There’s a clear contradiction between Microsoft’s statements and its actions — the two don’t exactly line up at the Redmond giant.

Questions surrounding the profitability of Xbox Game Pass have existed since Microsoft’s subscription service first hit the market. Since its launch on June 1, 2017 — and increasingly over the years as Microsoft bolstered its value with major acquisitions like Bethesda and Activision Blizzard — the general sentiment has been that the deal is “too good to be true.” It’s certainly a fantastic value for gamers, but how long can one of the world’s most valuable companies continue to sustain it?

Xbox executives like Phil Spencer have repeatedly reassured fans about the profitability of Game Pass, and now Sarah Bond, President of Xbox, echoed those assurances in an interview with Japan’s Game Watch during the Tokyo Game Show: “Last fiscal year, Xbox Game Pass sales hit a record high of $5 billion. It’s a profitable business, and as more creators join Xbox Game Pass, payments to them increase — so we believe it’s a great business for creators.”

That’s only part of the story, though. On October 1, Microsoft shocked many when it announced a price hike for Xbox Game Pass, raising the monthly fee from $20 to $30 — a 50% increase. The price jump was similar in other regions, including Hungary, where the subscription now costs 10,890 HUF per month. It’s no surprise that fans criticized Bond’s remarks. If Game Pass was already profitable and beneficial for everyone, why was such a steep increase necessary?

Although Bond gave the interview just days before the announcement, as Xbox president, she almost certainly knew the price change was coming. Taking her comments at face value, the most likely explanation is that the service wasn’t as profitable as Microsoft wanted it to be. After all, the company spent $75.4 billion acquiring Activision Blizzard and another $7.5 billion for ZeniMax Media to expand the Game Pass library — and now expects more from the Xbox division in return.

Even with major IPs like The Elder Scrolls, Fallout, DOOM, Diablo, and Call of Duty included in the subscription, Game Pass hasn’t grown as much as Microsoft or analysts like Michael Pachter had hoped. Since subscriber growth has stalled, Microsoft now seems intent on extracting more revenue from its existing user base — the only question is how many will stay subscribed at the new, higher price.

Source: WCCFTech, Game Watch