Xbox Game Pass Is Reportedly Profitable After All

by

After Microsoft announced layoffs last week, people who use video games are starting to feel uneasy about possible big changes that could happen in the gaming world. This situation has once more sparked debates about Xbox Game Pass, a relatively cheap service provided to Xbox gamers, and whether it is truly profitable and sustainable for both users and publishers. The topic has been raised many times when Xbox Game Pass is being discussed, but now, those who subscribe and critics may finally get the answers they’ve been seeking.

Christopher Dring, editor-in-chief of The Game Business, explained the earnings generated by Xbox Game Pass, using trusted resources he is acquainted with as his basis.

Let me clear up a point. Contrary to some assumptions, Xbox Game Pass is actually profitable, even considering the potential losses in sales for their internal development teams, as confirmed by reliable sources. Approximately 18 months ago, I reached out to Xbox regarding the details of what they include in the Game Pass profit and loss statement (P&L). To put it simply,…

— Christopher Dring (@Chris_Dring) July 8, 2025

One argument Dring aimed to clarify was that Xbox might overlook the expenses associated with its own products (first-party costs) while evaluating the profitability of its services. As a result, some of their earlier claims about profitability could potentially be less than perfectly truthful.

In his post dated July 6th, Dring explained that he requested more information about the statement suggesting Game Pass is profitable, to which he was responded that no costs related to first-party games were taken into account.

In the latest discussion from July 8th, Dring put forth an opinion supported by evidence, suggesting that despite initial losses due to missed sales and additional purchases from first-party teams, the service still manages to turn a profit in the long run.

Despite all the other factors mentioned, it has been reported that even accounting for lost revenue from first-party game microtransactions, Game Pass remains profitable. Therefore, this is good news according to Dring.

Additionally, Dring mentioned concerns about the initial expenses related to first-party game development. He clarified that these costs don’t influence the evaluation of Xbox Game Pass profitability. Instead, they are compensated through alternative methods, like in-game purchases (microtransactions) and additional content (DLC).

Xbox Game Pass has faced recent criticism as it adapts to the evolving gaming industry moving towards service-based experiences. On July 5, Raphael Conlantonio, founder of Arkane Studios (Dishonored) and president & creative director of Wolfeye Studios, sparked a conversation about Xbox Game Pass by highlighting the potential drawbacks associated with the service.

Conlantonio asked, ‘Why isn’t anyone addressing the obvious issue here (Gamepass)? Ahem, ahem.'” or simply, “Conlantonio wondered why no one was discussing the apparent issue (Gamepass).

In later posts, Colantonio voiced his opinion that the Xbox Game Pass model, over a period of ten years, has been detrimental to the game industry as a whole. He viewed this service as being propped up not by its inherent value, but rather by Microsoft’s seemingly endless financial resources. According to him, this excessive capital was causing competition to dwindle and negatively impacting the gaming environment.

As a devoted Xbox enthusiast, I’ve always had my doubts about the apparent profitability of Game Pass, given that much of its financial specifics have remained hidden from us fans. In 2022, Microsoft Gaming CEO Phil Spencer confirmed that Game Pass is indeed profitable for them and contributes around 10-15% to their content and services earnings. Yet, Spencer didn’t delve into the particulars of how this profitability is calculated, which might have been what skeptics were hoping for.

In 2020, Aaron Greenberg from Microsoft mentioned during a podcast that Xbox Game Pass wasn’t expected to generate substantial profits immediately but might become profitable in the long run. As gaming fans and consumers try to pinpoint the reasons behind recent challenges in this sector, it seems that conversations about services like Xbox Game Pass will be vital for predicting what lies ahead as the industry experiences a major transformation.

Read More

2025-07-08 20:43