// Update 1 (08/07/2025 2:30 pm) Industry expert clarifies Xbox Game Pass is actually profitable
Questions around Xbox Game Pass’s profitability resurfaced following insights from industry expert Christopher Dring
However, Dring has now offered clarification behind his comments, and outlined that Game Pass remains profitable even if lost revenue associated with first-party games is factored into the financial calculations.
He previously suggested that Game Pass calculations exclude key first-party development costs, but later confirmed that first-party titles have a P&L separate from Game Pass.
The business model behind Xbox Game Pass has consistently drawn scrutiny, as players and analysts have long questioned its financial feasibility. Xbox leadership has repeatedly shot down these concerns, offering reassurances and stating that the subscription service is indeed profitable. However, amid growing uncertainty around the platform, coupled with recent layoffs, Game Pass’s profitability is under the lens once again.
During a sit-down with the Wall Street Journal in 2022, Xbox head Phil Spencer mentioned in plain terms that the service is profitable. This sentiment has been echoed numerous times, though never meaningfully elaborated upon. And we now have a better understanding of the calculations behind this ‘profitability,’ courtesy of The Game Business’ editor-in-chief, Christopher Dring.
Contributing to an X thread on XGP’s financials, here’s what Dring had to say: “So costs associated with the Game Pass business is fees paid to third parties, marketing, service costs… and by that measure, it’s profitable. What they don’t count is the lost revenue that Xbox’s first-party studios are seeing as a result of the service. I have to imagine if first-party studios received similar compensation, that profitability might not be correct.”
“I asked for clarification on the ‘Game Pass is profitable’ claim, and was told no first-party costs are included,” he added.
What this essentially means is that Microsoft only accounts for fees paid to third-party studios and publishers, the marketing costs to promote the subscription, and the service costs to keep it operational, while assessing Game Pass’s profitability.
They reportedly leave out the costs associated with developing first-party titles such as Starfield and Avowed, and the money left on the table (in terms of pure sales) by adding those games to the Xbox Game Pass on day one. So, the service is profitable when applying that limited measure, but it likely bleeds money if you factor in first-party costs.
Update 1 (08/07/2025 2:30 pm)
In a new X post , he stated that first-party games such as Starfield have their own P&L separate from Game Pass since they also make money from pure unit sales. Given the considerable impact a day-one inclusion in the XGP catalog can have on said unit sales, he wanted to “ check if the full impact of the service was being considered in their ‘Game Pass is profitable’ line.”
Nevertheless, his sources have now confirmed that Game Pass remains profitable even if lost revenue associated with first-party games is included.
A massive gaming nerd who’s been writing stuff on the internet since 2021, Aryan covers single-player games, RPGs, and live-service titles such as Marvel Rivals and Call of Duty: Warzone. When he isn’t clacking away at his keyboard, you’ll find him firing up another playthrough of Fallout: New Vegas.
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- Microsoft and AMD will co-engineer new Xbox hardware, including consoles and handhelds.
- The next-generation Xbox will support multiple game stores, featuring Steam, GOG, etc.
- As per the announcement, backward compatibility and cross-device support are core to Xbox’s future vision.
Microsoft has officially confirmed that it is building the next-gen Xbox consoles, and it is teaming up once again with AMD to power the future of gaming. In a short announcement video, Xbox president Sarah Bond shared that the two companies have entered a multi-year partnership to co-engineer new hardware. This new lineup will include both home consoles and handheld gaming devices, all working under one evolving ecosystem.
Bond said the next-generation of Xbox will bring advanced performance, AI-enhanced features, and complete backward compatibility . In the era of expensive gaming, the last part really stood out to me. As someone who has grown up with Xbox through every generation, knowing that my current library will carry forward is both reassuring and exciting. It shows that Microsoft is thinking about players, not just new tech.
Next-Gen Xbox Consoles Will Have Multiple Store Support
Microsoft’s partnership with AMD for the next-generation Xbox also hints at a much larger shift. Beyond just using a powerful AMD chip in the new consoles, there’s more on offer. As per Bond’s statement, the “ next-gen Xbox will not be locked to a single store “. Yes, you heard that right, console war marks!
Xbox is eyeing a future where your console is the only gaming machine you’ll ever need. Want to dive into Halo Infinite via Game Pass, then switch gears for a deep dive into Baldur’s Gate 3 on Steam? You got it! Xbox will flip the script on console ownership , bringing PC-like flexibility right to your living room.
Another exciting reveal is that Microsoft is working closely with the Windows team. This likely means that future Xbox hardware could operate like a powerful Windows-based gaming machine, while still keeping the simplicity of a console. We are already seeing early signs of this with the Xbox-branded ROG Ally handhelds , which run on Windows and support multiple game libraries.
Whether you are a fan or not, AI will play a key role in the next-generation Xbox. Microsoft and AMD are working to improve visuals, gameplay, and responsiveness. The goal is to make games feel better without losing that classic console experience. There’s no release date yet, but 2027 seems likely, especially if you believe in rumors. Until then, Microsoft is focused on connecting console, PC, and handheld platforms. Your games and progress will move with you. As someone who switches devices often, I’m really looking forward to that.
This is the most confident I’ve felt in Xbox’s direction in a long time. The next-generation Xbox looks set to deliver real improvements where it counts.
A gaming nerd who covers all things video games. Spending time playing games and writing about them was always a dream. Thanks to Beebom, I live it. Once I am done gaming, I write. Once I am done writing, I game. You feel me.
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