2022 is the year I fell in love with Game Pass. As someone who coveted every major release since long before I started writing about games, I just could checking out a slew of hot new games without worrying about the hole it might leave in my wallet is extremely liberating, especially now that buying one big game equates to six months of Game Pass subscription. Seeing something like Darktide or A Plague Tale land on Game Pass is always exciting, and finding a hidden gem while browsing the library is even better. Outside of games I’ve covered professionally, I’ve probably played more games this year through Game Pass than through Steam, what wild.
Yes, ownership issues still gnaw at the back of my mind, though between modern licensing deals and the ephemeral nature of digital distribution, my hold on my game library is already pretty transient. In any case, Game Pass offers fantastic value for money for now. The benefits aren’t exclusive to subscribers either. For developers who offer games or make them active on the service, it can provide welcome financial guarantees (opens in new tab) in a busy and unpredictable market.
In short, we stand for Game Pass. Still, I also worry about how long the good times will last. In October, it was reported that Game Pass had failed to reach its subscriber count for the second year in a row. It wasn’t a narrow miss either. Microsoft’s forecast annual growth rate for the service was 72.88% as of June 2022. As of that date, the service had grown by just 28.07%. Even worse, the year-over-year growth has actually slowed compared to 2021, when sales grew 37.48%.
Growing pains
Now it’s possible that Microsoft was too ambitious. Growth in the gaming industry skyrocketed in 2020 as almost everyone was at home due to the pandemic. That growth has since slowed down, a trend that will continue in the coming years. That said, it also seems that Microsoft is struggling to grow Game Pass specifically. In a conversation (opens in new tab) at last year’s Wall Street Journal tech live conference, Phil Spencer revealed that Game Pass brings in about 15% of Microsoft’s total gaming revenue, adding, “I don’t think it’s getting any bigger.” Spencer still expects Game Pass’s total revenue to grow, but not his share of Microsoft’s total gaming revenue. Which would mean that Game Pass is not in charge and never will be.
Is this a problem? Well there is evidence (opens in new tab) that games on Game Pass can boost sales of those games on other platforms. This was specifically referring to third-party indie games, but it probably applies to Microsoft exclusive titles as well. I’m sure there are people out there who want to play Age of Empires 4, for example, but don’t want to pay for Game Pass. But even if Game Pass is useful to Microsoft in that way, given the big “Coming to Game Pass Day 1” marketing push we’ve seen from the company this year, the fact that it’s still underperforming should sting a bit.
As for why that happens, there are plenty of possible causes, but ultimately I think it boils down to a lack of star power. Game Pass has plenty of interesting, fun games, but one thing it doesn’t have is a God of War or an Elden Ring, that life-consuming blockbuster that everyone wants to play. The games industry disproportionately revolves around a handful of major blockbuster titles, and while Game Pass has had a few contenders, none of them have fared well. Halo Infinite should take the lead late last year, but 343’s game is struggling to maintain relevance in the era of Fortnite and Warzone. 2022 was particularly bleak from this perspective. Microsoft’s only first-party exclusive was Pentiment, which is a nice game, but not the kind of thing you’d bet an entire subscription service on.
Forward pass
2023 looks promising with a number of games potentially launching Game Pass into the stratosphere. But here too there are concerns. Microsoft’s ace in the hand, of course, is Starfield, Bethesda’s highly anticipated sci-fi RPG. Personally, I have doubts about how current Starfield will be when it finally lands. Fallout 4 was lagging behind when it launched in 2015, and the glimpses of Starfield I’ve seen haven’t represented a major leap forward in Bethesda’s design philosophy. However, from Microsoft’s perspective, the bigger hurdle is that Starfield isn’t an established brand like Fallout and The Elder Scrolls. If it were the Elder Scrolls 6 coming out on Game Pass next year, Microsoft could probably sit back and watch the money tide come in. With Starfield, there is still a risk of it underperforming.
After Starfield, Diablo 4 is the biggest game on Microsoft’s list. Hell, maybe this is the bigger prospect of the two. Either way, it depends entirely on whether Microsoft’s acquisition of Blizzard goes through, which is what the FTC intends too block the takeover (opens in new tab), is uncertain to say the least. Even if the FTC lawsuit fails, it could still thwart Microsoft’s plans by delaying the acquisition or forcing Microsoft to make concessions about which games it will make exclusive.
In addition to Starfield and Diablo, a few other games power see surprisingly large launches, such as Redfall, Ark 2, and The Outer Worlds 2. Realistically, though, I don’t see any of these drawing larger audiences than games from Blizzard and Bethesda Softworks. Then there are some potentially huge wildcards. The biggest is Playground’s Fable reboot, but when it comes out in 2023 I’ll eat the closest headgear available. There’s also Rare’s new game Everwild and Obsidian’s elusive RPG Avowed, which could be a big deal if it’s Elder Scrolls-y enough.
I feel like playing all these games. But from Microsoft’s point of view, the Game Pass outlook for 2023 seems heavily dependent on Starfield drawing a large crowd. If not, I imagine Phil Spencer will be asking himself some tough questions. I don’t think Game Pass will go away – the service is profitable according to Microsoft, even if it’s not doing the numbers the publisher would like. But I wonder how a disappointing 2023 would affect the company’s long-term plans. Given Game Pass’s alignment with Xbox Cloud Gaming, there are rumors that Microsoft’s latest Xbox consoles might also be the last, that the company would move to a hardware-free service model where you just need a Game Pass subscription and a controller and you can play on any device you like, from PCs to TVs. But if the majority of gaming revenue still comes from hardware and software sales, it’s unlikely Microsoft will go full-on Netflix any time soon.