Xbox CEO Asha Sharma has detailed the company’s ongoing strategy to ‘Reset’ Xbox which includes letting go of over 4000 employees by the end of the current fiscal year, while also admitting that Game Pass has failed to grow at the rate Microsoft had expected. According to the Wall Street Journal, Microsoft had originally anticipated Game Pass subscriptions to reach somewhere around 77 million this year, but it currently has hit only about 30 million. Also, based on the FTC vs Microsoft trial in 2023, the company had hoped for a whopping 100 million subscribers by 2030, which seems highly unlikely given where the numbers are at right now.
In a recently sent email, the Xbox CEO has clearly outlined the apparent failure of the company’s strategy with Game Pass:
“Our business today is not healthy,” Sharma said. “We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset Xbox.”
However, there’s also a valid reason why subscription services haven’t managed to gain as much momentum as the publishers would’ve liked is cause they place too much control in the hands of the companies and almost none to the actual players and if services like Game Pass continue to become more successful in the near future, there could be a time when the megacorporations who control the industry simply decide to make the entire medium run solely on subscriptions which means players would lose all control over their games altogether.
There are other reasons why subscriptions services aren’t nearly as great as the companies would have us believe, and here are some of them as spoken by Former chairman of PlayStation Worldwide Studios Shawn Layden and the former vice president of Bethesda Softworks Pete Hines.
