A debate around services like Xbox Game Pass has been intensifying over the past few years, as the gaming industry increasingly leans towards subscriptions in addition to regular sales. In a new report focused on discussing current gaming industry issues, former Sony Worldwide Studios President Shawn Layden expressed concerns that services like Xbox Game Pass pose a threat to the industry’s longevity and harm developers.
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Speaking to Gamesindustry.biz, Layden, along with gaming analysts Mat Piscatella and Piers Harding-Rolls, described the rise of subscription services as dangerous to the gaming industry’s overall health. “I’m not a big supporter of the ‘Netflix of gaming’ idea. I think it is a danger,” said Layden. “I mean, look what happened to music. In the popular mind, music costs nothing. Music should be free. Spotify, what is that? It’s 15 bucks a month or something, but virtually no one buys music anymore.”
The gaming space has recently struggled to meet consumers where they are. After years of players expecting to get games on sale or for “free” through services like Xbox Game Pass, they have become more focused on perceived value. The cost of full-priced games has also remained stagnant for years, with gamers experiencing sticker shock earlier this year when some companies committed to $80 games. This aversion to upfront cost among the gaming mindset has evolved to the point that new titles are made available on these subscription services at launch, which Layden called “bad for the business.”
“The problem with gaming is all we have is launch. That’s it. No one wants to pay money to come into the studio and watch people code,” said Layden, contrasting how gaming differs from the options that musicians have to make money in the music market, with concerts and global tours. Even movies can re-release in theaters to earn more, or make up costs through product placement, VOD, home video sales, and cable and streaming deals. Those options aren’t available to publishers.
According to Mat Piscatella, gaming subscription spending in the United States reached record highs in May after a consecutive period of growth.
However, while these numbers seem good for subscriptions, Piscatella warned that players have also expressed concerns about larger purchases, citing economic uncertainty and stating that they will be spending less in the future. “In this case, we have double the amount of people saying that they’re planning on spending less than are saying they’re planning on spending more,” said Piscatella. “That’s a little bit of a red flag.”
Industry analysts’ concerns about issues surrounding gaming monetization make sense. Still, one may wonder how these companies can offer these services in the first place if they are losing money for developers and publishers. The profitability of services like Xbox Game Pass remains a topic of debate, and Layden suggests that companies can use financial wizardry on their balance sheets to make things appear profitable that may not be sustainable in the long term.
“There’s a lot of debates going on. Is Game Pass profitable? Is Game Pass not profitable? What does that mean? That’s really not the right question to ask anyway,” said Layden. “You can do all kinds of financial jiggery-pokery for any sort of corporate service to make it look profitable if you wanted to. You take enough costs out and say that’s off the balance sheet and, oh look, it’s profitable now. The real issue for me on things like Game Pass is, is it healthy for the developer?”
Concerns for paying gaming developers seem like a reasonable worry in the current climate. The past few years have seen a surge in layoffs at major studios, with thousands of people exiting and entire development teams being forced to shut their doors. In July 2025, Microsoft shocked the industry by laying off 9,000 employees in one go, largely affecting several studios under the Xbox umbrella. These layoffs occurred despite Microsoft reporting an 18% increase in profit between January and March (via AP News), and Xbox Game Pass revenue hitting $5 billion for the first time.
For the time being, Xbox Game Pass seems good for the bottom line, but with industry layoffs and changing consumer attitudes, does it spell trouble for the industry to monetize and pay its creators in the long term?
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Image courtesy of Netflix
