Xbox Demonstrates Commitment to Game Pass with Price Increase

Over the past two months, Xbox has reaffirmed its dedication to Game Pass, silencing earlier doubts about its commitment to the service. The inclusion of Call of Duty: Black Ops 6 in Game Pass on its launch day and the Xbox Summer Showcase, which featured first-party games available on Game Pass, demonstrate Xbox's resolve. However, Game Pass has faced challenges, with stagnant growth over the past 18 months and disappointing premium sales of Xbox games. Hellblade 2, for instance, failed to crack the top 100 in Europe. The gaming industry, including Xbox, is grappling with a growth problem, leading to a hyperfocus on profitability and margins. This shift is evident in the recent layoffs and the decision to raise prices for Game Pass. Xbox has simplified its offerings, removing one tier and introducing a new one, while restricting membership stacking in certain countries. The $20-a-month Game Pass Ultimate option is now the most popular tier, with 74% of console users subscribed, according to Ampere. The introduction of a $15 Standard tier, which includes online multiplayer access and a library of older games, is an interesting development. This tier may appeal to price-conscious players who want online play and a selection of games without needing the latest releases. Xbox has also announced plans to release more games on other platforms, including those owned by PlayStation and Nintendo. This move may attract new users to Game Pass and increase revenue. The company's reluctance to raise PC pricing significantly reflects the high Game Pass attach rate on Xbox consoles and the potential for growth on PC. As streaming accelerates, Xbox may consider a subscription option for non-Xbox and non-PC gamers. The upcoming mobile push, led by Candy Crush and Call of Duty Mobile, may also lead to changes in Game Pass. Xbox's determination to make Game Pass work is clear, with a focus on sustainability and profitability. The company aims to mitigate increasing costs and potential lost revenue from adding Call of Duty to the service. According to Ampere, global Game Pass average revenue per user is expected to increase by 5.4% this year and 15.3% in 2025, with estimated spending reaching $5.5 billion by next year. While there are concerns about the long-term viability of Game Pass, Xbox is working to prove the symbiotic relationship between subscription and premium business models. If successful, the company may convince more industry players of Game Pass's potential.