Game's popularity on Game Pass reportedly causing 'internal friction' according to a previous Xbox executive, as increased adoption on the service often decreases retail sales revenue for the same game.
In a surprising turn of events, tech giant Microsoft announced significant changes in its gaming division, laying off 9,000 employees and shutting down several studios. The most notable closures include The Initiative, the developer behind Perfect Dark, and Tango Gameworks, the studio behind the celebrated breakout hit, Hi-Fi Rush.
The reasons behind these decisions are not entirely clear. The article does not provide specific details about the reasons for the layoffs or the closure of these studios. However, industry insiders have raised concerns about the impact of Microsoft's subscription-based game service, Game Pass, on the industry.
Shawn Layden, former Sony Worldwide Studios boss, expressed reservations about subscription services, stating that they encourage a "wage slave" approach to game development. Pete Hines, former vice president of communications and marketing at Bethesda, echoed these concerns, describing the short-sighted thinking driving subscription-based game services like Game Pass as damaging to the industry.
Raphael Colaontonio, founder of Arkane, went a step further, labelling Game Pass an "unsustainable model" that has been harming the industry for a decade. Shannon Loftis, former World's Edge studio head and Xbox Games Studios vice president, acknowledged the issue, stating that Game Pass can claim victories with games that otherwise might have failed, but it comes at the expense of retail revenue.
Despite these concerns, Microsoft claims Game Pass is profitable. However, it's worth noting that the company does not factor in lost first-party game sales into its profits. This means that games on Game Pass don't make as much as they potentially could if they were not available on the service because people can play them without actually buying them.
The article does not provide any information about the current state or future plans for Game Pass. It also does not provide specific details about the cancelled games or the reasons for their cancellation.
In a separate incident, the studio that was closed in 2024 in connection with issues around recognition and compensation of game studios featured on Game Pass is Cliffhanger Games, which was shut down by EA.
These developments highlight the ongoing debate about the role of subscription services in the gaming industry and the potential impact on studios and developers. As the industry continues to evolve, these issues are likely to remain a topic of discussion and concern for many.
