Microsoft has complained of a downtrend in the sales of its products after putting games on its Xbox Game Pass subscription. According to the gaming company, their gamble with the Xbox Game Pass subscription has yet to pay off as expected. Their sales target is well below their expectations.
The UK Competition and Markets Authority reported that Microsoft had a nasty sales downtrend after including many game titles on its Xbox Game Pass subscription service. According to the CMA report, "Microsoft also submitted that its internal analysis shows a [redacted]% decline in base game sales twelve months following their addition on Game Pass."
The new development from Microsoft is a huge surprise to many as the Xbox head Phil Spencer claimed that adding certain Xbox series to the game pass will automatically increase sales. In 2018, Phil Spencer made this claim, but they were witnessing another scenario in 2023. According to Phil Spencer in 2018, "When you put a game like Forza Horizon 4 on Game Pass, you instantly have more players of the game, which is actually leading to more sales of the game. You say, 'Well isn't everyone just going to subscribe for $10 and go play this thing?' But no, gamers find things to play based on what everybody else is playing."
Xbox Faces EU Scrutiny Over Activision Blizzard Acquisition
Xbox also mentioned in their report that Activision Blizzard has a dim view about adding game titles to a game pass subscription. Apart from this, the EU and other gaming companies like Sony have scrutinized Xbox over the acquisition. Sony even claimed that acquiring Activision Blizzard could give Microsoft a significant power in the gaming industry. According to Sony, this could be better for the industry's growth.
The EU has even presented Microsoft with a formal antitrust warning, and the United States regulatory body is doing everything possible to block the merger. In a press release, the Federal Trade Commission said that they are "seeking to block technology giant Microsoft Corp. from acquiring leading video game developer Activision Blizzard, Inc. and its blockbuster gaming franchises such as Call of Duty, alleging that the $69 billion deal, Microsoft’s largest ever and the largest ever in the video gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business."
Microsoft's Reaction to the Case
Microsoft has reacted to the charges, saying they are actively working with regulatory bodies to ensure they pass the scrutiny and move to the subsequent acquisition stage. Microsoft Xbox head Phil Spencer says that despite the scrutiny they are currently receiving, he has high hopes of the deal going through.
According to Spencer, "We're actively working with the regulatory boards around the world that need to approve this, and it's been a learning experience for me. A lot of time spent, a lot of travel, a lot of conversations, but they're conversations where I get to talk about our industry and the work that we do and why we do it. I think the more regulators are informed about what gaming is, how the business runs, who the players are, and what our aspiration is as Team Xbox is just a good thing for the industry itself."