Microsoft says Xbox Game Pass is profitable - and about to cost a lot more

[Skye Jacobs]

Bottom line: Microsoft's gamble on gaming subscriptions has reached a turning point. Xbox Game Pass, once an ambitious bet on a Netflix-for-games model, is now officially in the black, pulling in billions. But as it proves sustainable, Microsoft is also restructuring the service and making its priciest tier far more expensive. The shift signals more than just a new billing structure... it's a test of whether players will accept higher costs in exchange for bigger libraries and premium perks.

The combination of steady revenue growth, expanding developer participation, and new device partnerships points to Xbox Game Pass playing an even more prominent role in Microsoft's gaming strategy.

Speaking in an interview at the Tokyo Game Show, Xbox president Sarah Bond told Game Watch that Game Pass is not just viable but lucrative. The service generated nearly $5 billion over the last fiscal year, with payouts to developers climbing alongside revenue. "It's a profitable business, and more creators are participating," Bond said.

Before	After	Old Price	New Price	Platforms (Before)	Platforms (Now)	Key Changes / Notes
Xbox Game Pass Core	Xbox Game Pass Essential	$9.99	$9.99	–	Console, PC, Cloud	Rebrand only; now part of the three tiers playable across console, PC, and cloud.
Xbox Game Pass Standard	Xbox Game Pass Premium	$14.99	$14.99	–	Console, PC, Cloud	Expanded library; now includes access to PC games. 200+ games on Xbox & PC; Diablo IV and Hogwarts Legacy available today.
Xbox Game Pass Ultimate	Xbox Game Pass Ultimate	$19.99	$29.99	Console, PC, Cloud	Console, PC, Cloud	50% price increase. More than 75 day-one releases/year (incl. CoD: Black Ops 7, High on Life 2, Keeper, Ninja Gaiden 4, The Outer Worlds 2). Adds Fortnite Crew ($12/mo) and Ubisoft+ Classics (~$16/mo) at no extra cost. Xbox Cloud Gaming exits Beta.
PC Game Pass	PC Game Pass (existing subs only)	$11.99	$16.49	PC	PC	~40% price increase. No Ubisoft+ Classics; will get ~50 additional Ubisoft titles. Continues to include day-one releases.

That declaration answers years of speculation over whether the subscription model could ever carry the weight of blockbuster game development. Former PlayStation executive Shuhei Yoshida has been one of the skeptics, warning that players might grow accustomed to cheap access, pushing studios to take fewer creative risks. Bond countered by framing Game Pass as an engine for diversity, not homogeneity, within Microsoft's broader gaming strategy.

Game Pass now sits alongside initiatives like Xbox Cloud Gaming and experimental hardware projects such as the Asus ROG Xbox Ally, a Windows 11-powered handheld. The vision, according to Bond, is ubiquity: access on console, PC, handheld, or streaming.

The investment has been immense. Chris Charla, head of the ID@Xbox indie program, recently told Eurogamer that Microsoft has inked deals with more than 150 developers – the biggest expansion push in Game Pass's history.

Financial filings support that momentum: Xbox content and services revenue jumped 13 percent year over year last quarter, while Microsoft's overall revenue climbed 18 percent and net income rose 24 percent. CEO Satya Nadella said Game Pass alone brought in "nearly $5 billion" across the year.

Subscriber numbers are murkier, as Microsoft stopped reporting them. But filings revealed 34 million subs as of February 2024, and an employee profile hinted the number has since edged above 35 million. Nadella also noted Microsoft's combined gaming platforms now reach 500 million active users.

New Game Pass tiers and a price jump

The service's success is arriving just as Microsoft overhauls its subscription tiers. Starting today, the top plan – Xbox Game Pass Ultimate – jumps from $19.99 to $29.99 a month, a steep 50% increase. Microsoft is trying to cushion that shock with a bundle of new perks.

The branding is changing, too: Game Pass Core is now Xbox Game Pass Essential, Standard becomes Xbox Game Pass Premium, and Ultimate stays Ultimate, albeit much pricier.

Essential will still be $9.99 per month, Premium remains at $14.99, and Ultimate climbs to $29.99. All three tiers will span console, PC, and cloud, while the legacy PC-only Game Pass is being discontinued for new subscribers (existing ones can stay grandfathered in, but their price is rising from $11.99 to $16.49).

Under the new structure, Core subscribers automatically shift to Essential, Standard users move to Premium, and Ultimate players remain in place.

Microsoft is padding the change with content. Starting Wednesday, 45 new games land on the service, including Hogwarts Legacy and Diablo IV for Premium and Ultimate members. Premium subscribers will also gain PC access for the first time, unlocking a library of more than 200 games.

For those paying the extra $10 at the Ultimate tier, Microsoft is dangling bigger carrots: more than 75 day-one releases annually, including Call of Duty: Black Ops 7, High on Life 2, Keeper, Ninja Gaiden 4, and The Outer Worlds 2. This represents a 50% increase over the previous year in terms of day-one titles.

Subscribers also get bundled memberships to Fortnite Crew (normally $11.99 per month) and Ubisoft+ Classics (around $16 monthly), plus improved streaming with shorter queue times now that Xbox Cloud Gaming is moving out of beta.

By contrast, PC Game Pass players see their price rise almost 40 percent to $16.49 a month without the same extras. Xbox executive Jerret West clarified that PC subscribers won't get Ubisoft+ Classics, but will instead gain access to around 50 additional Ubisoft titles while continuing to receive day-one releases.

The subscription pivot underscores how Microsoft is rethinking its role in gaming. First-party titles like Indiana Jones and the Great Circle, Doom: The Dark Ages, and Elder Scrolls IV: Oblivion Remastered are launching into Game Pass from day one, while Xbox is simultaneously putting games like Forza Horizon 5 and Age of Empires II on PlayStation 5.

Sarah Bond mentioned Ninja Gaiden 4 from Koei Tecmo as a project in development.

Bond highlighted Ninja Gaiden 4 from Koei Tecmo as a symbol of Microsoft's intent to deepen ties with Japanese studios, part of a long-term strategy to broaden Xbox's cultural reach. She also pointed to ongoing collaborations with AMD and other chipmakers aimed at shaping the next generation of Xbox hardware.

With these latest changes, Game Pass has officially gone from experiment to profitable business in under a decade. Now Microsoft is testing whether players will stomach higher prices in exchange for bigger libraries, premium bundles, and more flexible access across devices. The model has proven it can make money. The harder question is whether it can grow even as the buy-in climbs.

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Microsoft says Xbox Game Pass is profitable – and about to cost a lot more

 

[James321]

No thanks, saw this coming a mile away.

Get people onboard then slowly increase the price, give it another few years and it will be 100$ per month.

 

[yRaz]

I'm all for a service like game pass, especially if it provides value. I've been considering game pass because it'll let me play games I can't otherwise play on my steam deck. It would be through a browser and performance may vary, but there are games that I want to play where I have to go through the trough of pirating a game I own just so I can crack it to run in WINE.

Maybe as Proton gets better this will become less of an issue, but the number one issue with running on Linux is DRM and with TPM 2.0 DRMs and requirements like secure boot, Proton compatibility is just going to get worse.

I'm not against paying for things, I certainly can afford every game I want to play and I want a streamlined gaming experience. The whole installing things in WINE and cracking them then not having access to things like cloud saves is a real pain.

 

[Billybobjoey]

They sure are pricing out everyone on Ultimate who doesn't want a fortnite subscription. I cancelled mine back when they did more layoffs and cancelled Perfect Dark a few months ago, however I always stacked codes from CDKeys so I still have subscription time through Spring of 27. Might as well enjoy it while I've got it, but by then it'll probably be $40/month lmao.

 

[NumberNine]

$1 a month was fun but unstatainable, but for 20x the price... I'd rather own than rent. There's no sweet spot for game pass pricing in my world. I have too much access already.

 

[dangh]

Never used, probably never will. I like to own games I play, and I don't have whole days to do it so I play selected games I want to enjoy, instead of small pool of available titles. I have no issue as well paying for the game fully, preferably on the dev site so he can get as much support as he can, without middleman extortion. And with what we know of GP, it is a king of extortion.

Buying and owning games is what I want to do, not paying monthly for a chance of renting a title.

 

[m4a4]

If I ever have too much time on my hands, I would certainly pay for GP to "demo" a bunch of games I would otherwise never try or want to own (and who knows, might even convert the ones I like to owned).

But as of right now, for me personally, Steam has my backlog of owned (and family shared) games pretty big.

 

[amghwk]

Just wait for Epic free giveaways, for big titles. In the meantime, play all the backlogged, other free games from Epic.

 

[Theinsanegamer]

$360 a year to subscribe to terrible videogames. WTAF.

Here's the thing, lets say you're an adult. You have a job, a social life, and responsibilities. If gaming is your main hobby, how much time do you actually spend gaming? Especially with modern games all being live service gind a thons full of FOMO events. Are you really buying more then 6-7 AAA games per year?

Or even 6-7 total games per year, including indies?

Even with my time spent gaming, I only really buy 1-2 a year, and only on sale. I dont think I bought any games last year. What selection is coming out that is so good it justifies that kind of pricetag?

 

[wiyosaya]

They're probably trying to make up for the cost of Tariffs.

 

[Theinsanegamer]

They're probably trying to make up for the cost of Tariffs.

Tariffs do not affect digital products such as games.

More like Game Pass' growth is stalling out and they need to show growth in the gaming sector to offset the collapse of physical xbox sales. Or it's just Microsoft's old Embreace, Extend, Extinguish attitude rearing its head.

There's a reason everyone in the 90s and early 2000s HATED Microsoft.

 

[AnilD]

Microsoft finally proved the Netflix for games idea works, but now they are testing if people will happily pay HBO Max money for it. At thirty bucks a month you really need to treat Game Pass like your main platform, not just a side subscription.

If you actually use Fortnite Crew and Ubisoft Plus you basically break even on the Ultimate price hike, which feels like peak Microsoft math where you save money by spending more money.

 

[Revolution 11]

$360 a year to subscribe to terrible videogames. WTAF.

Here's the thing, lets say you're an adult. You have a job, a social life, and responsibilities. If gaming is your main hobby, how much time do you actually spend gaming? Especially with modern games all being live service gind a thons full of FOMO events. Are you really buying more then 6-7 AAA games per year?

Or even 6-7 total games per year, including indies?

Even with my time spent gaming, I only really buy 1-2 a year, and only on sale. I dont think I bought any games last year. What selection is coming out that is so good it justifies that kind of pricetag?

What you are buying with this service (or any service of this type) is choice. You are paying out the nose for the choice to play whatever game is on the ever-growing catalog of titles. You are paying for the discovery of games you may not have been aware of but may want to play if you knew about them.

You are paying for access to a list of games you want to think that you will ever get to play but in reality they will be a part of your ever-growing backlog. You are paying for the hope that you will complete your backlog of games before you die.

You are paying for the benefit of receiving the psychological wage of thinking that by having all this choice at the tips of your fingers, you will live longer than you would otherwise because there is no divine justice in this world if you die with a massive backlog of games.

/sarcasm but half serious.

 

[calvinblanes]

Xbox pass is great, I have paid it a few months in the past and try it, it's a cool thing if u dont own games or just wanna play something new in a cheap way.

Yet every single old gamer like me wanna play all kind of games from all ages, today I may play CS2, Cyberpunk 2077 and Hexen or Quake, to us on the industry since ages, is really hard to have it enough with just a game pass, it doesn't work.

 

[Subset6]

I used the basic tier for quite a while and found some value there. I would occasionally cancel, but a new random game always kept me coming back. Recently, I re-subscribed, but many of the games I used to play on the basic tier have been moved to much higher tiers. I will say they did let me refund my money even after a day, so that was nice.

Sadly, this marks the end of the road for Gamepass for me. It was marginal for me anyway, and now it’s dead on arrival..

 

[p51d007]

No thanks, saw this coming a mile away.

Get people onboard then slowly increase the price, give it another few years and it will be 100$ per month.

Just like streaming movies and what not. Get them hooked, then start jacking up the price.
Instead of cutting the code, maybe people need to "cut the stream".

 

[human7]

Profitable for Microsoft maybe, but is it truly profitable for the studios? I'm not sure. A counter-argument could be that Steam sales are frequent enough that games don't always sell for full price anyways (I'm not sure what the average distribution is of game sales at full price versus sales). Either way, unless I am new to gaming and don't have a backlog of owned games, I can't think of a reason to subscribe. For new gamers it might make sense as a way to experiment and find the genres they like.

 

[Jim Lahey]

I always expected it, but I have to say a 50% jump in one hit is enough to push me away.

The economy isn’t good enough for this kind of pricing model, in my opinion.

I enjoyed trying new releases that I otherwise wouldn’t pay full price for, but that was a luxury, not a need.

I’ll probably let my subscription lapse and go back to buying the titles I want.

 

[Y2JB47]

The article is confusing revenue and profit. Beyond a vague comment saying ‘it’s profitable’ Microsoft has not provided numbers to say whether this is actually the case.

Microsoft continue to hide the real numbers because GP is almost certainly hemorrhaging money due to eye watering operating costs.

TechSpot is the only place spinning this story as positive…

 

[candle86]

Well I used it for a couple months with it first came out years ago but, I prefer to own my games playing and simple I'm not going to get subscription. Plus or EA's game pass. Also I don't really chase new games anymore.

 

[NoLifeDGenerate]

Why isn't anyone questioning MS about the continued existence of extra account systems from the companies they've bought the past several years? Bethesda, Activision, etc accounts should no longer exist. The only account anyone should need on Xbox is our goddamn Xbox account. I don't care how many games are on GP or the price. I won't play them if I have to make an account when I load up the game.

 

[Theinsanegamer]

Why isn't anyone questioning MS about the continued existence of extra account systems from the companies they've bought the past several years? Bethesda, Activision, etc accounts should no longer exist. The only account anyone should need on Xbox is our goddamn Xbox account. I don't care how many games are on GP or the price. I won't play them if I have to make an account when I load up the game.

Probably because 99% of people already know the answer. the Xbox account does not have all the functionality that the account systems for Bethesda, Activision, ece have, and swapping those integrated systems out without breaking or losing anything is actually pretty hard to do.

 

[wiyosaya]

Tariffs do not affect digital products such as games.

More like Game Pass' growth is stalling out and they need to show growth in the gaming sector to offset the collapse of physical xbox sales. Or it's just Microsoft's old Embreace, Extend, Extinguish attitude rearing its head.

There's a reason everyone in the 90s and early 2000s HATED Microsoft.

Have you forgotten that tariffs affect X-boxes?? Maybe those tariffs are why X-box sales have collapsed?? And how to make up for the loss in profits?? Oh, it couldn't possibly be by raising the price of X-box Game Pass could it??

 

[WaphleStomp]

M$; glacially-slow patching security vulnerabilities but lightning-fast resorting to fear tactics, a sure sign of desperation.
#TFF

 

[Coisa]

Someone has to pay for the $billions in merger and acquisition cost the MS has spent over the last couple of years. It's all about market share, wall street financials. It is not about new and creative or good games. It's about the cost of creating a monopoly; we pay. The greater the monopoly the more people that will lose their jobs. I hope this tactic fails. Gamers seem to like to collect games and brag about them (I do too) but I play just four or five regularly in my library of over 2000. I suspect that is true across fandom.