Microsoft: Game Pass is profitable, even without accounting for expenses incurred by internal studios
Recently, the editor-in-chief of The Game Business, Christopher Dring, reported that the profitability of Game Pass might be the result of some clever number juggling. He suggested that Microsoft's calculations do not include data from its internal studios. However, the corporation has now clarified that the subscription generates profit under any circumstances.
According to Dring, the calculation scheme for the subscription's profitability looks as follows. When evaluating revenue, Microsoft considers the expenses for marketing and supporting Game Pass, as well as payments to third-party developers who agreed to release their games on the service. Since Microsoft's internal Xbox studios do not receive similar compensation, their lost potential profit is ignored. As the journalist asserted, he obtained this information directly from Microsoft.
Based on this mathematics, Dring initially concluded that if Microsoft were to include the potentially lost revenue of its studios in the calculations, discussing profitability might not be accurate.
Soon after, Microsoft contacted Dring and explained that Game Pass brings profit even when the calculations include the lost potential revenue for its studios — not only from the number of game copies sold but also from microtransactions. They did not share specific figures.