During pre-recorded testimony for the Federal Trade Commission (FTC) and Microsoft evidentiary hearing, Jim Ryan, the CEO of Sony Interactive Entertainment, went on record stating that publishers do not like Microsoft’s video game subscription service because they believe it is “value destructive” according to IGN.
How the Xbox Game Pass works according to Microsoft is players will pay a monthly fee of $10 a month in exchange for access to dozens of “high-quality games” with titles being continuously added. This function has availability on both Xbox and PC, with options such as Xbox Game Pass Ultimate and Xbox Live Gold being additional monthly purchases that provide additional benefits.
It is important to note that “value destructive,” in this case means the model itself for the battle pass Microsoft has set up is not sustainable for profit. In Ryan’s own words during the testimony he states:
“I talked to all the publishers, and they unanimously do not like Game Pass because it is value destructive. The Game Pass business model appears to have some challenges, and Microsoft appears to be losing a lot of money on it.”
Xbox has denied these claims with the Xbox CEO Phil Spencer going on record saying that the service was not burning cash and that it was “very, very sustainable.” This however was not entirely true as Microsoft admitted in the UK Competition and Markets Authority that its video game subscription service caused a decline in base sales.
Whether or not this strategy is sustainable has been contentious to say the least, but Xbox seems to be holding strong on the idea, so it will be interesting to see how things unfold as people continue to enjoy the benefits of the Xbox Game Pass.