Microsoft’s Game Pass revenue model has sparked ongoing debate across the gaming sector since its 2017 launch. Initially, observers speculated that the tech giant might temporarily offset losses through its financial resources, but long-term viability remained in question. Over time, Microsoft consistently asserted the service’s profitability and stability. In late 2019, Xbox lead Phil Spencer addressed concerns, stating:

Critics often ask, “Is this sustainable long-term?” The reality is, Game Pass performs strongly for us and our subscribers. It’ll become even more impactful with new console launches, offering players instant access to an extensive library from day one—a first in platform history.

Despite these assurances, recent challenges—including sluggish subscriber growth and organizational restructuring—have revived skepticism. Analysts and developers alike now question whether the subscription strategy can maintain momentum, particularly as major titles from acquired studios like Activision Blizzard and Bethesda join the service immediately.

Industry insider Chris Dring recently shed light on Microsoft’s accounting practices for Game Pass. In a social media thread, he explained:

Microsoft’s profit calculations reportedly exclude internal studio costs. While third-party licensing fees, marketing, and infrastructure expenses factor in, potential revenue losses from first-party titles launching directly on the service don’t. If Xbox accounted for these, the financial picture might shift significantly.

Dring emphasized that despite Microsoft’s expanded portfolio—now housing franchises like Call of Duty, Diablo, and DOOM—the company continues to omit internal development costs from its profitability metrics. This approach raises questions about how sustainable day-one releases for premium IPs on subscription platforms truly are, especially as the service evolves with new acquisitions.