Microsoft Admits Xbox Game Pass Isn’t Really Making a Lot of Money Right Now
Gamers often wonder how whether Xbox Game Pass is profitable for Microsoft, given the amount of promotions available on a regular basis and the expenses that Microsoft inevitably occurs into when adding new games to the library.
Speaking to What's Good Games, General Manager of Xbox Games Marketing Aaron Greenberg rather candidly admitted that in the short term Xbox Game Pass is indeed not that profitable for Microsoft. However, he highlighted the importance of building up a base of customers which will eventually pay off.
We always laugh when we hear that. Please don't worry about us. Microsoft is going to be alright. We're gonna make it, I think we're gonna be okay.
With Xbox Game Pass, Microsoft is focusing on over-delivering on value, even if it comes at the cost of profits in the short term. It's a different mindset. If you do optimize for profit, you can either say 'How we do get as much profit out of each customer?' or, do you pivot that and say, 'How do we add as much value to our fans?' 'How can we actually over-deliver on value?' If you do that, you build fans for life.
When people feel like you're over-delivering on value, they want to not only continue to use your service but they want to tell their friends about it. The most powerful marketing is word-of-mouth marketing. We can't create as many advertisements, as many assets as we want, but if both of you go tell one of your closest friends, 'You have to get Game Pass!' that's way more effective than any marketing I can do. For us, we just want to keep adding more and more value to Xbox Game Pass so you feel really good about that and you feel like you want to go tell your friends about it. And ultimately, we think long-term that's the right thing for the business and will have long-term benefits for us. In the short-term, yeah, Xbox Game Pass is not a big profit play. But we think long-term it works out good for everybody.
Indeed, Microsoft is clearly playing the long game here as we've often discussed both on Wccftech and on our podcasts lately. Starting this September, even Project xCloud will be included with the Xbox Game Pass Ultimate subscription, adding even more value to the service.
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