#64: Like and subscribe

Growth in Xbox Game Pass is slowing. Just how concerned should Microsoft be?

First, a warm welcome to the clutch of new readers sent here by Eurogamer’s lovely shout-out to Hit Points yesterday. Quite a surge. I am feeling no pressure. None whatsoever.

Oh god.

Yesterday Microsoft revealed that take-up in Xbox Game Pass has slowed significantly, with growth in the 12 months to June 30 hitting 37.48% against a target of 47.79%. (I was going to round those figures, but in a company of Microsoft’s size I expect one hundredth of a percent to be roughly equivalent to the GDP of a small country.) Game Pass missing its target is not a bad thing in and of itself — and with Microsoft in rude health and CEO Satya Nadella making $50 million a year, I doubt Phil Spencer fears much for his job — but it’s clearly not that great, either.

To be fair, I’m not sure how useful these figures are as a measure of the health of Game Pass, or anything else, in what has been a very non-normal year. Game Pass growth is one of six metrics by which Microsoft calculates its executive compensation, and the Xbox subscription service was one of only two areas in which the company fell short. The other was growth in monthly usage of Microsoft Teams.

These kinds of user-focused metrics are naturally harder to predict than revenue growth, and the pandemic’s effect on consumer behaviour is bound to have thrown forecasting models severely out of whack. Teams usage surged by over 500% last year as half the world suddenly started working from home; it would take one hell of a crystal ball to accurately predict what would happen after that. Likewise Game Pass, which comfortably beat its target last year as people turned to games to help pass the time during lockdown. This was always likely to be a quieter year, as vaccine programmes rolled out and people started going outside again.

But! This year’s targets were already heavily reined in — in Game Pass’ case, from 71% down to 48% — no doubt on the assumption that growth would slow as life returned to (sort of) normal. There will, I expect, be at least some consternation at Microsoft over how Game Pass has failed to meet even a set of tempered expectations. Particularly in a year where it launched two new consoles and Xbox Cloud Gaming, completed the Bethesda acquisition, and made deals left and right to make Xbox Game Pass an increasingly irresistible proposition to the value-conscious lover of games. If all that doesn’t lead to growth targets being met, what will?

Still, there’s little cause for alarm. The numbers are still going up, after all; Game Pass still grew by many millions of subscribers. I highly doubt Phil Spencer is about to pack his collection of videogame t-shirts into a cardboard box and be escorted off campus by security. Besides, I personally find all this rather comforting. I understand why Microsoft sees Game Pass take-up as the defining measure of the health of its videogame business. But what this tells me is that, despite Microsoft’s attempts to change the rules of engagement, it is still software, not services, that matters most.

Game Pass is chock full of games, but it continues to lack somewhat for bangers. There are over 100 titles on the service today, many of them excellent, but none of them is a traditional system-seller. Those are coming. Spencer et al will look at the coming year, at Forza Horizon 5 and particularly Halo Infinite; they will look further ahead, towards Starfield and The Elder Scrolls VI. They will find in all that plenty of reason for optimism. So, in a broader sense, do I.


  • Sticking with Microsoft, Redbubble’s Phil Spencer spoke at a Wall Street Journal event this week. Among the not-really-revelations are a pledge that Microsoft isn’t done with acquisitions, and still has no interest in making its own VR hardware. As you were.
  • Marcus Lehto, founding member of the original Halo team and the designer of Master Chief, is joining a new EA studio in Seattle as game director. Lehto’s most recent project, the RTS-infused sci-fi shooter Disintegration, never quite found its audience. He’s a good egg, and Hit Points wishes him all the best with his new adventure. Unfortunately this now means we can likely take him off the subscriber-exclusive interview wishlist, because EA PR are an absolute nightmare on whom I gave up many years ago.
  • Epic Games has announced publishing agreements with Eyes Out, the studio started recently by Spec Ops: The Line’s Cory Davis and Nine Inch Nails’ Robin Finck, and with Spry Fox, developer of old Edge office obsession Triple Town and the Roguelike puzzler Road Not Taken. Spry Fox’s new game is described as a “multiplatform, non-violent, persistent multiplayer game designed to encourage friendship and reduce loneliness in the world.”
  • More than 20 staff have departed Activision Blizzard as a result of its misconduct scandal, according to Fran Townsend, the firm’s executive VP of corporate affairs, and a further 20-plus have been subject to disciplinary action. This seems to me to be not quite cleaning house so much as airily waving a feather duster around, but it’s a start. Meanwhile, the firm’s legal army has requested a stay in the lawsuit that brought the allegations to light, asking for time to investigate allegations of ethics violations by DFEH lawyers.
  • Facebook reckons the best way to avert its ongoing PR crisis is changing its name. I am sure this will work brilliantly — look how everyone stopped using the name Google when it changed its name to Alphabet.

That’s your lot! To the influx of new arrivals, I hope today’s edition lived up to Eurogamer’s kind endorsement. To the rest of you, thanks so much for sticking around and putting up with me. I continue to appreciate you enormously.

As ever, if you’ve enjoyed today’s installment, do please give it a share, either using the buttons below or the little arrow icon at the top of the email, if you’re a fan of scrolling back to the start of things you’ve just read. And if you’re not already signed up for a paid subscription then perhaps today’s the day, hmm? Barring any catastrophes, the first subscriber-exclusive edition will be landing in inboxes worldwide this Saturday. How exciting. Have a good couple of days, and I’ll see you all on Friday.