“I also want to make clear to people that are out there that for us at Xbox, there’s not one business model that we think is going to win,” he said. “I often get asked by developers, ‘if I’m not in the subscription am I just not viable on Xbox anymore?’ and it’s absolutely not true.
“Like we look at retail of people selling games, buying games, it’s an important part of our P&L [profit and loss statement], you know that. And it’s something that we invest resources in to enable our developers to do great work there.”
Game Pass: Maximizing Your Game’s Total Value
Xbox Game Pass launched in June 2017 and has become central to Microsoft’s gaming business, attracting over 25 million subscribers as of January 2022, according to the company.
It offers members access to over 100 titles, including all first-party games at launch, for $10 / £8 per month on console or PC. For $15 / £11, users can access the games on console, PC and mobile devices, including via Xbox Cloud Gaming.
Microsoft CEO Satya Nadella claimed last year that Xbox Game Pass subscribers play approximately 40% more games and spend 50% more than non-members.
But Spencer said in the GDC video that Microsoft will continue to support a diverse range of business models including retail, subscription and free-to-play.
“And this is where I sometimes contrast against other forms of media that we get compared to, whether it’s music, whether it’s video, where the models have really condensed down to maybe one or two business models that are working,” he said.
“I fundamentally believe a strength for us in the video game business is the diversity of business models and the strength of those.
“Definitely in team Xbox, we invest in the business models that developers are asking for and ensuring those are flourishing, so that every year we see great new experiences that come to our platform that might never have been built if the business model capability wasn’t there on our platform.”
Last December, Spencer also told Edge that Game Pass isn’t the company’s sole focus going forwards.
“Do I want, or do I envision, everybody who’s on Xbox being a Game Pass subscriber? I don’t,” he said.
“I want people to make their choice. Some people want to buy all the games we ship and create their own library.”
Spencer added: “Subscriptions give you a good continual revenue stream. And that’s an important thing for any business, on top of the spikes that you’ll get around certain retail releases.
“That’s why I talk about it really being a mix of things. It’s not about one muscling out another.”