Microsoft's Xbox Game Pass subscription is irresistable

Microsoft launched its ground-breaking gaming subscription, Xbox Game Pass in June last year, offering unlimited downloads and play of more than 100 games for $9.99 per month. This month Microsoft announced a major enhancement to the subscription service; Xbox One games from Microsoft Studios will now be available to Game Pass subscribers on the same day they are released to a global audience; previously members had to pay separately to buy the games or wait for the games to be launched as part of their subscription plan.

Gaming subscriptions are becoming more popular as the subscription economy grows and people of all ages are becoming more comfortable paying for entertainment via subscription.  Microsoft are tapping into the trend that subscriptions are going main stream as consumer preferences shift from ownership to immediate access and specifically exploiting the GaaS (game as a service) model. Microsoft, Sony and Nintendo are all experimenting to see what works and what doesn’t. 

Microsoft will benefit in three key ways from this strategy. 1) Reach. This move immediately exposes their games to a much larger audience. While Windows Store still isn’t where it needs to be to appeal to the core PC gamer, there’s a huge untapped potential there to be unlocked (Xbox Game Pass will work on Windows 10 PC for Xbox Play Anywhere games). 2)  Recurring monthly revenues. A stable source of subscription revenues from a much larger pool of gamers who they can entice to come back when a new update drops. 3) An additional source of revenue from microtransactions and in-game purchases which are the lifeblood of GaaS and, in all likelihood how Microsoft plans to make Xbox Game Pass work.

A YouGov survey commissioned by Zuora, Inc in 2017 showed that adoption of subscriptions increased 11% last year with 9 in 10 British adults now subscribing to at least one product or service. Gaming Services represented 9% of all subscriptions vs VOD at 30% and music at 19% but innovations like this are undoubtedly going to lead to greater subscription engagement.

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