Phil Spencer Says Xbox Game Pass Is Profitable, New Sign-Ups Slowing Down On Console

According to Microsoft Gaming CEO Phil Spencer, Xbox Game Pass is profitable already as a business, though the executive did not share any other details about the economics of the service or the accounting for it.

Speaking at The Wall Street Journal's Tech Live event attended by The Verge, Spencer said Game Pass is "profitable for us," adding that Game Pass makes up 10-15% of the Xbox content and services revenue. Just how Microsoft did the math to determine that Xbox Game Pass is turning a profit remains to be seen.

"Game Pass as an overall part of our content and services revenue is probably 15 percent," Spencer said. "I don't think it gets bigger than that. I think the overall revenue grows so 15 percent of a bigger number, but we don't have this future where I think 50–70 percent of our revenue comes from subscriptions."

In 2020, Xbox's Aaron Greenberg said Game Pass was "not a big profit play" for Microsoft. The company does not provided detailed financial breakdowns of its products and services, so we may never know what the economics of Game Pass truly look like.

In any event, Game Pass is a big and growing service, but growth on console is understandably slowing down. Spencer said PC Game Pass is surging--it jumped by 159% in the last three months--but new console subscribers are not keeping pace.

"We're seeing incredible growth on PC ... On console, I've seen growth slow down, mainly because at some point you've reached everybody on console that wants to subscribe," Spencer said.

As of January 2022, Xbox Game Pass had 25 million members, a figure that has no doubt grown since then. Microsoft launches all of its new first-party games into Game Pass, and this will include Starfield in 2023.

In other news, Spencer said during the same event that Xbox price hikes are coming.