How Xbox Game Pass Became the Subscription Service to Beat

Four years ago, between the announcement of Xbox Game Pass and its launch, Microsoft’s vision for the “Netflix of games” had yet to come into focus. Phil Spencer and team Xbox were clear in its direction, though public perception surrounding the game subscription service was muddier: What did Game Pass mean for consumers? Was it sustainable for developers? How would it affect the future of game ownership?

Now, coming up on the service’s fourth anniversary, public perception has cleared, and the verdict is near-universal: Xbox Game Pass has been heralded as a cost-effective, accessible alternative to traditional game purchasing for many players.

As Sony takes a bigger step into offering its own subscriptions with its “all-new PlayStation Plus” and Nintendo has tried its own hand at a similar service with some of the benefits of Nintendo Switch Online, we’re taking a look back at how Xbox Game Pass has evolved since its inception, from an unproven concept to the backbone of Microsoft’s gaming ambitions.

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project was known internally as Arches, though the concept would never make it to market in that form. Microsoft, seeing the success of other media streaming services like Netflix and Spotify, pivoted toward a subscription model, and thus Game Pass as we know it was born.

The pitch for Game Pass, passionately spearheaded by Xbox boss Phil Spencer, was met with resistance, as publishers expressed concern about devaluing their own products for Microsoft’s potential gain. Spencer saw things differently. His vision was both clear and, as time has proven, feasible: Game Pass was an opportunity for mutual growth, for Microsoft to expand its active user base on Xbox and for publishers to grow player counts, extend games’ shelf lives, and ultimately increase revenue through continued sales and in-game transactions — not to mention the guaranteed money from Microsoft for allowing their games on the service. Spencer and co. ultimately sold publishers on the idea by pitching a low-risk investment: Give us your older games, games whose revenue streams have effectively dried up, and let’s see what happens.

An early promo image for Xbox Game Pass

With publisher support secured, Microsoft officially unveiled Xbox Game Pass in February 2017. The $10 USD/month service featured access to a library of over 100 Xbox One and Xbox 360 games, ​​as well as subscriber-exclusive discounts. The service officially launched four months later on June 1, featuring Halo 5: Guardians, Gears of War, Borderlands, BioShock, and more. As Microsoft predicted, and as publishers soon found out, player engagement surpassed expectations: total player counts, as well as subscribers’ average ​​spending and genre experimentation, increased significantly, according to Xbox.

Weeks later Microsoft announced original Xbox backward compatibility was coming to Xbox One, providing the company an opportunity to offer fully downloadable games across three console generations through Game Pass. This was not only a boon for the Game Pass catalog but for past-generation accessibility and game preservation as well — a notable point in Microsoft’s favor compared to the way Sony and Nintendo have handled its legacy titles. Both have seen pushback from fans after announcements like Nintendo’s plans to close its 3DS and Wii U eShops without plans to support those libraries on future consoles, along with a similar decision by PlayStation for the PS3, Vita, and PSP stores, though that decision was later reversed for the PS3 and Vita shops.

(First-) Party Time

No addition to Game Pass has been more impactful than Microsoft’s commitment to launching all of its first-party games day and date on the service in 2018. Subscribers have since gained access to over a dozen Xbox Game Studios games — the latest Halo, Gears, Forza, State of Decay, Psychonauts, and more — at no additional cost.

The decision now highlights the starkest contrast between Game Pass and Sony’s recently revealed service. Sony won’t include first-party games at launch as part of its overhauled PlayStation Plus; Sony’s Jim Ryan said the company is “in a good virtuous cycle with [its] studios, where the investment delivers success, which enables yet more investment, which delivers yet more success,” and including exclusives at launch would break “that virtuous cycle,” according to Ryan, which largely seems to imply PlayStation believes not having its exclusives selling upwards of 20 million copies would simply be leaving too much money on the table.

Microsoft launched its first game into Game Pass in March 2018 with Sea of Thieves. It’s proven to be a fitting start to the initiative, as Rare’s pirate adventure is a shining example of what the service can do for a game: Following a lukewarm reception at launch, Sea of Thieves has received four years of consistent updates and, as of October 2021, reached 25 million players. In a pre-Game Pass world, Microsoft may have dismissed Sea of Thieves as a flop after that tepid launch. Instead, it’s one of Microsoft’s most celebrated new franchises in recent memory, and a much-needed success for a storied developer who had struggled to find its footing since joining Xbox in 2002.

More recently, Xbox released Halo Infinite and Forza Horizon 5 into Game Pass. They garnered 20 million and 18 million players, respectively, by the end of 2021, resulting in each series’ biggest-ever launch (and the biggest release in Xbox Game Studios history). It’s unclear how much Game Pass cut into these games’ actual sales, or how much money they’ve made through downloadable content avenues, though it is clear that Microsoft isn’t overly concerned: Since 2015, the company has turned to active users as its key metric for success, and in that regard, both Halo Infinite and Forza Horizon 5 shattered series records. (It is worth noting that Forza Horizon 5 debuted as the fourth-best selling game last November in North America, according to NPD.)

Complementing its Day One Game Pass initiative is Microsoft’s acquisition strategy, bringing acclaimed developers under the Xbox umbrella to create new games that bolster the Game Pass library. Microsoft’s recent acquisition spree truly kicked off in 2018, when it purchased four studios: Playground Games, Undead Labs, Ninja Theory, and Compulsion Games. Microsoft has since acquired RPG experts Obsidian and inXile, Double Fine, the whole of Bethesda, and most recently Activision-Blizzard.

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The two latest acquisitions — Bethesda and Activision — are notable in that they are full publishers rather than single development studios. This not only provides Microsoft with more future Game Pass titles, but it also provides an immediate boost to Game Pass by integrating these publishers’ sizable backlogs.

Thanks in part to these acquisitions, Xbox’s exclusive drought seems to be over. In June 2021, Microsoft announced its intention to release a new first-party game into Game Pass every quarter. It followed through with Psychonauts 2, Forza Horizon 5, Halo Infinite, and Age of Empires 4 in 2021, though it failed to release a game in Q1 2022. Despite missing this past quarter, Microsoft looks set to capitalize on its acquisitions and potentially resume its quarterly efforts with Redfall, Starfield, Contraband, Everwild, Hellblade 2, State of Decay 3, Avowed, The Outer Worlds 2, Perfect Dark, Fable, new projects from inXile, and presumably other unannounced projects on the horizon.

Game Pass Goes ‘Ultimate’

Two years after Microsoft introduced Xbox Game Pass, it launched an equivalent subscription for PC players, bringing the service to a whole new audience. Around that same time, Microsoft introduced Game Pass Ultimate, a $15/month premium tier that combines Xbox Game Pass, PC Game Pass, and Xbox Live Gold.

Ultimate has since cemented itself as the best-available Game Pass deal — and what many argue to be the best available deal in gaming, period. In addition to Game Pass access on console, PC, and through the cloud, Ultimate includes an array of miscellaneous perks and, as of 2020, access to the full EA Play catalog, which includes Mass Effect Legendary Edition, Star Wars Jedi: Fallen Order, It Takes Two, and all of EA’s recent sports games.

With the addition of EA Play, Game Pass Ultimate subscribers eventually gain access to every Microsoft and EA game (generally 6–8 months after release), offering a value proposition that would have been hard to fathom just four years ago.

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Heads in the Cloud

When Satya Nadella took over as Microsoft CEO, he envisioned a subscription- and cloud-based future for the company, according to WSJ, opening the door for Spencer and team Xbox to make Game Pass a reality. Building off the trust Spencer garnered through 2014’s lucrative acquisition of Mojang, Spencer received the support of Nadella to run with a video game subscription service that could (optionally) deliver games through the cloud rather than local hardware — an option that’s been realized over the last couple of years, during which Microsoft rolled out Xbox Cloud Gaming as part of Xbox Game Pass Ultimate.

While effective cloud gaming is still nascent, the technology is catching up with the concept. The cloud infrastructure Microsoft has built will enable the company to further its goal of making games as accessible as possible. Spencer has been quoted multiple times referencing Microsoft’s desire to reach billions of gamers, and removing the need for iterative pieces of $300-500 hardware is a significant step toward realizing that ambition. Improving accessibility also involves expanding the availability of Game Pass both geographically and technologically: Game Pass recently came to Steam Deck, and Microsoft’s Liz Hamren (via Thurrott) confirmed the company is also working to integrate Game Pass directly into smart TVs and “developing standalone streaming devices that you can plug into a TV or monitor.”

This play at accessibility has been at the heart of Xbox’s brand revival. While consumers are benefitting, this isn’t pure altruism; it’s business. However, there are times when business and consumer interests align, times when what best serves a company also serves consumers. Game Pass, for now, represents one such synergetic scenario.

What’s Next for Game Pass?

The future of Game Pass is the future of Xbox. Microsoft, through its messaging and decision-making, has made it clear that its path forward in gaming goes through Game Pass.

In less than four years, Microsoft has established a new market within games and amassed 25 million subscribers. The library has ballooned from ~100 games to 450 and has grown to include notable third-party games at launch, such as Outriders, MLB The Show, Back 4 Blood, and Tunic.

Even with all these additions to Game Pass, the monthly price hasn’t changed. Spencer has implied the $15/month price tag for Ultimate is likely going to stay in place for the foreseeable future, while more explicitly telling Axios Game Pass is “very, very sustainable right now.”

A higher-priced Game Pass family plan, however, is reportedly in the works, potentially allowing up to five players to share a single subscriptiion across multiple consoles and households within the same country.

As for the sustainability of releasing future games on Game Pass, publishers’ initial worries, at least in some cases, have been remedied by the aforementioned increases in player engagement and spending. Some games — Descenders, for example — even saw a dramatic increase in sales after being added to Game Pass, as reported by GamesIndustry.biz.

While games are a consumer product that must be marketed and sold, they must first be created, and these creations are the culmination of countless artistic, technological, and managerial disciplines coming together. It’s one thing for Game Pass to improve a publisher’s financial position, but how has it affected developers’ creative processes? For some of Xbox’s internal studios, at least, it’s reportedly been liberating.

Double Fine boss Tim Schafer told GI.biz Game Pass has allowed him to revisit “some of the crazy game ideas” he previously shelved due to lack of financial viability; Obsidian’s Feargus Urquhart said, “Game Pass emboldens us to go, ‘We think this could be super cool’, and there’s people who can just try it”; and Bethesda’s Todd Howard echoed that sentiment, saying, “​​Game Pass opens up the creative canvas to many more types of games that may not find an audience in other ways.”

With commercial and creative viability now a known quantity, Xbox Game Pass is only going to grow. In addition to Microsoft’s entire upcoming first-party slate, third-party games S.T.A.L.K.E.R. 2, A Plague Tale: Requiem, and Atomic Heart are all joining Game Pass at launch. The service may also see a massive wave of new games in the first half of 2023 if/when Microsoft finalizes its acquisition of Activision-Blizzard and obtains the entire Call of Duty catalog, among many other games.

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Over the course of four years, Xbox Game Pass has shifted from a perceived risky bet to a cornerstone of the entire Xbox experience. The service is the result of a near-decade-long course correction that began when Phil Spencer took over as head of Xbox following the disastrous rollout of Xbox One. Not long ago there were questions of Xbox’s demise; now the company is at the forefront of gaming’s next frontier. Game Pass, coupled with excellent hardware innovations in the forms of Xbox One X and Series X|S, has brought confidence back to the brand and restored a communal excitement last felt during the days of Xbox 360.

Jordan is a freelance writer for IGN who’s discovered countless games (and saved hundreds of dollars) thanks to Xbox Game Pass. His favorite Game Pass discovery is Slay the Spire.

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