Xbox Game Pass Price Increase

 

Xbox Game Pass Price Increase

 

Xbox has announced a price increase for its Game Pass Ultimate, raising it from $16.99 to $19.99 per month in the US, with similar hikes in other markets. Additionally, a new "Standard" tier at the original price will have a more limited game library and no day-one game access.

 

This move has frustrated many Xbox fans, but analysts say it was inevitable due to rising game development costs and stagnant subscriber growth. The changes come as Xbox aims to cover costs of licensing games and adding major releases like Call of Duty to Game Pass.

 

Despite Xbox’s efforts, subscription numbers have leveled off. The subscription market has generally flattened, with US spending on video game services slightly down in 2024 compared to the previous year. Xbox, heavily invested in the subscription model, needs to make adjustments to achieve long-term goals.

 

Simon Carless, author of GameDiscoverCo, explains that Xbox is now focused on increasing revenue either through volume or yield. As subscriber growth has plateaued, Xbox is shifting subscribers to higher tiers. Game Pass Ultimate, now targeted at die-hard gamers, aims to extract more value from its most engaged users.

 

Joost van Dreunen, professor at NYC Stern School of Business, suggests that Game Pass Ultimate is now more expensive than buying two or three premium games annually. However, this tier is designed for hardcore gamers who play more and utilize Xbox’s services extensively, making them less sensitive to price increases.

 

Future changes could include an ad-based version of Game Pass. Van Dreunen predicts this tier may start with banner ads in menus, eventually incorporating ads during loading screens. This move aligns with Xbox’s revenue targets, which include significant ad sales by 2030.

 

The upcoming release of Call of Duty: Black Ops 6 on Game Pass is a significant test. Analysts believe this could attract new subscribers and upgrade existing ones. However, if it doesn’t boost subscriptions, it raises questions about the sustainability of Xbox’s strategy.

 

Xbox’s price hikes and tier restructuring reflect broader industry trends of adapting to rising costs and market dynamics. The success of these changes will depend on their ability to maintain and grow their subscriber base amid evolving consumer expectations.