Is Xbox Game Pass unsustainably burning cash? The Xbox boss has an answer

One of the things I’ve been told Xbox finds amusing is the discourse around Xbox Game Pass, with some industry commentators claiming it burns through cash and is unsustainable. I’ve said for a while that I’ve heard it’s already sustainable, and it seems now we have some official confirmation that yes, it is indeed the case.

Speaking with Stephen Totilo of Axios, Xbox head Phil Spencer discussed Xbox Game Pass, its targets, and its future.

With regards to subscriber figures, Spencer reacted to reports a few weeks back that XGP missed internal targets, emphasizing that Microsoft frequently sets aspirational goals for itself. “I’m always going to set those targets high. Game Pass is doing very well from a business perspective and a creative and engagement perspective, so it continues to be, I think, a real differentiator for our platform and enabler for creators and players.”

Totilo asked if it was wrong to claim that Xbox Game Pass is unsustainable, citing analysis that it could potentially eat into retail sales of upcoming exclusives like Starfield. Spencer quite frankly replied “yeah,” inviting people to do the math themselves. “I mean you could do the math on Game Pass. I guess you don’t know how many subscribers or how much each subscriber is paying, but you can make some fairly informed decisions and literally just do the math on what we think Game Pass could eventually be–you could do that on any part of the business. But absolutely, Game Pass is sustainable.”

Spencer reiterated that Xbox Game Pass is designed to supplement Xbox, and it is just one of a range of focuses the organization has right now. Spencer noted that it’s not the “only thing” growing within Xbox, and it’s true that retail demand for Xbox Series X and Series S consoles continues to outstrip supply. Xbox is also seeing something of a resurgence in Japan, outselling the Xbox One console entire lifetime sales in just a year.

“I love to see it growing, because I see what it does to the diversity of games that people play and the games that we can fund to go create. And I think that’s a very magical mix. But its growth is a part of Xbox. It’s not the only thing that’s growing in Xbox. It’s not the only focus of the organization, and it, as a standalone thing, is very sustainable as it sits today, like just today. It’s sustainable.”

Will Phil Spencer’s comments put the debate about Xbox Game Pass’ sustainability to bed? Probably not, but Xbox hasn’t typically shown itself to stick with businesses that are clearly failing. Microsoft killed off Mixer relatively soon after it became immediately clear it wouldn’t be able to challenge the likes of Twitch and Facebook Gaming, and Spencer also ended gaming development of Microsoft’s camera peripheral Kinect after it became largely rejected by the Xbox audience.

As Xbox celebrates its 20th anniversary, the future of the platform seems increasingly like a plurality of services and features to meet all types of gamers no matter where they are, with no single entry point serving as the dominant modality. Whether it’s Xbox Cloud Gaming, Xbox consoles, or PC, through physical retail copies or subscription services, the next 20 years of Xbox seem likely to have something for everyone.

“I know there’s a lot of people that like to write, We’re burning cash right now for some future pot of gold at the end. No. Game
Pass is very, very sustainable right now as it sits and it continues to grow.”