This is a really interesting subject, I'd argue its probably THE most interesting topic in the business side of gaming happening right now because absolutely noone has attempted the course of action that MS has chosen for Xbox.
Its not just that they are willing to spend big to establish GamePass, its their willingness to potentially jeopardize their existing Xbox console software/hardware ecosystem by placing it behind GP in terms of business priority.
Its one hell of a pivot, and it demands scrutiny to see how its paying off for them.
Lets be objective about this; Placing their first/second-party output day#1 on GP was a ballsy thing to do, doubling down on that by investing literally billions of dollars into expanding that first party roster is an extraordinary commitment to the strategy.
What I'm getting at by saying this is missing targets -however optimistically they were set- is a big deal. When the stakes on the table are so high, there has to be a lot of attention paid to detail in the business plan. Especially where the biggest KPI's are concerned. Growth, retention, and engagement are all hugely significant, and moreover potentially volatile given the nature of the business.
At this point, growth is clearly substantially down on targets. The question then becomes how are the other two performance pillars doing?
We cannot rely on MS own PR statements to get a true picture of how the situation is panning out. They are too invested at this point to express any doubts or signs of weakness in their resolve. Because to do so would not only be demeaning but risks compounding investor skepticism.
With Halo's MP being F2P, and therefore to some degree unhooked from GP, going into the next year their line-up still seems fairly thin. Yes there are a number of already announced titles which have been delayed, but I'm not sure if any of their new acquisitions will be dropping anything massive for quite some time.
This is significant, not just for the 3 KPI's mentioned above, but because its going to force them to buy-in more product from third-party sources until their pipeline reaches readyness. This is even more expenditure and potentially even more red ink on the ledgers to explain away to investors.
GP is not bulletproof yet. Its not even proven sustainable, because if it was everyone else would be transitioning to a similar model.
To the contrary, what do we see their competitors doing? Nintendo are doing their own thing -as usual- and thriving. Sony are doing great too, and steadily expanding out onto PC and readying their second push into the VR space. The ones who seem to be doing less well are those offering similar a-la-carte services and streaming options.
Good analysis, well-reasoned and rational without being toxic, I think these are points people regardless what side they fall on should be considering.
I know there are some zealot types around who'd say why is any of this a concern for us gamers, that we should just play games, but the truth is these type of things can impact our ability as gamers to play games, in this case because GamePass performance has direct ramifications on what Microsoft decides to do with the Xbox division in the future. That can affect budgeting, technical support from other company divisions (such as the Surface team and Azure), pursuits for 3P content into both GP and on the Xbox platform...all of which ends up impacting what games people on Xbox and GamePass can play, their potential quality (if budgets get cut across the board that can affect QA testing), or even if GamePass and/or Xbox as a platform continue to stay around.
And as someone who
still feels it sucks that Sega (and to a lesser extent, NEC/Hudson and SNK, tho SNK never really tried competing in the mainstream console space) had to fold as a platform holder in the industry, I know how important it is to be mindful from a point of neutrality, the realities of certain market performances and business decisions a platform holder is experiencing, how those things feed into each other, etc. If there were people like ourselves around with a full-blown internet back in the '90s giving analysis on actual and potential business decisions for companies like Sega and Atari of the time, there's a chance, however slim, that maybe someone at those companies'd of seen enough of that feedback to make decisions that could've changed the course of trajectory of those companies for the better, creating a whole different history for them.
To people saying that these companies don't pay attention to the community, you don't know how wrong you are. It was gamers who spoke up against Microsoft trying to double the cost of XBL Gold out of nowhere, which got them to fold on that plan. It was gamers who called Sony out for trying to charge for a PS5 upgrade to Horizon: Forbidden West when they had promised it would be free beforehand, forcing Sony to honor their original word. If gamers make enough noise, especially in regards to bad business practices, some of these companies will listen.
But I'd like to think they also listen, maybe more subtly, to just general discussions relating to their products in general, especially those that become noteworthy topics across various spaces online. They aren't oblivious to these conversations, even if their decisions aren't driven by them primarily or at most as just tertiary influences. I don't see a reality where someone can see Microsoft missing their GamePass growth target by 30% and claim it's not a big deal, as if that also applies to Microsoft and more crucially the Xbox division, who need to produce results and one of those being to at least hit set targets. Now I've heard that the 48% target was done before Halo's delay, and some may argue the fact Microsoft/Xbox beat their growth targets in 2020 (which let's be honest, were primarily driven by COVID lockdowns) offset them missing this new target, but that's not how it really works. Maybe the Xbox division revised that figure internally after the delay, but if that were the case would not the SEC filing have mentioned this?
Look, I don't
want GamePass to fail or struggle, I don't
want Xbox to fail either. I don't want another platform holder needing to leave the space, because an industry with just Sony and Nintendo providing a platform ecosystem would suck sooner or later. But we also can't just pretend everything's trucking along fine or call people out as being fearmongers and 'doom-and-gloomers' just because they (well, the ones who actually are, not the console warriors and trolls) are expressing genuine concerns about future viability for GamePass sustainability and growth if things remain exactly as they are. Which, they likely won't, but we don't know too much in what ways things will change outside of some new game releases.
I have my own ideas as to what Microsoft should do and those involve some big restructurings to GamePass and taking on some other initiatives (like VR), and some other strategies. Some of those even involve easing off on GamePass some, at least as the central pillar to their strategy. However, it's completely understandable and even likely to expect Microsoft/Xbox division's own ideas are quite different from those, since they have more data to work with and can strategize around it. That all being said, if those ideas zero in on yet harder GamePass and mobile streaming pushes that feel like they come at the expense of the Xbox hardware, other sensible hardware initiatives, and game scope...well, I'll be increasingly weary about how effective those ideas can work out in practice.
And for goodness sake Xbox, plug up the damn leaks. I'm beyond tired of these insiders spoiling the surprise of genuine new game announcements by leaking details way too early. I think it's hurting some of these reveals more than helping them. And I'd also like more legit official sources to talk about and show off these games, through official means, instead of relying so much on insiders. Matt Booty seems to be making the rounds again, hopefully he does those suggestions since, well, it's kinda part of his
job and all