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[Zeroing]

For over a decade until 2020, Tesla saw billions of dollars in net losses every year and yet for the past 5 years, their market cap and credit/consumer confidence has shot through the roof. Making a profit isn't the end all and be all that it used to be anymore.

Yes it’s about investment/investors wanting to get into “the next big thing” before anyone else… still… space vs a gaming service… not quite the same impact…

 

[nowhat]

Thats when you make Skyrim 2 exclusive.

Your post just made me realize something I hadn't thought about regarding the Zenimax aquisition - if Xbox and PC are the only supported platforms, will Skyrim 2 be re-relased on both platforms annually? Or will it be Xbox one year and PC the next?

 

[Salty Popsicle]

Disney owns almost everything, including children’s dreams ( joking about that part ) of course they are destroying their competitors.

Anyway, somehow some people wanted to believe that gamepass was “a game changer”, that it was profitable because it’s an awesome ammunition for console wars… and in the aftermath of another console war… some people truly believed the service was profitable.

so here we are… MS is not making any money out of it and it didn’t changed the gaming industry…

Gamepass has been around for less than 4 years, and only started really advertising and ramping up their games catalog for the past 1.5 years. If Netflix had taken your approach of "Be Profitable Now", they would have shut down around 2011. Also, the people who support XGP don't do it because they care if Microsoft makes money, they do it because they like the value it brings to consumers, including me.

 

[Ezekiel_]

I also wonder this.

I don't understand how this can be profitable... ever.

If someone could explain then that would be nice.

I just don't see how MS can pay so much money for games to be on there yet charge a small fee to gamers. Where is the investment return?

Here's different ways Microsoft can make it profitable :

• Less quality / quantity of games
• Increasing price of subscription
• Day and date first party releases are still sold for subscribers, but at a reduced price, like Disney still sells its big releases even for Disney+ subscribers (example : Mulan)
• Emphasis on "games as a service" or large open-world filler type games that try to make people play and stay subscribed for many months, eventually making them pay more than if they bought it full price at release
• Emphasis on sold microtransactions / DLC
• Emphasis on episodic, smaller releases with cliffhanger endings to give the impression that there's periodically new content added, and keep people subscribed longer
• Making some content exclusive to Gamepass subscribers, to try to drive the subscription numbers

It's quite clear that we are in the "honeymoon" phase right now.

Studies show that once someone is subscribed to something, they are less likely to unsubscribe for fear of "missing out".

Reality will start kicking in at some point, and some of the points highlighted above will start happening.

If Microsoft plays it's cards right and do it gradually, they might be successful in making it profitable.

Consumers, not unlike frogs in water gradually heating to boiling point, won't have a clue what happened until many years later.

 

[A.Romero]

Pull it off? Easier said than done.

Take a look at Netflix.

Video streaming giant Netflix had a total net income of over 2.76 billion U.S. dollars in 2020, whilst the company's annual revenue reached 25 billion U.S. dollars. The number of Netflix's streaming subscribers worldwide has continued to grow in recent years, reaching 204 million in the fourth quarter of 2020.

That's 210 million subs right now (as of Q1 2021). Look at those numbers. They make 25 billion revenue for a whole year and the bottom line of Net profits, their earnings, is $2.76 billion.

Netflix is everywhere. It's not tied to some specific hardware, Game Pass you need an Xbox or a PC (and let's leave aside Xcloud for a moment, that's a big hypothetical future). Netflix is a service that all people can enjoy, it's movies and TV, gaming is not for everyone.

Netflix produces its own content, they also pay third parties, but they have become very efficient in making their own very diverse catalog in a matter of few years and continue doing so. Their content ranges from B to AA quality (mostly AA) and it's less expensive and time demanding than game development.

Long story short, a service like Game Pass is much more expensive to maintain than Netflix, it's also harder to market and gain subscribers because it's tied to specific hardware and smaller gamer demographic.

MS is currently investing millions developing unique content for the service hoping that will have a significant lasting impact on bringing more people over. But a game takes 2, 3 or more years to make, and most of them have a gaming life expectancy of 2 weeks max. People beat a game (if they like it enough for it) and move on, a Netflix Series season is made in less than 6 months, people watch it and in a year or less they will have more to watch of each one, so there's way more incentive to keep subscribing.

I could go on, but the bottom line is, Netflix is a pioneer and right now facing very strong competition. They spend a lot, they make 25 billion in revenue and "only" take 2.7 billion to the bank. That with 200 million subscribers.

You really think Game Pass has a chance at profitability, maintaining more demanding servers, paying pricier pieces of third party content, maintaining Xcloud, paying EA for EA Play, spending big on AA/AAA games that won't sell well because will be day1 on the service, and all the while their subscriber base growth is tied to the success of hardware sales (Xbox consoles or capable GPUs). As a whole the gaming industry sells 200 million consoles in a span of 7 years, add to that roughly 100 million PC gamers. Even if all of those 300 million would subscribe to Game Pass, it would probably still be a losing game.

It's a long shot, not saying it's not. However I see no problem in them trying. At the end we, as consumers, are the ones receiving the benefits of their experiment. If they fail what's the problem? We all know it's a subscription service and they are not intending to sell it otherwise. They will just drop the service and that's it, no harm done.

There is controversy about the true financial success of Netflix so maybe not even them are going to make it in the long term or at least not in their current form, it's also true that the market for TV shows and movies is much wider than the one for games. There is no doubt there are many factors pointing to an uphill battle for Microsoft. That said, similar perspectives have been established for different services that have survived or even turned out to be profitable.

I wasn't a Gamepass believer but I took the trial, liked it and now I'm a customer. It's just a good deal for me. Is Microsoft bleeding money? Evidently. Do I care? Not really.

That said, I stand by what I said: If anyone in the current market can pull this off is Microsoft on account of their deep pockets and a real interest in taking a good chunk of the gaming market. The Epic case has shown that Microsoft has bled a lot of money and they are still doubling down. Google couldn't keep their Stadia studio for long enough. Amazon hasn't shown anything. Sony is approaching all this differently. Nintendo lives in their own world....

 

[Kokoloko85]

Congratulations to the people who are enjoying this (for whatever reason).

Me on the other hand will be taking full advantage of GP.

Because its not a good thing for video games. If gamepass succeeds, it Will be all about MS controlling and choosing what games get made and what studios get what budget.

Which is exactly what will happen if MS controls loads of IP‘s and most the money coming in for those games is gamepass...

 

[Zeroing]

Gamepass has been around for less than 4 years, and only started really advertising and ramping up their games catalog for the past 1.5 years. If Netflix had taken your approach of "Be Profitable Now", they would have shut down around 2011. Also, the people who support XGP don't do it because they care if Microsoft makes money, they do it because they like the value it brings to consumers, including me.

You were on the gamepass threads you know of the high levels of insanity written there. You know how people got angry if anyone dared to say “the service is not for me” some people took it as a personal offense.

I remember being on the of gamepass threads having problems with the pc version of the service and everyone was just too busy complaining and going crazy.

 

[Mitsuda Maniac]

Here's different ways Microsoft can make it profitable :

• Less quality / quantity of games
• Increasing price of subscription
• Day and date first party releases are still sold for subscribers, but at a reduced price, like Disney still sells its big releases even for Disney+ subscribers (example : Mulan)
• Emphasis on "games as a service" or large open-world filler type games that try to make people play and stay subscribed for many months, eventually making them pay more than if they bought it full price at release
• Emphasis on sold microtransactions / DLC
• Emphasis on episodic, smaller releases with cliffhanger endings to give the impression that there's periodically new content added, and keep people subscribed longer
• Making some content exclusive to Gamepass subscribers, to try to drive the subscription numbers

It's quite clear that we are in the "honeymoon" phase right now.

Reality will start kicking in at some point, and some of the points highlighted above will start happening.

If Microsoft plays it's cards right and do it gradually, they might be successful in making it profitable.

Consumers, not unlike frogs in water gradually heating to boiling point, won't have a clue what happened until many years later.

Yup, I bet it starts with Halo Infinite. You get the game through Game Pass but there are a ton of mtx and eventually they will release episodic story DLC available free only through Ultimate. Eventually a lot of the big 1st party games will be chopped up and sold through episodes or parts.

 

[Leyasu]

Disney owns almost everything, including children’s dreams ( joking about that part ) of course they are destroying their competitors.

Anyway, somehow some people wanted to believe that gamepass was “a game changer”, that it was profitable because it’s an awesome ammunition for console wars… and in the aftermath of another console war… some people truly believed the service was profitable.

so here we are… MS is not making any money out of it and it didn’t changed the gaming industry…

Lots of people on the other side have been desperate for bad news and hoping it would fail. It’s best to ignore the imbecilic fanboys. It is Obvious that you need a threshold before the balance tips in your favour. I.E subscribers.

The thing is gamepass is great, and will for certain reach a point where the monthly revenue will easily cover the cost of the games being made.

I can see them easily hitting 30m full paying monthly subs before this gen is finished. No matter what fanboys think on either side, gamepass is here to stay and will grow and grow

 

[IDKFA]

This really isn't shocking.

MS are throwing all sorts of money into GP. Buying up studios for billions, then paying to fund game development (including staff wages, running offices etc), paying 3rd parties for having their games on the service and the cost of running the service.

Luckily, MS has very deep pockets and can absorb the hit, but soon shareholders are going to want to see some profit being made. This will probably happen in a few years when sub numbers hit higher levels.

However, another they could make a profit is by increasing the price of GP. Not a popular move, but it's going to happen eventually. I'd still pay for it, even if it was £20 pm as long as I had a constant stream of first party and third party AAA games on day one.

Another decent way they could make a profit is to lock everything on Gamepass. Make all future games Gamepass exclusive and remove the option to buy the game digitally or via disc. So, if you want to play ESVI or Perfect Dark, the only way you can do it is if you have Gamepass. That would absolutely increase subs and start turning a profit.

 

[Garret Bobby Ferguson]

It's relatively new, it shouldn't be profitable if they're getting more studios and games on board.
Look at Netflix and how much they have to reinvest for content. Microsoft is growing gamepass and it won't be profitable for a long time. They can offset those losses with profits in other sectors so it's not as big a deal.

 

[Salty Popsicle]

I enjoy reading all the keyboard warrior, self-taught, profit analysts on this thread declaring it impossible for Microsoft to ever make money with XGP. You people really believe one of the richest companies in the world didn't get dozens if not hundreds of Ivy-League level cost estimators and financial analysts to work on figuring out whether even starting such an ambitious venture would be practical for them?

They know exactly how many subscribers they need in order to break-even, how much they need to invest every quarter, and a timetable for profitability. They have had since 2017, the launch of XGP, to see the trajectory of their plans. If they were not confident about this service, they would not have purchased Zenimax for $7.5 Billion or hundreds of millions on the other smaller studios like Ninja Theory or Obsidian. All within the past 2.5 years.

 

[alabtrosMyster]

Netflix just started making money, a lot of moneys.

 

[Dr Bass]

This was obvious. Not a real news story. I don't think it will profitable for a long time, if ever. The numbers just don't seem to add up. That's been the argument from the beginning though, this service is not going to be able to do fund great games alone, which means MS subsidizes the entire service, and how long can that last without something needing to give (game quality, raise prices, cancel service as a money loser etc)?

 

[Markio128]

 

[vaibhavpisal]

Netflix just started making money, a lot of moneys.

It's upto them when they want to make money.

There is already sizeable selection of games on gamepass. If they only got indies (inexpensive) for a few months, it would start generating profit.

 

[John Wick]

I'm guessing that the money they're paying out to get games into the service is steep or when XBOX says GP subs they're including everyone who joined up irrespective of whether they're still/recurring subs. I thought that at 23 million they'd be seeing major profits. I guess not...

I think everybody and his dog knew GP wasn't profitable yet except for Xbox fangirls. They have been in denial from day one.
It was obvious with how MS hides it's numbers and lumps it with other things.
Watch how the narrative changes and Tom Warren will be called out as an unreliable source etc....

 

[Wizz-Art]

Seriously, I've been years on this forum and never ever understood the fixation here about how much money a trillion dollar company makes or doesn't make. And for just as long nobody could ever answer the question why anyone should be concerned?

I don't care! It's not in or out of my pocket now is it? I enjoy the best deal in gaming and continue to do so, for as long as it is going I'll be subscribed simply because it's a no brainer if you like games.

 

[bentanchorbolt]

I don't care if they make money or lose money on it. I'm an end user, so the only thing I require is a service that is worth the price of admission and right now, it is.

Why should I care about any of this? It makes ZERO difference to me how many consoles Sony or MS sell, or how much money they are making, etc. As long as they continue to offer products worth buying, that's what I care about. If MS today decided to stop production and shut it all down, I'd just take my wallet to their competitor and keep playing videogames.

 

[Salty Popsicle]

Seriously, I've been years on this forum and never ever understood the fixation here about how much money a trillion dollar company makes or doesn't make. And for just as long nobody could ever answer the question why anyone should be concerned?

I don't care! It's not in or out of my pocket now is it? I enjoy the best deal in gaming and continue to do so, for as long as it is going I'll be subscribed simply because it's a no brainer if you like games.

When you're unable to speak negatively about the quality of a great service, all that's left is to point out that it's costing the provider a ton of money and that one day it will disappear. It's quite funny actually.

 

[thebigmanjosh]

So if you owned a business that was super busy but was constantly losing money, you would keep it open?

Yes, and I’d call it Netflix.

Comparing a failing business to Game Pass not being profitable at this time lacks any kind of critical thinking. It’s apples and oranges considering this is a long term investment for Microsoft as all of their other divisions have become subscription based services.

As the service grows, any immediate losses are offset by other revenue sources (gold subs, digital, etc.) much like console hardware has been sold at a loss to create an install base in the first few years.

 

[Thabass]

It’s fine as long as devs are making money from the service.

I mean, if they weren't, would they be on there? I know the visibility alone is worth being on there, but if bigger IPs (like say Final Fantasy or Resident Evil) didn't get money from the deal, I would think they just wouldn't be on there to begin with.

 

[DaGwaphics]

I don't give a rats ass if the service is profitable or not at the moment, LOL. It's obvious enough how these things work until you reach critical mass, as has been mentioned already. Adding new users doesn't increase their costs all that much, so, eventually the number of users increases enough to offset costs. It's not rocket science.

With that said, MS has eluded to the service being profitable already, likely due to MTX and DLC. No one has any firm numbers to deny that, I don't think.

So they are going to make the service less and less appealing? Sounds like if they follow your logic they will NEVER make money. Imagine if Netflix saw their streaming service was losing money and they said "That's it! No more original series and we are raising the prices! That should light our service on fire!"

Well it probably would light the match, just not in the way they were thinking.

 

[Phoenix RISING]

Why do it matter to me as a user if it’s profitable or not

This is what I was thinking, too.

I'm enjoying while it lasts.

 

[Stuart360]

Yes, and I’d call it Netflix.

Comparing a failing business to Game Pass not being profitable at this time lacks any kind of critical thinking. It’s apples and oranges considering this is a long term investment for Microsoft as all of their other divisions have become subscription based services.

As the service grows, any immediate losses are offset by other revenue sources (gold subs, digital, etc.) much like console hardware has been sold at a loss to create an install base in the first few years.

Gamepass is very successful, its just maybe not profitable yet. There is a difference in business.
23mil subs, growing by around 3mil every quarter. In business terms thats huge and successful.
And as i keep repeating, NO ONE actually knows except Phil, Nadella, and Microsoft, as they dont give us full humbers. So all this is speculation at the end of the day.

 

[jshackles]

This was obvious. Not a real news story. I don't think it will profitable for a long time, if ever. The numbers just don't seem to add up. That's been the argument from the beginning though, this service is not going to be able to do fund great games alone, which means MS subsidizes the entire service, and how long can that last without something needing to give (game quality, raise prices, cancel service as a money loser etc)?

You're forgetting something though: a huge part of the success of Game Pass hinges on backwards compatible games. When Game Pass was first spun up, this meant Xbox 360 games. Now it means original Xbox, 360, and Xbox One games as well. Microsoft has a big push to make these older games play exceptionally well on new hardware - stuff like 4K resolution bumps, texture bumps, FPS boost, etc. often times make these older games look and play more like remasters. A fun game will continue being a fun game regardless of how old it is. Game Pass has modern powerhouses like Minecraft and Skyrim. Even 10 years from now, people are going to be wanting to play Minecraft and Skyrim. In fact, I'd bet the older Elder Scrolls games like Morrowind and Oblivion will get a surge in popularity closer to the release of The Elder Scrolls VI.

The more good games they create going forward, the wider appeal and better value the service will have... forever. The incentive is in place to make more games like Skyrim (that will be a draw to the service for literally decades) and less games like the recent Battletoads (which everyone will forget about within a year).

 

[Dr Bass]

Lots of people on the other side have been desperate for bad news and hoping it would fail. It’s best to ignore the imbecilic fanboys. It is Obvious that you need a threshold before the balance tips in your favour. I.E subscribers.

The thing is gamepass is great, and will for certain reach a point where the monthly revenue will easily cover the cost of the games being made.

I can see them easily hitting 30m full paying monthly subs before this gen is finished. No matter what fanboys think on either side, gamepass is here to stay and will grow and grow

What number of subs do you think they need to "easily" cover the cost of supporting "23 studios" making games for this service, one of which was bought for 7.5 billion? Netflix has upwards of 200 million subscribers, paying up to 18 dollars a month, and Netflix has been losing money for years. Years.

200 million subscribers.

The Xbox Live user base is like 90 million or so right now? Not everyone will sign up for GP, which is obvious. Their play is to hope people on mobile and other consoles sign up to play via XCloud only. Not sure I'm seeing that.

 

[John Wick]

What is $15 x 23 million? That's your budget monthly from just Gamepass, with zero deficit spending, and without counting any other revenue streams. The more the sub count goes up, the more money they get. Their sub count could easily double by the end of the gen if they manage some big exclusives.

You think Xbox gets $345 million a month?
Lmfao
They got about £70 from me for 3 years of GPU and I'm subbed till 2023

 

[Jigsaah]

They have revenue, but they have been investing more than they are pulling in. Um...duh. You don't get what we've gotten on Gamepass on charity. Maybe it will become profitable in the future. For now, I'm just happy Microsoft is footing the bill so I don't have to.

 

[Dr Bass]

You're forgetting something though: a huge part of the success of Game Pass hinges on backwards compatible games. When Game Pass was first spun up, this meant Xbox 360 games. Now it means original Xbox, 360, and Xbox One games as well. Microsoft has a big push to make these older games play exceptionally well on new hardware - stuff like 4K resolution bumps, texture bumps, FPS boost, etc. often times make these older games look and play more like remasters. A fun game will continue being a fun game regardless of how old it is. Game Pass has modern powerhouses like Minecraft and Skyrim. Even 10 years from now, people are going to be wanting to play Minecraft and Skyrim. In fact, I'd be the older Elder Scrolls games like Morrowind and Oblivion will get a surge in popularity closer to the release of The Elder Scrolls VI.

The more good games they create going forward, the wider appeal and better value the service will have... forever. The incentive is in place to make more games like Skyrim (that will be a draw to the service for literally decades) and less games like the recent Battletoads (which everyone will forget about within a year).

I'm not forgetting anything. I know MS games are supposed to stay on forever. This is all just blah blah blah. What matters is the number of people who sign up, and stay on and that's it. People do not sign up to services to play old games. They want new content constantly. Again look at the Netflix model. You think people are going to pay 120 a year (or more as prices rise) because it has "old games"? Absurd and silly. The last thing GP wants is a reputation of paying a high fee to access really old content.

 

[Schmick]

Because its not a good thing for video games. If gamepass succeeds, it Will be all about MS controlling and choosing what games get made and what studios get what budget.

Which is exactly what will happen if MS controls loads of IP‘s and most the money coming in for those games is gamepass...

All I'm reading here is conjecture. Who exactly will MS be controlling? 3rd party developers/publishers? What exactly would MS gain from taking control?

I see Gamepass as a good thing, for smaller developers especially. Gamepass provides guaranteed income for the developers that put their games on it. Guaranteed income may just be the necessary impetus needed for developers to develop something fresh and new as opposed to the numerous sequels and unoriginal games we get.

Original games don't always succeed financially because gamers are not prepared to pay for something new. But with GP this won't be an issue. How many times have you heard of gamers pleasantly surprised about a game they would have never of thought of trying if it wasn't for GP.

So not only does GP give developers the opportunity to produce something original but also gives the gamers the opportunity to play them.

 

[HotPocket69]

It's not for the moment. It will be.

Just like the system will eventually have actual new games?

 

[Tripolygon]

Butt Gamepass is the best value in gaming.

It kinda is a really good proposition for a consumer but for Microsoft, it is expensive and not profitable yet.

 

[Hendrick's]

We all know this. We shouldn't care as long as it delivers value to us. I don't see people worrying so much about Netflix being profitable.

 

[thebigmanjosh]

Gamepass is very successful, its just maybe not profitable yet. There is a difference in business.
23mil subs, growing by around 3mil every quarter. In business terms thats huge and successful.
And as i keep repeating, NO ONE actually knows except Phil, Nadella, and Microsoft, as they dont give us full humbers. So all this is speculation at the end of the day.

I 100% agree. At this time, I’m sure success right now is increasing MAU’s and getting GP onto as many devices as possible.

 

[DaGwaphics]

What number of subs do you think they need to "easily" cover the cost of supporting "23 studios" making games for this service, one of which was bought for 7.5 billion? Netflix has upwards of 200 million subscribers, paying up to 18 dollars a month, and Netflix has been losing money for years. Years.

200 million subscribers.

The Xbox Live user base is like 90 million or so right now? Not everyone will sign up for GP, which is obvious. Their play is to hope people on mobile and other consoles sign up to play via XCloud only. Not sure I'm seeing that.

Netflix has plenty of operating income these days: https://www.macrotrends.net/stocks/charts/NFLX/netflix/operating-income

MS will never need to match Netflix $ for $ in content. Even if you say a major AAA release is going to cost them $200m. How many of those do they need to release in a year? How many does Sony release?

Netflix is spending $17b a year on content, or 85 AAA $200m games a year. LOL MS will never have those expenses, thus they would never need that many subscribers. And that would be if they were completely paying for all dev costs on both first and third party and everything was day one. The older games they have on there would be costing them a lot less than that, as would the indies.

 

[The Hamburglar]

Interesting. When the Xbox poster boy on Twitter spreads ps5 fud, he’s right.

But here he is saying the ‘best deal in gaming’ Isn’t profitable and all of a sudden he’s wrong.

Why would it be profitable? They just spent 10 billion paying for games releasing on Xbox to now only be on Xbox and gamepass. Does money spent on Xbox services just get wrote off to say the second coming (gamepass) is profitable?

 

[jroc74]

Where were you when the gamepass threads were being made by the dozen? Yeah a lot of people really though it was…

lol, trust me, I know. I was in a few of them, try to avoid them now.

That was more a rhetorical question...I was trying to be nice about it.

 

[Schmick]

You think Xbox gets $345 million a month?
Lmfao
They got about £70 from me for 3 years of GPU and I'm subbed till 2023

And yet MS still think it's worth investing 7 billion buying Bethesda.

 

[Roufianos]

Not only is it not profitable but MS is losing out on all the money that would be raked in by their first party releases.

Definitely a long-term investment and MS has more than enough money to ride it through.

 

[SLB1904]

so controversial

 

[THEAP99]

It's Microsoft. Literally doesn't matter. They're playing long game. When a casual subscribes to gamepass, the last thing they'll worry about is "wait.. idk if microsoft can afford this"

 

[Coulomb_Barrier]

A price increase is a case of when, not if. Or something like that.

We all know its not sustainable as is.

 

[Schmick]

A price increase is a case of when, not if. Or something like that.

We all know its not sustainable as is.

As it is with everything else i.e. Netflix, electricity bills, broadband....

But I'll look forward to the "I told you so" comments in a few years time.

 

[sunnysideup]

an army of astroturfers cost pretty penny.

 

[Tutomos]

They are not making money on hardware either.

 

[massivekettle]

I think people are hung up on profits because if there is no return eventually the mothership will pull the plug.

True, but as for all high growth initiatives, key is to be patient, something the current Microsoft leadership has shown it is willing to, certainly a lot more than previous management (i.e., Ballmer).

Also, in the grand scheme of things, Gamepass is a drop in the overall bucket for now, when gaming only generates 10% of overall revenue.

I also wonder this.

I don't understand how this can be profitable... ever.

If someone could explain then that would be nice.

I just don't see how MS can pay so much money for games to be on there yet charge a small fee to gamers. Where is the investment return?

Netflix generated $6bn of EBITDA in the last 12 months (23.5% margin). For context, Sony generated $13bn of EBITDA (15% margin). So yeah, streaming can be profitable, and can produce high margins. The main issue with streaming platforms is the very high degree of fixed costs; however, once you reach and surpass the breakeven userbase threshold, then it becomes highly profitable as marginal/variable costs are very low.

It depends how much Microsoft is paying for Gamepass content. The Epic/Apple lawsuit shows Epic is getting great deals on content for their store. Also, Microsoft's bargaining position will increase as the Gamepass userbase expands, so the more it grows, the higher its profit margin will become.

It's highly likely Gamepass isn't profitable yet at this stage. That being said, Tom Warren's justification for saying GP is unprofitable is a red herring. Companies don't like to open up their books for everyone to see; it doesn't mean their business is inherently unprofitable.

 

[Coulomb_Barrier]

As it is with everything else i.e. Netflix, electricity bills, broadband....

But I'll look forward to the "I told you so" comments in a few years time.

Electricity bills and broadband are essential costs for essential services of course, Gamepass is not.

Netflix, Amazon Prime, Disney+ and Gamepass on top is a needless expense for casuals.

 

[Jaysen]

Yikes, I don’t think either Sony or Nintendo needs to answer to GP anytime soon

That’s like saying because Spotify makes no profit, it doesn’t need competition. I get the distinct impression a lot of you don’t know the first thing about business.

 

[alabtrosMyster]

It's upto them when they want to make money.

There is already sizeable selection of games on gamepass. If they only got indies (inexpensive) for a few months, it would start generating profit.

People would cancel in drove before they made a profit if they did this (maybe not those on the 1$ deal...). Profit would not happen like this.

When I have a couple of minutes I will go over the psnow list and look for overlap with the GamePass list (old/ish AAA titles are probably all around raking in all the money they can), which is the vast majority of games on these services + Sony has about twice as much. To be honest, I don't think that the selection is great on PSNow, and I think gamepass is worse--even if you count the day and date thing as MS did not release a game I am aware of in forever.

Now about the money, as many say here, if they get enough paying customers to compensate whatever they intend to spend on development they will make money with it at some point, and if they release interesting games with enough regularity it will become something you need as a gamer... But that time MS publishes games you can't miss on a regular basis has not happened yet.