Analyst Projects $5.5 Billion Gross Revenue For Xbox Game Pass By 2025

While trailblazing for the industry, it appears Microsoft is beginning to plateau with its effort for Xbox Game Pass. Accounting for more than 34 million users as of February this year, the service appears to be hitting the ceiling to further grow its subscription base. As a result, we are witnessing more opportunities opening for the service.

One is with Amazon. Recently, the service has opened up access via Amazon Fire Stick. What’s more, there is even a bundle now available for the streaming stick and a Xbox controller that offers a trial for Xbox Game Pass. And as Microsoft is now readjusting its pricing for the subscription to account for new traffic, projections for financial turnout appears to be in the billions come next year.

The last publicly shared approximate revenue for Microsoft on Xbox Game Pass comes from 2023 in which the firm indicated just over $1 billion gross was achieved for the service. Now from Ampere Analysis, it is anticipated that by 2025, it could swell up to $5.5 billion at least.

Microsoft’s changes to Game Pass are meant to improve the coherence of the offer but have also added another layer of complexity. Previously, Game Pass Console had its own challenges within the portfolio because it didn’t include multiplayer access, which is offered by Game Pass Core (or Xbox.

However, it was impossible to bundle that into the Console version of Game Pass and maintain good differentiation from Game Pass Ultimate, which brings together the multi-game subscription service across PC and console, multiplayer access on console, EA Play and cloud streaming across multiple screens into one offer. Hence the need for a launch of a new tier at a more expensive price point but one that does not include day one releases to clearly differentiate it from Game Pass Ultimate.

With day one releases key to the value proposition for many consumers, this will inevitably drive most new subscribers to the Ultimate tier of the service, which is already the most popular tier. Ampere estimates that 74% of current Game Pass subs on console are the Ultimate version with Core and Console making up the remainder. The fact that most subscribers are on the Ultimate tier, and with existing Game Pass Console subscribers retaining access if they keep on subscribing, means third-party games that launch into Game Pass will not have their exposure significantly impacted by a lack of inclusion in Game Pass Standard. 

Piers Harding-Rolls, Ampere Analysis Analyst

“The commercial landscape for the games sector in 2024 is one focused on reining in costs and trying to deliver profitability. Microsoft has been pursuing that aim across its whole games portfolio and Game Pass is no exception. In some ways, Game Pass’s profitability is driven by its scale, and with growth slowing, the company needs to look at other ways of driving up spend per user to offset escalating costs. […] Global consumer spending on Game Pass as a whole is expected to reach almost $5.5bn in 2025.”

One notable aspect of this push effort for Microsoft to improve its return for Xbox Game Pass is how it’s giving ammunition to adversaries. Namely the FTC. After its battle in court for the Activision Blizzard deal, the government facility has criticized Microsoft on its statements then compared to recent actions with price changes. You can read the full report by heading here.

Are you convinced Xbox Game Pass will achieve this revenue by next year?

Source: Ampere Analysis