Microsoft has increased the price of its Xbox Game Pass service, as well as introducing a new Standard subscription tier. Starting on Wednesday, July 10th the price for Game Pass “Ultimate” for new subscribers has increased $3 a month from $16.99 to $19.99. The PC Game Pass subscription will go from $9.99 to $11.99 a month. The “Core” Game Pass service price will go from $59.99 annually to $69.99 annually. For existing Game Pass subscribers the new prices will go into effect on September 12th.
Microsoft also announced a new “Standard” plan at $14.99 a month. This upcoming plan will replace the existing $10.99 “Game Pass for Console” plan. The Standard plan will include online multiplayer and access to back catalog games but will not include day-one releases.
Analysis
It was widely known that the price hikes were coming for Game Pass. As Microsoft now has the Activision Blizzard library they needed a price hike to financially justify day-one releases of key titles, most notably the Call of Duty games. However, Microsoft again confuses the issue by adding the unnecessary Standard tier.
Game Pass has struggled to grow despite having the compelling unique feature of day-one access to top Microsoft games. In DFC Intelligence’s recent consumer surveys on subscription services, Game Pass not only falls behind Sony PlayStation Plus but also Nintendo Switch Online in both usage and perception. It will be interesting to see if this changes in upcoming surveys this fall as Call of Duty will now be included.
Overall, game subscription services are not as attractive as was once assumed. This has been discussed in several DFC reports and forecasts and nothing Microsoft has done recently would lead us to change our opinion. The big test will come this fall when Call of Duty: Black Ops 6 releases on October 25th. This title will be included for Game Pass subscribers but will cost non-subscribers $70.
The problem Microsoft faces is that it can be assumed they are going after PlayStation 5 users. To get a “free” Call of Duty a PlayStation 5 consumer would need to buy a $240-a-year subscription plus buy an Xbox Series X starting at $450+. In other words, a $700 commitment.
A more attractive scenario is that consumers who own a PlayStation and/or Nintendo Switch can add a subscription to Game Pass for PC at $12 a month. This is a compelling offering because it includes premium titles without having to purchase an Xbox console system. Furthermore, the price hike is reasonable, from $120 a year to $144.
However, those are short-term issues. Microsoft is clearly playing a long-term strategic game to gain more control of the video game distribution ecosystem. This will be a crucial paradigm shift over the next few years as the console market undergoes major upheaval. The PlayStation 5 and Xbox Series X/S are on the downcycle and the focus now is on preparing for a console market transition.
The latest DFC Intelligence reports on the console and PC game market indicate that as the console market struggles during the hardware transition, PC games are likely to be a key beneficiary. Ironically, Microsoft, with its focus on cross-compatibility between console and PC, is a key driver of growth in both PC games and PC hardware and accessories.
