The discussion about streaming services such as Xbox Game Pass has grown more heated in recent years, as the video game market shifts towards subscriptions along with traditional purchases. In a recent analysis examining current challenges facing the gaming industry, the former President of Sony Worldwide Studios, Shawn Layden, voiced worries that subscription-based services like Xbox Game Pass could potentially jeopardize the industry’s longevity and negatively impact developers.
As a passionate gaming enthusiast, I recently expressed my concerns to Gamesindustry.biz about the increasing trend towards subscription services in the gaming industry. Alongside gaming analysts Mat Piscatella and Piers Harding-Rolls, I voiced my apprehension towards the “Netflix of gaming” concept, stating that it could potentially harm the overall wellbeing of the gaming industry. In a candid conversation, I shared my sentiments saying, “I’m not entirely on board with the ‘Netflix for gaming’ ideology. I believe it poses a threat.”
Likewise, I pointed out the impact that streaming services have had on the music industry as an analogy. “Just take a look at what happened to the music industry,” I said. “In the public’s perception, music has become nearly free. Music should be accessible, but not without cost. Services like Spotify are around 15 dollars per month, yet it seems that hardly anyone purchases music anymore.
In the gaming world, it’s become challenging for developers to cater to users in their preferred ways. Over time, gamers have come to anticipate discounted or free games through platforms like Xbox Game Pass. This has led them to prioritize perceived value over cost. Moreover, the price of full-priced games hasn’t significantly changed for quite some time, causing a sense of sticker shock among players earlier this year when certain companies announced $80 games. The reluctance toward initial costs in the gaming community has reached a stage where new titles are now available on these subscription services at launch. However, Sony Interactive Entertainment’s Shawn Layden expressed concern, stating that making titles available immediately on subscription services could harm the business.
In essence, Layden pointed out a key disparity between the gaming and other entertainment industries: while gaming studios mainly profit from the initial release of their games, musicians and filmmakers can generate additional revenue through various means such as concerts, re-releases in cinemas, product placement, video on demand, home video sales, and cable/streaming deals. These options are currently not accessible to publishers in the gaming industry.
In May, gaming subscription expenditure in the U.S. hit all-time peaks, marking a continuous spell of growth as per Mat Piscatella’s observations.
In May 2025, U.S. spending on video game subscriptions reached a record monthly high of $0.6B, marking the third consecutive month of growth. It seems that people are seeking value due to increasing costs in everyday expenses like food and general economic uncertainty.
— Mat Piscatella (@matpiscatella.bsky.social) 2025-07-09T13:23:54.142Z
Despite the impressive subscription numbers, Piscatella cautioned that players have raised concerns about larger purchases, partly due to economic uncertainties. He explained that these individuals plan to spend less in the future, which could be a potential concern since twice as many people anticipate decreased spending compared to increased spending. In essence, this indicates a possible warning sign.
It’s understandable why industry analysts have concerns about gaming monetization issues, given they could potentially harm developers and publishers financially. Yet, it’s puzzling how companies manage to provide such services if they aren’t profitable initially. The financial viability of platforms like Xbox Game Pass is still a subject of discussion, and Layden implies that these firms may employ creative accounting techniques on their financial statements to make the services appear profitable in the short term, but their long-term sustainability might be questionable.
Layden stated, “There’s much discussion about the profitability of Game Pass. Is it profitable? Isn’t it? But that’s not the essential question. To be honest, one can manipulate financial reports for any corporate service to appear profitable if desired. By moving certain costs off the balance sheet, it suddenly looks profitable. However, the key question regarding services like Game Pass is: does it benefit the developers?
In today’s circumstances, it’s understandable to be concerned about game developers getting paid fairly. Over the past few years, we’ve witnessed a significant rise in layoffs at big studios, resulting in thousands of people losing their jobs and numerous development teams having to close down. A striking example is Microsoft, which laid off 9,000 employees across various studios under the Xbox brand in July 2025. This mass layoff took place even though Microsoft announced an 18% rise in profit between January and March (as reported by AP News) and Xbox Game Pass revenue exceeding $5 billion for the first time.
At present, Xbox Game Pass appears beneficial for their financial standing. However, given the ongoing layoffs within the industry and shifting consumer preferences, there’s a question about whether this model will prove sustainable and profitable for both the industry as a whole and its content creators in the future.
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2025-08-14 03:15