The main highlight of Microsoft's latest round of layoffs is that Xbox's efforts to compete for industry over the years through Game Pass are on the verge of failure.Today, foreign media WCCF published an article, sorting out the causes and consequences of Microsoft's betting on the complete failure of the Game Pass subscription service route. All of this starts with Spencer's launch of Game Pass.

In October 2017, on an investor financial report call, Microsoft CEO Nadella said that the company hopes to replicate Netflix's success and launch a similar game subscription service.However, long before Nadella made a statement, Microsoft had already launched a subscription service, but Nadella made a formal statement at this meeting: the company will do its best to advance this plan.

In order to attract more users to join Game Pass, Microsoft has spent a huge amount of money to acquire studios for Xbox in 2018: Ninja Theory, Compulsion Games, Playground Games, Undead Labs, inXile Entertainment, Obsidian and Double Fine, which joined in 2019.All first-party games will be available on Game Pass on the first day, which is extremely attractive to consumers.

However, over time, Xbox realized that this wasn't enough to convince tens of millions of users to subscribe.To have a real impact, Microsoft decided to spend $76.2 billion to break the record-breaking successive acquisitions of Bethesda parent company ZeniMax Media and Activision Blizzard, the two largest publishers in the industry.This allows them to obtain many IPs such as "The Elder Scrolls", "Fallout", "Doom", "Call of Duty", "Warcraft", and "Starcraft".

However, Microsoft quickly realized that these game series could not be limited to a single gaming platform, let alone a difficult platform like Xbox.Microsoft will suffer heavy losses if these games are not ported to PlayStation or even Nintendo consoles.This has led to Microsoft's multi-platform strategy, which many fans have complained about recently.

Meanwhile, Game Pass's growth has stagnated, far below Microsoft's ambitious goals.Despite repeated attempts by Xbox executives, the Game Pass subscription service is not allowed to be launched on Sony and Nintendo platforms, and its growth on Xbox has reached a full saturation.PC Game Pass is constantly evolving, but it is not enough to achieve the effect Microsoft wants, and cloud gaming is not as fast as initially thought.

In order to explore more in-depth why current technology leaders failed to bet, foreign media WCCF contacted Rhys Elliott, director of time-field analysis at Alinea, who shared some ideas, mainly thinking that subscriptions are not suitable for games.

The gaming industry has grown explosively during the epidemic. Many companies thought this growth would continue, so they invested, acquired and took risks in a crazy way.But now the economic environment has changed, inflation is high, borrowing is expensive, and players are not spending so much money. The game industry has entered a mature stage, and many companies have begun to lay off employees and shrink.

The problem with Xbox is actually earlier, and it has been going downhill since the Xbox One era.Microsoft relies on Game Pass subscription system to turn around and thinks it can change the industry like Netflix, but it turns out that games are not like movies or music. Most people don’t have time to play too many games, so the subscription model is not very attractive to ordinary players and is only suitable for a few heavy players.

Although Game Pass is cheap, it will affect game sales, especially games that are put into the first release.However, Microsoft bet on this strategy for many years, but the results are not good.Although they bought Bethesda and Activision Blizzard and became super publishers, Xbox itself is becoming less and less like a traditional console platform, and more like a content provider.

To sum up: Microsoft is betting the wrong direction, Game Pass failed to become mainstream, Xbox is no longer the Xbox in the past, and the future may not be better.

The full text is as follows:

Like many industries, the gaming industry has also been over-expanding during the epidemic.During the epidemic, people were quarantined at home, and game participation and game spending soared.This mentality of "pursuing growth at all costs" becomes very dangerous.Many companies mistakenly believe that double-digit growth will continue, approve high-risk projects and strategies, and conduct large-scale mergers and acquisitions.However, the market is very different now, and many initiatives have not worked in the end.The game market has entered a mature stage.Now, inflation remains high, and borrowing costs have increased significantly, and the cost of living crisis has also followed.Publishers are forced to lay off employees in order to adapt to this new normal.But for Xbox, the situation is even more complicated.

These troubles started back in the Xbox One era, and Xbox has been in a state of fix since then.The Game Pass strategy was originally the main antidote for Xbox, but the game lineup never brought the expected impact.Xbox bet on the wrong subscription service.Many people have asserted that subscriptions will become the mainstream way for players to get game content, just as platforms such as Spotify and Netflix dominate the music and video distribution market.However, despite the best efforts of the companies, game subscriptions are not currently the mainstream distribution method.Consumers and markets have given the answer.The reason is also clear: the attention economy has become saturated, and the consumption of game content is more challenging than other media.A consumer can:

Listen to hundreds of songs on Spotify every month

Watch dozens of movies/TV series

But even for deep players, most people can only play a few games

This is just the tip of the iceberg, explaining why "multi-game subscription" is only cost-effective for the most core players:

Most players can already be satisfied through the free game market

Others are happy to buy just a few boutique games a year

Despite a brief boost recently for adding Call of Duty to Game Pass, Xbox's console platform has also been following this trend.The subscription service that is first released and is in the library is beneficial to consumers, but it will erode the game sales of Xbox’s core platform.And as the growth of the strategy stagnated, Xbox began to turn to becoming a third-party publisher.

Another complication is that Microsoft's acquisition of Bethesda and Activision Blizzard was intended to reshape its gaming business.This did happen—but it was very different from what many people imagined.Today, Xbox is already a huge game publisher, holding the copyrights of multiple heavy IPs such as Call of Duty, Minecraft, Elder Scrolls, and Fallout.But the entire department is in turmoil, sandwiched between its traditional hosting platform identity and the increasingly "platform-independent" (third-party) future.It is still unknown whether this will make Xbox more successful or just become more diluted.But to be honest, I'm not optimistic.The Xbox was vanishing, and it was really sad that there were too many victims in the process.

There is no doubt that Game Pass has not met Microsoft's initial expectations so far.In the current market, there are too many games, and more and more games continue to update content for many years after they are released, continuously attracting players' attention, thus leaving the limelight of the new work.We didn't have enough time to play all the content.In this environment, only "quality rather than quantity" can stand out and support the rising high prices.However, Microsoft has never really made a fortune by high-quality games.

This doesn't mean that Xbox is dead, but as many people have pointed out, the Xbox we know is no longer there.Its advancement on Game Pass is far from what it expected.In addition, Microsoft's gaming department CEO Phil Spencer is a staunch promoter of Game Pass's strategy, and he still supports this model even when facing internal doubts.However, despite rumors from the outside world, he has no sign of retirement from this position at present.