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Microsoft’s most recent SEC filing provided an insight into the growth of Xbox Game Pass. The subscription service saw a 38% increase in total subscribers compared to Microsoft’s last fiscal year. While that is impressive growth for a year without a Halo-like exclusive, it does come up short of Microsoft’s internal target of 48% growth. And this illustrates how important those major blockbuster releases are to Xbox Game Pass. And it shows why the company has spent so much on acquisitions.
Microsoft was expecting slower growth overall for fiscal 2021. In fiscal 2020, Xbox Game Pass grew 86%, which outpaced the internal target of 71%. But with no Halo and few other standout marquee releases or exclusives for Game Pass during this reporting period, the company knew that Game Pass wouldn’t replicate that 2020 expansion in 2021.
Still, 2021 came up shy of even those more modest expectations. And this says a lot about what will work for Game Pass and what won’t. While Xbox Game Pass did have some day-and-date releases like The Ascent and Outriders, those weren’t enough to push Game Pass’s subscriber base over the 50% line.
To the surprise of no one, Xbox Game Pass needs blockbusters
What would have the strength to do that? Big, exclusive games with massive budgets and brand recognition. And Microsoft understands this.
“With Game Pass, we are redefining how games are distributed, played, and viewed,” reads the SEC filing. “With our acquisition of ZeniMax Media, we made 20 of the world’s most iconic and beloved games accessible via Game Pass.”
That growth will likely pick up pace again this holiday with Forza Horizon 5 and Halo Infinite. But it should really pick up as the company is able to deliver on games like Starfield in November 2022 and beyond.
For now, Microsoft is spending a lot of money for decent growth. But it knows it needs to see spectacular growth to justify its investment. The good news for Xbox boss Phil Spencer and Microsoft chief executive officer Satya Nadella is that they are pretty close to their target even when they Game Pass is coasting on its previous momentum.
Once those big games do start coming on a regular cadence, Microsoft should be able to attract the kind of growth that it needs and desires.
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