Everyone seems to agree that Xbox Game Pass is a pretty great deal. In fact, sometimes it seems like too good of a deal. If you play a lot of games on Xbox One or PC, it quickly pays for itself. Meanwhile, Microsoft is constantly running promotions for it that discount the service to an absurdly low rate. As a result, many have begun to wonder: how is Microsoft making money on it? And as a result of this rising question, some have suggested that Phil Spencer and co. are burning money up front in order to gain customers. And once they have this base, the price will increase. Of course, there's no proof backing up these claims, however, they aren't wild in their assumptions either.
That said, according to Phil Spencer, this isn't Microsoft's angle. Not only is this not the model the company is following with Xbox Game Pass, but the head of Xbox suggests the service is doing quite well for Microsoft.
“I know some people — I’ve seen it — some people say, ‘Oh, they’re just kind of burning money left and right in order to gain customers so they can trick you into raising the price later,'” said Spencer while speaking to Stevivor. “There’s no model like that, for us. We feel good in the business that we’re running now. We’re definitely investing in it, but not investing in a way that’s unsustainable. We’ll do promotional deals and stuff — any service will, but it’s a business and it’s a business that does well.”0comments
Now, as you may know, it's a somewhat common practice for video game hardware makers to sell consoles at a loss up front in order to attract an install base as quickly as possible The thinking here is, get everyone through the door, and make money on the back-end via software. In other words, it's not out of line to think Microsoft would be willing to take a loss up front with Xbox Game Pass to get that subscription base, but it's wrong, or at least Spencer claims it is.
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