According to the renowned analyst, Microsoft’s strategy is akin to shooting itself in the foot.
Michael Pachter, a strategic advisor at Wedbush Securities, is not one to mince words. He always says what he thinks. In his famous 2018 statement, he said that loot boxes only exist because consumers are stupid. In 2022, he criticized Sony for overpaying for the $3.6 billion acquisition of Bungie, especially compared to Microsoft‘s deal for Activision Blizzard and Take-Two‘s acquisition of Zynga. That same year, he predicted that Xbox Game Pass would have 100 million active subscribers when Activision Blizzard games were added to the lineup. In 2024, he doubled that prediction, saying Game Pass could reach 200 million active subscribers in 10 years.
However, in a recent conversation with GamesBeat, following the change in Microsoft‘s leadership, Pachter completely changed his stance. He was not optimistic about the next Xbox console, currently scheduled for release in 2027, precisely because of Game Pass. Pachter previously supported Game Pass, but he seems to have changed his mind after the subscription service’s recent reorganization and price increase, which he considers a bad model.
“I think the console is dead. They’ve already blown it by embracing Game Pass. The problem with Game Pass is that it’s all or nothing. It’s either give me 30 bucks a month, or f*** you. You aren’t playing my games. Why wouldn’t you sell EA Sports FC to the 100 million people who want to play it but don’t want to buy a console? Of course you should! Leveraging Microsoft’s game library, live ops understanding, and cloud infrastructure to be like Steam, but for connectivity, is the ultimate solution.
If they ever did that, I think it would work. I think the $30-a-month subscription was the wrong approach. The price should be $10 a month for unlimited access. Who’s going to pay for a buffet when they know it costs five times more than a regular meal? How can you justify charging people $360 up front for a game that only costs $70? They should have run it like a cafeteria. That’s their mistake,” Pachter said.
By pushing Game Pass and its multiplatform strategy so hard, they have reduced the value of Xbox console ownership, as evidenced by console hardware sales over the past three to four years. Now, with the Game Pass price increase, they have lost many subscribers who believe the service is no longer worth the price. According to the latest rumors, Microsoft wants to add more third-party and/or proprietary services to Game Pass Ultimate to make it more appealing at $30 a month, but it may already be too late.
