Xbox Game Pass price increase feels like the final mistake for Microsoft

As the changes to Game Pass are met with disdain and mockery it feels like the entire Xbox brand is teetering at the abyss, but how did Microsoft get itself in this position?

It is the 25th anniversary of the Xbox brand next year but it seems unlikely that there’ll be much to celebrate. Xbox has long been the nearly man of the video games industry, the essentially infinite funds of Microsoft making surprisingly little difference when competing with the much more limited resources of Sony and Nintendo.

As Paul McCartney once said, money can’t buy you love and that’s been proven again and again as Microsoft has tried to leverage paid exclusives and expensive marketing deals to win over would-be customers, all to only limited effect.

Their most recent obsession has been Game Pass, which when it was originally announced, eight years ago, seemed a genuinely innovative idea, that was likely to disrupt the whole games industry. It didn’t though, something which Microsoft has been loath to admit to itself, leading to them making their most recent, and perhaps most serious, mistake: pricing the service out of the reach of ordinary people.

Game Pass was a good idea. The concept of a Netflix for gaming seemed to make sense at the time, when it was just a theoretical concept. Over a hundred games, including all first party titles, for a set subscription price seemed like amazing value for money at first. Although that was at a time when it only cost £8, whereas the current price increase has raised the Ultimate tier to a staggering £23 a month.

Either way, Game Pass wasn’t the instant success that Microsoft expected and while they refused to accept that, it soon became obvious why. People do not consume video games in anything like the same way they do movies and TV shows. Few people have the spare time to play enough games, especially if they’re 40+ hour epics, to make the cost of the Game Pass subscription worth it.

Not to mention the problems of choice paralysis and the reality that most casual gamers aren’t really interested in the more esoteric titles that make up the bulk of the Game Pass portfolio.

This isn’t a Microsoft problem. Sony has experienced exactly the same issues, with third party reports suggesting that the video game subscription business as a whole has been stagnant for the last several years. There are no official figures for Game Pass, but the fact that Microsoft refuses to release them (just as it won’t say how many consoles it sells) tells its own story.

According to Microsoft, Game Pass is profitable but there’s no way to quantify how much, especially when you then have to factor in how it negatively affects game sales and developer profits. But when adding Call Of Duty to the service, from day one, didn’t move the needle it’s hard not to come to the conclusion that Game Pass, and game subscriptions in general, are never going to be significantly bigger than they currently are.

There are other problems too, such as how subscriptions devalue the entire concept of video games. Not only in the sense that you never own them but because when paying money for one you have a vested interested in giving them a fair go, before deciding you don’t like them. But with subscriptions, games are often downloaded and then discarded within minutes, no matter their quality.

Microsoft’s no doubt hoping that streaming and cloud gaming (which have been newly emphasised by the changes to Game Pass and in which they have an enormous advantage over Sony) will help to turn the tide but not only is their service inexplicably worse than GeForce Now but in typical Microsoft fashion they’re flatly ignoring real-world realities – in this case that broadband infrastructure around the world is too inconsistent to be the only way you access video games.

At some point that will no longer be true, so technically Microsoft could just play the waiting game, but what will the state of Xbox be like by then? Especially given current hardware sales are next to nothing, and the only successful part of their business is operating like a third party publisher, no different from 2K or Ubisoft.

Microsoft’s mistakes seem very obvious to outsiders, not least because they’ve been making the same ones for over two decades. Their biggest problem comes down to the fact that they’ve only ever really been successful in the US, and to a degree the UK and Brazil. The brand has been dead on the Continent and in Japan almost since its inception and yet Microsoft has done virtually nothing to address this.

They’ve never engaged properly with Japanese publishers, no doubt hoping, during the Xbox 360 era, that they would become increasingly irrelevant. It should be remembered that the original reason for starting the Xbox project was to prevent Sony from gaining control of the living room via the PlayStation… which became an irrelevant concern with the advent of the smartphone.

The codename for the original Xbox was Midway, in reference to the decisive American victory against Japan in the Second World War. That hubris aside, Microsoft’s inability to appeal to Europeans has been equally calamitous, with weak marketing (and persistent problems with AI translated interfaces, that are as insulting as they are inaccurate) and a refusal to accept that the Xbox’s key exclusives do not have the same appeal outside the US and UK.

One of Microsoft’s persistent faults is that it always believes its own hype – far more than anyone else ever does. It’s taken far too long for Xbox leadership to recognise that legacy franchises such as Halo and Gears Of War are no longer big draws, while any mildly positively news is instantly blown up out of proportion. For example, it was obvious to everyone else that Starfield was unconvincing, just by watching the trailers, but Microsoft seemed to have been genuinely surprised that it was not received with rapturous applause.

Their other problem is that they’re always looking for a shortcut. That they came to the industry a generation later than PlayStation should have been treated as an irreverence, or even a positive given that for its first few years the Xbox 360 made Sony look like the out-of-touch old guard. That was the short glimpse at what the Xbox brand could and should have been: an important third voice that was pushing gaming in a different direction to either of its rivals.

Instead, after schooling Sony on how online gaming should be handled, they immediately took their eye off the ball and became obsessed with copying the Wii, via the risible Kinect motion sensor. Then there was the bizarre segue into multimedia with the Xbox One, during which they dismantled most of their first party developers and then tried to reverse that mistake by buying up existing ones, thereby upending the entire balance of the games industry when they bought Bethesda and Activision Blizzard.

That cost them over $80 billion but nobody at Xbox seemed to realise that Microsoft execs would want to see a quick return on that investment, one that certainly wasn’t going to come from Game Pass, and which instead forced them into their still vaguely sketched multiformat plans.

Buying up smaller companies that already specialise in what you want, rather than doing the groundwork themselves, is standard operating procedure for Microsoft, and indeed most big companies. But it’s generally not the way Nintendo or Sony work. They’ve built up their expertise over decades and for Sony it was really only in the PlayStation 4 that their first party studios reached full bloom.

But Microsoft hasn’t got that kind of patience, especially not given how happy they are to layoff thousands of developers at a time, as if they’re disposable lackeys rather than the keepers of generational knowledge and as Sony, and in particular Nintendo, realise the most important assets any games company can have.

That cuts to the heart of the problem: Microsoft has never seemed to properly understand the games industry. CEO Satya Nadella very obviously doesn’t but as much as Phil Spencer tries to present himself as a fellow gamer, Xbox under him has been no less a disaster than when Don Mattrick was sabotaging the launch of the Xbox One.

For Microsoft, gaming has always been just a new industry to conquer, with Sony and Nintendo as enemies to be defeated. The idea that they could bring something positive to the still nascent medium always seems to have been a secondary concern at best.

It’s very clear Xbox needs new leadership, but the problems run deeper than that. Xbox needs humility, it needs patience, it needs to understand why it keeps failing, and it needs to try and start appealing to everyone – not just Americans.

As a brand, Xbox will no doubt continue to be a very successful third party publisher but the dream of it being a leading console manufacturer is already over. It was obvious five years ago that Game Pass was not the future of Xbox, or gaming in general, but after Call Of Duty and this ridiculous price hike that has been made so clear not even Microsoft can ignore it.

Now, even the most ardent supporters are asking what is the point of being an Xbox fan, when the hardware has been made irrelevant and all the exclusives have gone multiformat. And yet Microsoft is so out of touch with its customers, that it thinks a 50% price increase will do anything but hammer yet another nail into the Xbox’s coffin.

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