Game Pass misses growth target for second year running

Game Pass misses growth target for second year running

Microsoft has missed its growth target for Xbox Game Pass for the second year in a row.

Earlier this week, the company shared its latest financial results, including a hardware revenue growth of 13 percent and PC Game Pass subscriptions increasing by 159 percent year on year.

However, that still wasn’t enough to meet Microsoft’s targets, according to a new financial filing (reported by Axios).
Microsoft targeted a 73 percent growth rate for Game Pass for its fiscal year ending 30th June 2022. Instead, it managed just 28 percent growth.

The previous fiscal year had a target of 48 percent growth, but instead the company managed 38 percent. That followed an over-achievement the year before.

Axios reports the target was tied to performance incentives for Microsoft CEO Satya Nadella and other top executives.

The news follows comments from Xbox head Phil Spencer that Game Pass is profitable despite declining growth, which he said is “mainly because at some point you’ve reached everybody on console that wants to subscribe”.

Game Pass as a whole now accounts for around 15 percent of Microsoft’s overall Xbox content and services revenue, though Spencer admitted the price may increase in the future.

“We’ve held price on our console, we’ve held price on games and our subscription. I don’t think we’ll be able to do that forever… I do think at some point we’ll have to raise some prices on certain things, but going into this holiday we thought it was important to maintain the prices,” he said.

Although Microsoft doesn’t report specific numbers, “over 25 million Game Pass subscriptions” have been delivered according to this latest report. The same number was given in January this year.

Beyond the natural declining growth mentioned by Spencer, a lack of big Xbox exclusives compared with Sony and Nintendo is perhaps a further reason for these missed targets.

Via Eurogamer