Xbox Game Pass has long been the cause of debate. It’s been able to shift Xbox units for years without much by way of a major exclusive release because of its cost-effective price. On the flip side, it’s furthered the move away from game ownership, and all while trying to push the very expensive process of developing games to fit subscriptions.
Now, Microsoft’s actions have swiftly worked to pivot the more positive arms of public perception of the service. Tens of thousands of layoffs over the last few years, punctuated by further firings, studio closures, and game cancellations in July 2025 amidst gloats of Xbox’s success and multi-billion dollar acquisitions have soured the waters.
Cracks Clearly Showing for Xbox Game Pass
The most recent tsunami of layoffs under the Microsoft umbrella seemed to target Xbox staff and associated studios more than most other sectors in July. Yet, in regard to the health of Xbox, CEO Phil Spencer says that they have “more players, games, and gaming hours than ever before.”
There’s a second money-printing first-person shooter on the horizon, and Doom: The Dark Ages, Oblivion Remastered, Indiana Jones, and a few more Obsidian Entertainment titles have been added to entice more customers. The need for major first-party releases seemed to be realized after over a decade.
Since ousting promising games and studios like Everwild, Perfect Dark’s reboot, Romero Games, Turn 10 Studios’ driving sim team, a Zenimax MMO, and developers at King, many seniors have spoken out. The most echoing response has come from a founder of Arkane Studios, Raphael Colantonio.
Posting on X, Colantonio simply stated, “I think Game Pass is an unsustainable model that has been increasingly damaging the industry for a decade.” While subsidised by the infinite money of Microsoft, he mused, at some point, reality had to hit. As a result of Game Pass’ struggles, Xbox’s staff and associates have been gutted.
A USP that’s too Costly
Entertainment platforms across the digital space have long tried to compete with eye-catching, unique selling points. Perhaps the most prominent form of this that also relies on advertising a large library of content is found in iGaming. The casino sign-up bonus is a staple of the industry, offering new players a free way to play the games. The bonus will offer a match on the first deposit as bonus funds to be played on any game. Plus, it’ll give 100 free spins to offer more spins on ever-popular slot games.
Importantly, a USP like this doesn’t hinder the platform. It gives a burst of free play for newcomers to try the offering and then sets up tournaments and such to enhance premium play. It’s similar to the Epic Games Store, where monthly free games are there, but they supplement premium purchases.
For Xbox, the premium value to the company is lost unless Game Pass is wildly popular and profitable – which the layoffs and court hearings mentioning its sales impact would suggest not. Sony won’t put its new games or first-party games on the service for a long time. They let retail sales come in to fund the studio and add it later as a bonus, of sorts, to those who subscribe for online play, the classic back-catalogue, and discounts in the store.
The sheer cost of making a video game means that releasing it directly onto a subscription service simply can’t recoup the costs to the studio or service the vast majority of the time. Netflix invests some $18 billion in its original content, but it commands over 300 million subscribers. Plus, at retail, film recoups $10 per person for a DVD, while major games RRP at $70 these days.
With Microsoft going all-in on artificial intelligence and Xbox’s main USP seemingly struggling after so much investment, it makes sense that more and more industry insiders are finally talking about the elephant in the room.
