox Game Pass has garnered a positive reputation in the years since it debuted, particularly because Xbox-exclusive games launch day one on the service. Of course, that does raise important questions about how much Microsoft is earning from Xbox Game Pass, and whether the company as a whole will manage to keep it running indefinitely. If it fails to grow enough of an audience, it seems likely that the price will need to increase or the service will disappear entirely.
However, Xbox is invested in Game Pass right now. Xbox Boss Phil Spencer regularly reminds fans of how integral it is for Xbox's future. In some instances, Microsoft executives have expressed interest in creating a Netflix for games, which Game Pass is in a good position to achieve if it continues down its current path. The question, simply, is whether or not that path is sustainable.
Luckily, Xbox also seems to be invested in streaming Game Pass titles from phones, which would increase the potential install base by a significant degree. That would bring its own set of challenges, of course, but it could be the change that Microsoft needs to get to 500 million subscribers, which is apparently the sweet spot.
Source: GamesIndustry.biz