Phil Spencer took to the stage at The Wall Street Journal’s Tech Live conference to share two interesting tidbit of Xbox business information: Xbox Game Pass is apparently a “profitable” product for the company, and its earnings make up 15 percent of Microsoft’s content & services revenue.
The comments (documented by The Verge) finally shed some light on what Game Pass is doing for Microsoft’s Xbox business. Spencer played down the notion that content & services could be entirely driven by subscriptions. “We don’t have this future where I think 50–70 percent of our revenue comes from subscriptions,” he mused.
Spencer also added that Game Pass’ accelerating growth is currently happening on PC, with console growth having begun to slow down. “Mainly because at some point you’ve reached everybody on console that wants to subscribe,” he said.
Knowing that Game Pass represents 15 percent of Xbox content & services would normally give us some interesting context about how much revenue that represents. However, Microsoft does not share hard revenue numbers for that financial division.
Regulators in Brazil recently revealed that Xbox Game Pass pulls in about $2.9 billion in revenue on consoles as part of the country’s regulatory scrutiny over Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard.
Spencer’s comments about PC versus console growth also point to the company’s interest in utilizing its Xbox game library on platforms beyond Xbox consoles. Not only has Microsoft worked with Samsung to deploy an Xbox Cloud Gaming app on Samsung TVs, other regulatory disclosures have revealed that the company is looking to build its own mobile app store.
Despite the muddled financial numbers, Spencer’s comments do certainly give context for how Game Pass fits into Microsoft’s business. And it’s definitely a sign that subscription-based game services will be exert a huge amount of gravity on the game industry going forward.