Despite more subscribers, Game Pass missed its target growth this year

Microsoft recently revealed that for a second year in a row, Xbox Game Pass has failed to meet the targeted growth that they set up by a significantly large margin. The news comes from a report by Axios where their targeted growth for Game Pass was 73% but only came up to 28%. 

Funnily enough, this metric is directly tied into CEO Satya Nadella’s Pay as well as other Microsoft executives, so obviously it’s pretty important to them. The same target was exceeded back in 2020’s fiscal year which netted Nadella a cool $55 million payout in stocks and cash. 

Microsoft’s Xbox Game Pass growth targets for the past 3 years below:

TargetActual
FY202272.88%28.07%
FY202147.49%37.48%
FY202071%85.75%

Despite how it looks, Xbox Game Pass’s subscriber count is still growing and while this result is not what Microsoft’s executives would have wanted, the fact is that they grossly overestimated this year’s increase of subscriber count. 

One of the biggest reasons why Microsoft’s high target was exceeded during 2020 was because it was the first year of the pandemic. The global pandemic led to more people staying at home quarantined, and when you’re stuck at home doing nothing, you end up trying to find ways to entertain yourself. Game Pass gave folks instant access to a large library of games and evidently people really got into the service.

Game Pass growth
Phil Spencer at the Wall Street Journal Tech Live conference. Photo: Nikki Ritcher

After 2020, there doesn’t seem to be any indication that Game Pass’s growth rate would continue. Phil Spencer already knew this and even commented on it during the Wall Street Journal Tech show. “I’ve seen growth slow down, mainly because at some point you’ve reached everybody on console that wants to subscribe.”

Spencer suggests that most of the console users are already subscribed to Xbox Game Pass and if they wanted to expand, they’d have to look for more opportunities elsewhere, like cloud gaming. That being said, PC Game Pass subscriptions have been on the rise as well, growing 159% year over year, and with Xbox Game Pass following a more subdued and steady pace. 

In other news around the same vein, Microsoft plans on increasing the retail price of Xbox Game Pass. Phil Spencer assures subscribers though that it would only start after the Holidays. You can read more about it here.