Is Xbox Game Pass Running Out of Steam?

From its very inception, Xbox Game Pass sounded like a fantastical business model and a dream come true for hardcore game enthusiasts. After all, who wouldn't want access to hundreds of games at a fraction of the cost? Even Microsoft seemed to wholeheartedly embrace Game Pass, though it almost certainly costs them a pretty penny to maintain the catalogue. 

However, recent events would suggest that Microsoft has dug themselves into a hole of sorts. 

The first issue is that Microsoft has to keep people hooked onto Game Pass for months in order to make money. This would necessitate more games, which would in turn require more subscriptions, and so on and so forth.

To be fair, Microsoft appears to be handling this matter relatively well. As of February 2024, there are supposedly about 34 million Xbox Game Pass subscribers. If accurate, this figure shows that about 10 million new subscribers joined up over the past two years.

Therefore, we can safely assume that Game Pass can bring in an absolute upper limit of approximately $6 billion in revenue per year. Actual income would undoubtedly be far lower though as it's hard to imagine that AAA games from EA and Ubisoft, among others, would be cheap. 

Xbox Game Pass and the Activision Blizzard sized hole

The second, more pressing problem is that during those two years, Microsoft spent a mind blowing $75.4 billion to purchase Activision Blizzard. Needless to say, Game Pass isn't going to recoup those billions on its own any time soon, especially now that Microsoft has to foot the game development bill for all of its new first-party studios as well. 

In theory, it's not an issue of if Xbox can make back that $75.4 billion but rather when. They certainly have the talent at their disposal and the resources, not to mention dozens of well-known IPs. Game Pass also gives them the unique ability to keep people continuously engaged with a reserve force of third-party games, which have thus far kept the program afloat. 

In reality, Xbox's first-party studios haven't exactly met consumer expectations, and it's not a recent phenomenon. Halo Infinite might be the most prolific example in that the core gameplay was almost universally praised, yet ultimately hampered by the dreadful post-launch support. 

Xbox's other IPs haven't really stepped up to the spotlight either. It's been five years since the last main Gears entry, the Perfect Dark reboot is nowhere to be found, Forza Motorsport was stuck in second gear, and Rare is seemingly shackled to Sea of Thieves. The only company that seems to be flourishing creatively is Obsidian as their recent games have been both varied and relatively well received.

Xbox Game Pass Without the Xbox Games

To make matters worse, Microsoft recently closed some of their studios as well. On May 7, Arkane Austin, Alpha Dog Studios, Tango Gameworks, and Roundhouse Games shut down. Of these four companies, it seems like the workers at Roundhouse Games fared the best as they are supposedly being integrated into ZeniMax Online Studios to work on The Elder Scrolls Online.

The workers at the other three studios weren't as fortunate. Alpha Dog Studios was the smallest of the three and was exclusively a mobile game developer. Arkane Austin was responsible for Prey and Redfall, though most of the workers who developed Prey had already left by the time Redfall launched. 

While you can argue that the fate of Alpha Dog Studios and Arkane Austin was driven by practicality given their track record, Tango Gamework's closure was highly controversial and for good reason. Tango was the developer of The Evil Within, The Evil Within 2, Ghostwire: Tokyo and most notably, Hi-Fi Rush. With such a selection of games, you'd think that Tango Gameworks was a match made in heaven for Xbox.

Indeed, it's hard to imagine a more perfect game for Game Pass than Hi-Fi Rush. Even if it wasn't the best-selling game of all time, Hi-Fi Rush was a very unique game with great art direction, fantastic music, and novel gameplay mechanics. Most importantly, the story wasn't oppressively long, ideal for programs like Game Pass where you might have a huge backlog to work through.

The worst part is that Tango Gameworks' closure will undoubtedly cause other developers to have second thoughts. The entire assumed purpose of partnering with Microsoft is for the relative financial stability to pursue more creative games. These possibly niche games are then able to reach a larger audience via Game Pass, where everyone wins.

If Hi-Fi Rush wasn't enough to save Tango Gameworks' workers, then what's next? Will Hellblade 2 cause Ninja Theory to meet the same fate years down the line? Is Double Fine at risk because Psychonauts isn't making piles of money? 

Thus, the permanent and insoluble contradictions between art and capitalism have been brought to the forefront. Microsoft clearly desires a monopoly in all but name, inevitably causing stagnation and decay. How else would you describe the relatively tepid state of Xbox when they have a trillion-dollar company backing them and dozens upon dozens of studios and IPs to draw from? 

Better yet, we should probably be asking what kind of savings can possibly come from firing a few hundred talented people when billions were just spent on the largest acquisition in gaming history. This is living proof that the interests of capitalists and workers are diametrically opposed, no matter how many crumbs fall from the table of the capitalists to the workers. 

Again, there's no real doubt that Microsoft can make back $75.4 billion eventually. Yet Microsoft's recent moves give the impression that they feel like they're not going to make that money back fast enough. There's no other reasonable or publicly available explanation as to why Tango Gameworks of all studios would be cut loose. If anything, it just makes Xbox look confused and directionless at best, sustained to an embarrassing degree by their third-party Game Pass partnerships.