Xbox Game Pass Is Not Growing As Fast As Microsoft Anticipated
New subscriptions fell short of targeted growth rates in the 2022 fiscal year.
Game Pass subscription targets fell short of Microsoft company goals, according to a new financial filing from the tech giant. According to a report from Axios, Microsoft targeted a 73% gross rate for Game Pass for last fiscal year, which ended June 30, 2022. The service grew instead by 28%.
These goals are tied to Microsoft CEO Satya Nadella's pay. The company also failed to reach a similar marker in the 2021 fiscal year. However, in the 2020 fiscal year, Game Pass subscriptions exceeded expectations. Other goals that would affect the CEO's salary include Microsoft Cloud revenue, Teams usage, and LinkedIn sessions. Overall, Nadella received a $55 million payout in stocks and cash.
At the Wall Street Journal Tech Life Event, Microsoft Gaming CEO Phil Spencer said that Game Pass is profitable and that PC sign ups are seeing tremendous growth, although console sign ups are slowing down. He also alluded to possible price hikes after the holiday season. Xbox Game Pass currently costs $9.99 a month for either PC or Console. Game Pass Ultimate, at $14.99 a month, is a bundle that includes both PC and Console game pass, as well as Xbox Live Gold. Microsoft does not release any sales data concerning Game Pass. However, it did announce in January 2022 that the service had reached 25 million subscriptions.
Game Pass's market power has been a key part of Sony's objections to Microsoft's ongoing acquisition of Activision Blizzard. The UK's Competitions and Markets Authority echoed Sony's concerns, leading to a counter-statement from Microsoft. Last week, an anonymous stockholder sold a massive amount of Activision Blizzard shares, reflecting a possible lack of confidence that the deal would go through.
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