Microsoft Finally Admits That Game Pass 'Cannibalizes' Game Sales [UPDATE]

Update

Microsoft has again addressed the issue of Game Pass' impact on video game sales in response to the stir that the CMA report caused yesterday. At least in a way, because in a statement for Eurogamer the company said only that "every game is unique," and that the service provides developers with more choice in how to monetize their creations.

Microsoft also assured that Game Pass remains an attractive option for developers. It did not directly address the wording included in the CMA report, but also did not deny it in any way.

Original message (February 13)

It seems that Game Pass is having a negative impact on video game sales. No, these are not the words of competitors or authors of reports based on incomplete data. Microsoft itself has confirmed this as part of the ongoing discussion of Activision's acquisition of Blizzard.

For the record, the company has not made any announcement on the matter. The information is due to the UK's Consumer Protection Authority (CMA), which recently published a report summarizing an investigation into the aforementioned transaction.

On page 57 of the document made available on the agency's official website we read that Microsoft's internal analysis has shown a decline in game sales within a year of the title being made available on Game Pass. The public version of the report does not say exactly how much of a decline is recorded (the number was hidden).

Game Pass may help developers, but not necessarily in increasing sales. Source: Microsoft.

We find a similar statement in other parts of the report. In them, too, "censorship" has done its job, but Microsoft's internal documents show that "adding titles to Game Pass would cannibalize game sales." This was supposed to be the reason why Activision Blizzard refused to offer "new content" in this service (page 101).

In principle, this seems an obvious conclusion - many people pointed this out as early as five years ago, when the service hit the market. However, as recently as 2020, Microsoft assured that Game Pass was not only not holding back, but actually driving game sales.

So was the Redmond giant wrong? Not necessarily. Yes, three years ago Sarah Bond of the Xbox division informed Bloomberg agency about the positive impact of Game Pass on game sales. Only that, according to her words, it was supposed to manifest itself in higher spending on games in general (by 20%), and not on games available on Microsoft's service.

More doubtful is the assurance of Phil Spencer from 2018. Back then, the Xbox chief said in an interview that Game Pass could increase sales of titles added to the service.

It should be noted that Spencer was specifically referring to "such games as Forza Horizon 4 and State of Decay 2" and not all titles in the service's catalogue. However, most gamers tended to read this in a broader sense, as can be seen from the discussions of players about the information included in the CMA report.