According to a report out of the UK based on investigations into Microsoft’s Activision Blizzard acquisition, Xbox head Phil Spencer’s claim that Game Pass would not cannibalise game sales may not be true. Microsoft issued a statement denying the report’s findings.
Microsoft Game Pass is a video game subscription service that has been dubbed the “Netflix of gaming.” Soon after Game Pass launched in 2018, Microsoft Gaming CEO Phil Spencer claimed that the service would boost sales of games available both on Game Pass and at traditional retailers. Spencer hypothesised that word-of-mouth about a game available on Game Pass would influence non-Game Pass subscribers, resulting in increased sales from non-Game Pass players. But, according to a preliminary report from the UK’s Competition and Markets Authority, the opposite may be true.
The CMA discovered an unspecified percent drop in base game sales in the year following a game’s addition to Game Pass after analysing internal Microsoft documents.
An Xbox representative responded by saying that game developers who make games available on Game Pass are fairly compensated for their work and are “allowed room for creativity and innovation.” The statement makes no mention of Game Pass’s impact on overall base game sales.
Soon after Game Pass debuted in 2017, some wondered if a subscription model would hurt traditional game sales, which seemed impossible. When a game is made available as part of a service with millions of subscribers, all of whom have instant access to the game, sometimes from the day of release, logic dictates that those millions of subscribers will play the game without paying the full retail price.
According to the CMA’s findings, Microsoft’s claim that those millions of subscribers would generate enough excitement about the game outside of its Game Pass ecosystem to persuade others to buy the game did not pan out.
According to internal Microsoft documents, Activision was not a fan of having its games available on Game Pass for this very reason. If the acquisition goes through, Spencer has promised that Activision Blizzard games such as Diablo and Overwatch will still be available on Game Pass.
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