Update: Chris Dring has just posted on social media clarifying his comments. He stressed that Game Pass is profitable even when factoring in the lost sales for first-party teams. He was investigating Game Pass P&L ‘over 18 months ago’ and was led to believe that a profitability issue might exist due to the separation of sales figures.
He confirmed that sources have ‘reached out’ to set the story straight and confirm that Game Pass is ‘still profitable’.
Original report follows…
Recently, a debate emerged online regarding the Game Pass subscription service after the founder of Arkane Studios branded it ‘unsustainable’ and ‘damaging’ for the industry. It’s not the first time a topic like this has surfaced, but it once again prompted fresh discourse around the concept of Game Pass not being all that beneficial for some studios and companies.
On social media, The Game Business’ Chris Dring made a somewhat damning revelation. He claimed that the Game Pass service is only regarded by Xbox as profitable because the numbers referenced do not include the cost of developing and releasing first-party games, like Starfield, on the platform.
If you were to include these figures, it might paint a very different picture.
‘The Lost Revenue’
In a post on social media, Chris Dring wrote:
Costs associated with the Game Pass business is fees paid to third-parties, marketing, service costs… and by that measure, it’s profitable.
What they don’t count is the lost revenue that Xbox’s first-party studios are seeing as a result of the service. I have to imagine if first-party studios received similar compensation, that profitability might not be correct
Dring claims that he heard this information directly from Xbox, but has nothing more concrete to share regarding numbers and bases the comment above more on conjecture than solid figures.
I asked for clarification on the “Game Pass is profitable” claim, and was told no first-party costs are included.
It might make sense, though.
Consider Starfield, which could have cost as much as $400 million to be developed, including marketing costs. Starfield, which is Bethesda Game Studios’ most recent RPG epic, launched on Game Pass on day one and went on to accrue millions of players, but it was never made clear how many copies the game sold.
The thinking here is that Microsoft and Xbox would not lump in those development and investment costs into the overall earnings pot accumulated from the Game Pass service. This means we’re left with a picture that isn’t fully indicative of how well the service performs.
If Starfield had launched as a premium game not on Game Pass, how would player volumes have shaped up? In December 2024, four months after Starfield was released, Bethesda confirmed the game had secured 15 million players, not sales. Would that number have been the same if it weren’t for Game Pass?
Ultimately, we might never know what the state of play is with Game Pass unless something leaks – Xbox keeps those cards very close to its chest.
Do you think Game Pass is in the red and becoming unsustainable when you consider first-party development costs? Let me know your thoughts on the Insider Gaming forum.
For more Insider Gaming coverage, check out the news that Call of Duty Mobile might have made $3 billion
Grant has been gaming for 30+ years and in the industry for 10+. You'll probably find him playing a post-apocalyptic game or an extraction shooter somewhere.
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