Xbox Game Pass Accounts For Almost 80% of Microsoft’s Gaming Revenue, Despite Launch of New Consoles

Microsoft has revealed its quarterly financial earnings for its gaming division, with Xbox Game Pass driving engagement and revenue much higher than Xbox Series console sales.

Microsoft Xbox Gaming Content and Services vs Hardware Revenue Chart 2021
Microsoft Xbox Gaming Content and Services vs Hardware Revenue Chart (by Daniel Ahmad, Niko Partners)

It shouldn’t be a surprise to see Game Pass revenue up so high, with Xbox head Phil Spencer making it pretty clear during the Xbox games showcase that Microsoft is banking on the service more so than consoles this time. Xbox Game Pass is currently available on consoles, PCs and will soon be available on mobile devices thanks to the xCloud integration.

Xbox Game Pass is Microsoft’s Biggest Money Maker

With Xbox Game Pass, Microsoft has been taking bold decisions, with attention-grabbing partnerships and acquisitions. Recently, Microsoft acquired Zenimax Entertainment, securing all future Bethesda games exclusive to Xbox. After adding EA Play and new third-party developer partnerships to the mix, Xbox Game Pass has quickly risen to become the industry’s best value-added service.

According to Daniel Ahmad (Niko Partners), Xbox Game Pass (part of Microsoft’s content and services) accounted for about 80% of the company’s gaming revenue. This is despite the launch of new consoles at the tail end of 2020, and a cheaper console pushing digital purchases/subscriptions certainly helps in pushing Game Pass. Microsoft also bundles trial codes with every Xbox accessory, leading to many gamers finding Game Pass regardless of whether they own an Xbox console or not. The Xbox gaming experience on PCs is also about to get much better, with a major overhaul of the Microsoft Store in the works.

What The Future Holds For Game Pass

The growth of Xbox Game Pass hasn’t gone unnoticed by Sony, with a ‘counterpunch’ from PlayStation on the horizon. PlayStation on the other hand is increasing its investment into what worked for the PS4 generation – first-party studios.

Xbox Game Pass on PC

As of April 2021, Xbox Game Pass reportedly has over 23 million subscribers. Many skeptics might still wonder if and how Game Pass is sustainable. According to a report by Windows Central, XGP is sustainable through various means such as in-game purchases, discounts on games through the Xbox/Microsoft store, and a “free-to-play-like” virality¬†which helps in boosting retail sales of games.

It will be interesting to see what decisions Phil Spencer (Head of Xbox) and Sarah Bond (Head of Game Creator Experience & Ecosystem) take regarding XGP going into the summer season. With Xbox’s participation in E3 2021 confirmed, who knows what wild announcements we might get?

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