This week, Microsoft let go of more than 9,000 employees, and the Xbox division was notably affected. Consequently, several game projects have been terminated, one studio was shut down, and unfortunately, a large number of individuals are now jobless.
After the tumultuous events, I’ve found myself and many others seeking explanations. As per a piece in The Seattle Times, it appears that the colossal tech empire is aiming to liberate funds for further investment in Artificial Intelligence (AI).
Redmond Corporation has made significant financial commitments towards Sam Altman’s OpenAI project, which has led them to promote their Copilot product more aggressively to customers.
However, according to Raphael Colantonio, the former head of Arkane Studios, there might be an alternative reason behind Xbox’s performance issues.
He indirectly mentioned, “What’s everyone ignoring the obvious issue here? Hint hint, it’s Game Pass,” he posted somewhat blatantly on X (or Twitter).
This sparked an intriguing conversation on social media, as some prominent developers voiced their opinions about Microsoft’s innovative approach to doing business.
Asked to expand on his thoughts, Colantonio said:
In my opinion, the Game Pass model, supported by Microsoft’s seemingly endless financial resources, has been detrimental to the video game industry for a decade. However, I believe that at some point, the consequences of this model will become apparent. I don’t see how Game Pass can coexist with other business models in the long run. Either it will drive out its competitors, or it may have to adjust itself.
In reaction to a thread started by Colantonio, Larian’s Michael Douse pointed out that the concept of having an infinite amount of money didn’t make any sense. Raphael then offered his thoughts on the subject.
Indeed, I concur with your sentiments. It’s frustrating how they initially assured us that their actions wouldn’t affect sales, but then later admitted that it did have an impact. It seems obvious now, doesn’t it?
It’s important to mention here that Colantonio’s game, The Weird West from his studio WolfEye, was added to Game Pass last year in 2022. Therefore, he likely has a solid understanding of the advantages and disadvantages associated with this business model.
In the end, both Douse and Colantonio concurred that Sony’s method of subscriptions, which includes releasing games later in their lifespan, is a more robust strategy.
Douse said:
The financial aspects didn’t add up to me, but on the other hand, I acknowledge that this approach aided in reducing risk for small teams working on novel or high-risk intellectual properties. Instead, I strongly favor Sony’s ‘lifecycle management‘ strategy.
Previously, Sony’s former CEO, Jim Ryan, faced harsh criticism for voicing opposition to the Game Pass subscription service model. At that point, there was a widespread belief among many that the success of PS5 would be jeopardized if PlayStation Plus didn’t offer first-party games at launch from the get-go.
At the time, he said:
Previously, we’ve discussed this topic – it’s unlikely that our upcoming game releases will transition into a subscription model. The high costs associated with developing these games, which typically exceed $100 million, make such a shift unsustainable for us.
It’s intriguing to observe the economic aspects of Game Pass being scrutinized more closely now, as opposed to the years of casual mention by Microsoft and the wider media. Behind the scenes, there seems to be a bigger narrative unfolding.
This week, one analyst from France stated that more than 95% of The Elder Scrolls 4: Oblivion Remastered’s sales were not made on Xbox platforms in Europe. This suggests a decrease in Microsoft’s market share in Europe, but also hints at the potential impact of Game Pass on traditional full-price game sales.
It’s apparent that we currently lack sufficient information to determine whether our business model affects Xbox’s profits or not. However, it seems that Sony’s cautious approach towards subscriptions is paying off, suggesting that their decision might have been a wise one in the long run.
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2025-07-06 16:07