Xbox Game Pass is expected to make up to $5.5 billion in revenue next year, analyst firm Ampere Analysis predicts.
5VIEW GALLERY – 5 IMAGES
Microsoft’s recent Game Pass price hike will lead to a spike in earnings, at least that’s what analysts are predicting. Ampere Analysis head of research Piers Harding-Rolls gave an interesting prediction regarding Game Pass revenue forecasts, with the subscription service expected to achieve a whopping $5.5 billion in annual earnings in 2025.
The reason? Ultimate’s price increase is undoubtedly a catalyst for this growth, however it’s the perceived value fracturing of the subscription tiers–the entire removal of the Console tier and its “degraded” Standard tier replacement–that will ultimately (pun intended) urge users towards the more expensive $19.99/month tier. Note that this estimate reflects the totality of Xbox Game Pass, including options on console and PC, as well as revenues earned via cloud gaming access.
Harding-Rolls explains in a research note:
“…Reaching an audience off console and PC does not necessarily deliver profitability because the distribution costs in cloud gaming are significant – far more than just downloading games. As such, Microsoft needs existing subscribers to pay more, while also paying less to license games. The need to act has also been driven by the confirmation that new Call of Duty releases will be added to Game Pass Ultimate: Because that is such a significant annual premium release, offsetting some of the costs of that move was necessary.
“Microsoft is mitigating the impact by improving consumer ARPU through price increases, driving users to the Ultimate tier of Game Pass, and limiting the subscription stacking for Game Pass Console to 13 months. Gamers who want to dip into Game Pass to play the new release will have to do it at the Ultimate (or PC) tier.
“These strategies together should help increase ARPU significantly at the end of 2024 and into 2025. Ampere estimates that global Game Pass ARPU across all service tiers will increase by 5.4% in 2024 and that is expected to jump to an increase of 15.3% in 2025. Global consumer spending on Game Pass as a whole is expected to reach almost $5.5bn in 2025.”
Read Also: Xbox Game Pass Ultimate price has increased 33%, or $5, in 5 years
To put those numbers into perspective, we’ve been able to calculate Xbox Game Pass revenues based on two sources: the Brazilian anti-trust regulatory body called CADE, and Xbox CEO Phil Spencer himself.
Based on findings published by CADE in 2022, which we were the first to report on, the totality of Xbox Game Pass made $2.9 billion throughout 2021. This information was later redacted and taken out of the regulator’s report.
Then some time later, Xbox CEO Phil Spencer said that Game Pass makes between 10-15% of annual Xbox content & services revenues. We did the calculations and the ranges look like this:
- 2021 Game Pass Revenue – Between $1.258 billion and $1.887 billion
- 2022 Game Pass Revenue – Between $1.197 billion $1.796 billion
If Harding-Rolls’ prediction is accurate, Game Pass’ 2025 revenues will increase by over 200% over these top-end values.
Also, Game Pass’ $5.5 billion would make up approximately 35% of Xbox’s annual FY23 revenues of $15.47 billion.
5Read More
