Aaron Greenberg’s sentences come in handy with what we’ve been saying for years about Gamepass profits. But we continue to insist, Greenberg does not mention everything and the Gamepass will really hurt.
There are certain things that are evident. And one of them is that without eggs there are no omelets! Hence, by the same logic, a system that offers a lot for little money cannot be profitable.
And over the years, we have written several articles on the subject. How can Microsoft keep the production of AAA games on a regular flow if it doesn’t sell them each for 70 euros each, but allows people to access it for as much as 120 euros a year with a Gamepass.
Now 120 euros a year we are being friendly. Because we all know that Microsoft allows you to join the Gamepass for one euro a month, and that it even allowed it to be extended to a period of three years (36 euros for 3 years, without internet access). We also know that Live Gold can be converted into a Gamepass by joining 1 euro, which allows for 181 euros to join for three years, which gives something like 5 euros per month, with internet access.
And we know that Microsoft offers Gamepassa in boxes of cereal and hamburgers.
Hence, the number of users who pay 10 euros per month for the Gamepass, or 15 euros per month for the Gamepass with internet access, will certainly be reduced.
And if it was already difficult to see how 120 euros a year could pay 3 to 4 annual releases of AAA games, when we talk about these values, any logic other than Microsoft being subsidizing the service, considering it an investment, was impossible to be done.
And we even use Netflix as an example, where we often show data from your accounting where we realize that even with more than 120 million subscribers the service struggles to remain profitable, regularly accumulating losses. This in a market where Netflix does not compete with the great source of revenue for films, the cinema.
But when we approached this subject, which sounded more than logical, what was the reaction we had to these articles by Xbox fans? Discredit and partiality accusation! And that in something that could only sound … evident!
Microsoft recently announced that, with the pandemic, the Gamepass now had 10 million subscribers. Something that, given the promotions mentioned above, was not surprising at all. And that means that if the Gamepass could actually make a profit, it would be at its peak in profit since its creation.
But here comes Aaron Greenberg giving an interview and talking about the Gamepass. And contrary to what Microsoft had once suggested, Greenberg makes it clear that (and I quote):
The Gamepass “is not a great source of profits at the moment”.
Now, with 10 million users, Gamepass is not a great source of profit, what about the times when we wrote our articles and the service did not have 10 million users? There is no doubt that the Gamepass caused damage!
But does the Gamepass really make a profit now? Well, if these 10 million were paying 15 euros a month and if Microsoft did not launch its exclusives on day one on the service, yes, it would be.
But so, Greenberg, I’m sorry, but what we always question remains valid, and we continue with our original idea that Microsoft is hiding the truth, and that the service is making a loss, thus being something financed, that is, an investment that it will last until the objectives are achieved, then changing its operation when competition does not exist.
And the idea is even more vivid when Greenberg refers to the Gamepass exactly as “an investment, which has short-term costs, but which, if everything goes as planned, will pay dividends in the end”.
In other words, today, and contrary to what is meant by itself in the previous sentences, the service is not paying dividends. Because if you were making profits right now, even if small, you would already be bringing dividends, and you would not talk about long-term profits.
But interestingly, Greenberg himself does not seem to be sure about the future, as his phrases are not convincing. And this is noticeable when he says:
“Microsoft will be fine. We’ll make it – I think we’ll be fine. ”
In the same sentence, Greenberg goes from conviction to belief. Perhaps because I am fully aware that what they propose is not feasible and cannot be maintained forever, so that for the service to be a success and they may one day impose conditions that really make it profitable (that is, much more expensive), they need to have dominance over the market so that customers don’t run away from them.
But none of this will be new to those who accompany us. For there is nothing we are saying in this article that has not been said before. The big news here are Greenberg’s phrases that basically, not being able to say that the service is prejudicial, ends up confirming what we always think when using the term “it is not a great source of profits”.
And the willingness of Microsoft to force customers to join is great, which is proven by the fact that a visit to the Microsoft website to search and join for Live Gold is a daunting task because the membership and prices are hidden and the live page gold covered in Gamepass advertising. But when found, we realized that Microsoft now only sells Live Gold for 1 month at 6.99 euros, or 3 months at 19.99 euros, which makes the Gamepass offer even more attractive. Not by discounting the gamepass, but by the price increase of Live Gold, which can no longer be subscribed for 60 euros per year.
Basically this demonstrates that even within Xbox, Microsoft has difficulties in convincing people to join, since most of them probably understand what we are saying here. And so he uses these tactics with his own customers.