Xbox’s Most Epic Feature Isn’t Lucrative – And Microsoft Doesn’t Care

July 28, 2020 3:20 PM UTC
Xbox Game Pass isn't all that lucrative, but it's all by design. Microsoft is aiming for a long-term strategy of over-delivering value.
  • An Xbox marketing executive said Game Pass isn’t “a big profit play” for Microsoft.
  • The company aims to “over-deliver” value to prompt word-of-mouth marketing as it eyes up a long-term strategy.
  • Game Pass currently boasts 10 million monthly subscribers.

Whatever your thoughts on Microsoft’s consoles and the output from its first-party studios, it’s hard to speak ill of Xbox Game Pass.

Will Microsoft Ever Turn Game Pass Into a True Cash Cow?

The service offers unrestricted access to hundreds of Xbox games – many of which are available from day one – for as little as $10 a month (or just $1 for the first month courtesy of a limited-time promotion).

Xbox Game Pass offers unrestricted access to hundreds of games for a low monthly cost. | Source: Mark RALSTON / AFP

Microsoft doubled down on this value proposition during last week’s Xbox Games Showcase. Many of the featured next-gen Xbox Series X titles will be available at launch on Game Pass.

That’s one of several reasons the service remains mostly in a league of its own. The sheer value can’t be understated. A reported user base of 10 million subscribers attests to this.

How does Microsoft do it while remaining profitable?

Over-Delivering on Xbox Game Pass Value

According to Xbox marketing head Aaron Greenberg, it doesn’t. Xbox’s best feature isn’t all that lucrative for Microsoft.

And that’s by design.

In an interview during a recent episode of the What’s Good Games podcast, Greenberg explained the company is very much banking on the long-term with Xbox Game Pass.

For Microsoft, “over-delivering” value is as persuasive and effective as any well-orchestrated marketing campaign thanks to the power of word-of-mouth.

Greenberg explained:

With Xbox Game Pass, Microsoft is focusing on over-delivering on value, even if it comes at the cost of profits in the short term. It’s a different mindset. If you do optimize for profit, you can either say ‘How we do get as much profit out of each customer?’ or, do you pivot that and say, ‘How do we add as much value to our fans?’ ‘How can we actually over-deliver on value?’

If you do that, you build fans for life. When people feel like you’re over-delivering on value, they want to not only continue to use your service, but they want to tell their friends about it. The most powerful marketing is word-of-mouth marketing.

He continued:

Ultimately, we think long-term that is the right thing for the business and will have long-term benefits for us. In the short-term, yeah, Xbox Game Pass is not a big profit play. But we think long-term it works out good for everybody.

Based on their latest move – merging the Project xCloud streaming service into Xbox Game Pass Ultimate at no extra cost – Microsoft has no plans to stop upping the value proposition anytime soon.

Josiah Wilmoth edited this article for CCN.com. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

@TomBWrites

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