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Microsoft Admits Xbox Game Pass Has Not Been Very Profitable

• Mike Guarino
• July 28th, 2020

When Microsoft announced Xbox Game Pass, it seemed like it was a deal that was too good to be true. The company was giving gamers access to over 100 games at the launch of the service, as well as the promise of day-one access to first-party titles for just $9.99 per month. Well, the company delivered on their promise, though it seems like it hasn’t been a massive financial success so far.

General manager of Xbox Games Marketing Aaron Greenberg recently spoke with What’s Good Games, where he spoke honestly about Xbox Game Pass and how profitable it currently is. He said the following:

“We always laugh when we hear that. Please don’t worry about us. Microsoft is going to be alright. We’re gonna make it, I think we’re gonna be okay.

With Xbox Game Pass, Microsoft is focusing on over-delivering on value, even if it comes at the cost of profits in the short term. It’s a different mindset. If you do optimize for profit, you can either say ‘How we do get as much profit out of each customer?’ or, do you pivot that and say, ‘How do we add as much value to our fans?’ ‘How can we actually over-deliver on value?’ If you do that, you build fans for life.

When people feel like you’re over-delivering on value, they want to not only continue to use your service but they want to tell their friends about it. The most powerful marketing is word-of-mouth marketing. We can’t create as many advertisements, as many assets as we want, but if both of you go tell one of your closest friends, ‘You have to get Game Pass!’ that’s way more effective than any marketing I can do. For us, we just want to keep adding more and more value to Xbox Game Pass so you feel really good about that and you feel like you want to go tell your friends about it. And ultimately, we think long-term that’s the right thing for the business and will have long-term benefits for us. In the short-term, yeah, Xbox Game Pass is not a big profit play. But we think long-term it works out good for everybody.”

It was obvious from the get-go that Game Pass was an absolute steal, and really only makes sense if the company involved was focusing on long-term fan building rather than a big money-maker. It has certainly been raved about by just about anyone I’ve spoken to who subscribes to it, so it seems that they are at least hitting that mark.