As Microsoft continues its year-long journey to consume Activision Blizzard King, we keep learning more and more about the inner workings of the various corporations involved. And today, via the UK Competition and Markets Authority’s provisional report on the deal, we learned that when games are added to Xbox’s Game Pass service, they tend to see a decline in sales for around a year afterward. This isn’t the most surprising news, but it does seem to clash with past statements from Xbox boss Phil Spencer.
Launched in 2017, Xbox Game Pass has become one of the company’s biggest successes, helping it grow beyond its consoles and bringing in millions of new customers. For a relatively low monthly fee, subscribers get access to a huge catalog of Xbox and PC games as well as other benefits, such as discounts on DLC and the ability to stream a number of games. Of course, when it first launched, some wondered if its Netflix-like structure would lead to fewer people buying games. And it appears, based on Xbox’s own internal data, that this is indeed the case.
As spotted by GamesIndustry.biz, buried deep in a new report from the UK’s CMA is a small bit of information from Xbox about how Game Pass hurts game sales. Here’s what’s in the report:
Microsoft also submitted that its internal analysis shows a [redacted]% decline in base game sales twelve months following their addition on Game Pass.
The report does note that Microsoft’s data comes with some “some limitations,” specifically in regard to the time period which Microsoft appears to have used for its internal tracking. However, Xbox itself is noted as admitting in internal documents that adding games to the service would lead to “cannibalization of [digital] sales.”
Xbox previously claimed Game Pass increased sales
Now, this seems to clash with a statement Xbox boss Phil Spencer gave in 2018, about a year after the launch of the service. Back then, Spencer said sales increased when games hit Game Pass.
“When you put a game like Forza Horizon 4 on Game Pass, you instantly have more players of the game, which is actually leading to more sales of the game,” Spencer said. “Some people have questioned that, but when State of Decay 2 launched, you saw—if you looked in the US at the NPD—this game selling really well the month it launched on GamePass.”
Also in 2018, while talking to Giant Bomb during E3, Spencer specifically called out two games— Sea of Thieves and State of Decay 2—as selling better than the company forecast, even though both titles were available on Game Pass.
Of course, both of these answers come from 2018. Things change and it’s possible that with more data, Xbox has seen more frequent declines in sales, especially as the service has grown so much since those early 2018 days. There is still evidence as of 2020, though, that some games do see sales boosts due to Game Pass. So, as you might expect, this is a complicated topic. Kotaku has reached out to Microsoft and Xbox for clarification.
Interestingly, the CMA’s report also notes that according to Microsoft, historically Activision hadn’t been too keen on including its games on Game Pass or any platform’s subscription service. Why? Well, Activision believed doing so could “severely cannibalize” sales of games, especially when it comes to big new releases. But based on past comments from Xbox and Spencer, if the deal is finalized, it won’t matter. Activision games, big and small, will head to Game Pass eventually.
Update 2/13/2023 7:16 p.m. ET: Microsoft commented to Kotaku:
Xbox Game Pass offers gamers and game creators more choice and opportunity in how they discover, experience, and deliver games. For gamers, that means providing another option for them to discover games and play with friends at a great value. For developers, that means creating another option for how they monetize their games.
We’re focused on helping game creators of all sizes maximize the total financial value they receive through Game Pass. Each game is unique, so we work closely with creators to build a custom program to reflect what they need, ensure they are compensated financially for their participation in the service, and allow room for creativity and innovation. As a result, the number of developers interested in working with Game Pass continues to grow.