Former Xbox Exec Ed Fries Is Worried About Game Pass, Here's Why

Former Xbox executive Ed Fries has reacted to Xbox Game Pass, saying what Microsoft is doing with the subscription service makes him feel "nervous" about its potential impact to negatively impact the gaming landscape in general.

He told Xbox Expansion Pass because he sees Game Pass as being similar to Spotify, and not necessarily in a good way. "The one thing that they're doing that makes me nervous is Game Pass," Fries said, as reported by VGC. "Game Pass scares me because there's a somewhat analogous thing called Spotify that was created for the music business."

Fries said Spotify "destroyed" the music business--which not all experts agree with--saying Spotify changed listener habits such that people don't buy music anymore.

"People don't buy songs on iPhone for example, because why would you? They're all on your subscription service app. Apple's said they're going to take away buying songs because no one's buying them any more," Fries said. "So we have to be careful we don't create the same system in the game business. These markets are more fragile than people realize. I saw the games industry destroy itself in the early '80s. I saw the educational software business destroy itself in the mid-'90s… they literally destroyed a multi-billion dollar market in a few years."

As a consumer, Fries said he loves the concept of subscription services like Game Pass and Spotify. "It's a great deal as a customer. But it isn't necessarily great for the industry," Fries said.

Tim Ingham of MusicBizWorldwide believes it was piracy, not Spotify, that is responsible for negatively impacting music sales. "Spotify, and the cloud-based technology on which it relies, actually gave music fans a more convenient, legal, and monetized alternative to piracy," Ingham told VGC.

Fries is not the only person connected to video games that has spoken critically of Game Pass. Strauss Zelnick, the CEO of GTA parent company Take-Two, has questioned whether or not it's possible for everyone in the chain--developers, publishers, and consumers alike--to come out ahead with a subscription-based service like Game Pass.

Speaking during an earnings call, Zelnick said subscription-based services like Game Pass can make sense for older catalog games--which is why we've seen Take-Two release some of its games on Game Pass before, including GTA V and GTA: San Andreas more recently. But he wondered if it makes sense for new releases. "For any business model to make sense in the entertainment business, it has to work for the creators of the entertainment as well as the consumers of the entertainment. I think catalog can make sense for the publishers, it can make sense for the consumers who are avid, who really want access to a lot of product. But if you're getting into frontline product, then the economics are much more difficult to make sense of," he said.

Zelnick observed that "consumption patterns" for a streaming service like Netflix--which offers linear entertainment--are different from interactive entertainment like games. And as such, thinking about Game Pass as the "Netflix of Games" might not be appropriate.

"Consumers who are involved with interactive entertainment have different consumption patterns than those involved with linear entertainment. Linear entertainment consumers consume something like 150 hours of programming a month. That's probably well over 100 different titles. In the case of interactive entertainment, consumers are consuming something like 45 hours a month, and that may be one, two, three, four titles. But it's certainly not 100 titles. So from a consumer point of view, it's not clear that a subscription model really makes sense, for the bulk of consumers," he said.

Another gaming higher-up who is less-than-enthusiastic about subscription services is Graeme Struthers, the co-founder of Devolver Digital. He told GameSpot that his main concern is that subscription packages may become so stuffed with games that subscribers might have difficulty finding something to play (anyone who has used Netflix is aware of this phenomenon).

"The world of subscription is a worry. And we're active in these areas, so we can't stand on the sidelines and just complain about these things. Game Pass, PlayStation Plus, and Apple Arcade, they are things we are participating in," he explained. "You do wonder if it's going to lead to a situation where there is so much content that you kind of fall off the edge. That's the one that keeps us up at night."

Xbox boss Phil Spencer has spoken openly about how there is no one defined path for the deals it makes for Game Pass releases. He told The Verge that Microsoft's Game Pass deals are "all over the place," and he understands that this might sound "unmanaged." In some cases, Microsoft will completely fund the development costs of a game, and the studio can go sell their game on rival stores like PlayStation and Steam, or at retail, while Microsoft enjoys the benefit of having another Game Pass game. "For them, they've protected themselves from any downside risk. The game is going to get made. Then they have all the retail upside, we have the opportunity for day and date. That would be a flat fee payment to a developer," he said.

Data and commentary from Microsoft and third-party publishers have shown that games that launch into Game Pass do not necessarily see their sales diminish--and, in fact, the opposite may actually be true. The indie game Descenders saw its sales quadruple after it arrived on Game Pass, for example. Of course, there may be some confirmation bias here, as developers aren't exactly coming forward to share stories of how poorly their games sold after coming to Game Pass. It's reasonable to assume that, of the hundreds of games on Game Pass, not all have succeeded.

Xbox Game Pass has more than 25 million subscribers as of January 2022, and this figure has no doubt grown more since. The subscription program is expected to grow even more when Xbox launches its streaming stick and begins working with TV manufacturers to put Xbox directly into TVs.