Xbox projected Game Pass would hit 77 million subscribers by 2026. The actual number is 30 million. That gap tells you almost everything you need to know about where Microsoft's gaming division stands right now.
This isn't just a missed target. Two years ago, Microsoft reported 34 million subscribers. The service is shrinking, not growing, and the company is burning money fast enough that new Xbox boss Asha Sharma recently admitted that for every dollar Xbox earns, it loses 67 cents. That figure alone explains the 1,600 job cuts across the company, the studio sell-offs, and the quiet but unmistakable retreat from the strategy Phil Spencer spent nearly a decade building.
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What Game Pass looked like when it launched
Back in June 2017, the pitch was genuinely exciting. Pay $9.99 a month, access 100 backwards-compatible titles, and get every new Xbox first-party game on day one. The Xbox One had been a commercial disaster, selling just 58 million units against the PlayStation 4's 117 million. Game Pass was Spencer's answer to that problem.
The industry reacted warmly. Analysts called it a smart move. Spencer landed on industry People of the Year lists. The logic seemed sound: if Netflix could reshape film and television, a gaming equivalent should work too.
Here's the thing, though. Film and TV subscriptions work because viewers consume content fast, move on, and come back for the next thing. Games, especially the big triple-A titles Xbox was banking on, take 60 to 100 hours to finish. The average player buys a handful of games a year and plays them for months. The economics of the model were always going to be harder to make work.
The spending that was supposed to fix the catalogue problem
A backwards-compatible library and occasional first-party drops were never going to carry a Netflix-style pitch. So Xbox spent. Aggressively.
Leaked internal documents show Microsoft paid up to $300 million to license titles like Star Wars Jedi: Survivor and Suicide Squad: Kill the Justice League for the service. Alongside those licensing deals, Xbox acquired studio after studio: Undead Labs, Ninja Theory, Compulsion Games, Obsidian, inXile, Double Fine, and eventually Bethesda. The intention was to build a first-party engine that kept Game Pass stocked with exclusive content.
With hindsight, the results are painful to look at. Undead Labs released nothing after its acquisition. Double Fine's best-selling game to date moved 1.7 million copies. Ninja Theory's Hellblade series earned critical praise but not commercial returns. These studios were not the money-printers the model needed.
Bethesda survived the cuts, but its flagship post-acquisition release tells its own story. Starfield had internal projections of $1 billion in its first year. Estimates put its actual revenue at around $300 million across all platforms as of April 2026. Being day-one on Game Pass almost certainly cannibalized a significant portion of what should have been full-price sales. Compare that to Skyrim making $650 million in its first month, and the Game Pass effect becomes hard to dismiss.
If you're running into technical issues with Xbox's current Game Pass titles, our Forza Horizon 6 Invalid Gaming Services error fix guide covers the two most reliable solutions.
The Activision deal and the Call of Duty problem
The $75.4 billion Activision-Blizzard acquisition was supposed to solve everything. Call of Duty as a Game Pass anchor, King's mobile revenue as a new revenue stream, and a catalogue large enough to finally justify the subscription. Spencer's stated strategy shifted: forget selling consoles, focus on software reach.
That strategy had an immediate consequence. Xbox signed a 10-year, non-exclusive deal to keep Call of Duty on PlayStation. The reasoning was regulatory and competitive, but the effect was that Xbox gave up the one scenario where the Activision purchase could have driven a genuine hardware sales spike.
Then came the numbers. Black Ops 6 in 2024 was the highest-grossing game in Call of Duty's 23-year history. 82% of all sales came from PlayStation. Xbox reportedly lost $300 million in console and PC sales because players had no reason to buy the game when it was already on Game Pass. The following year, Black Ops 7 ranked fifth in annual sales, the franchise's lowest chart position since 2008's World at War.
The response from new leadership is telling. Advertising for the upcoming Modern Warfare 4 makes it explicit: you will need to buy it separately. Game Pass day-one access for Call of Duty is over, at least for now. It's the clearest possible signal that Microsoft recognises the model damaged one of gaming's most valuable franchises.
Price hikes, cancellation surges, and where Xbox goes from here
Facing mounting losses, Xbox raised Game Pass prices by 50%, from $19.99 to $29.99 per month. The backlash was immediate. So many subscribers tried to cancel at once that Microsoft's cancellation page temporarily crashed under the load.
Console prices followed. Xbox Series S and X both increased by $100 to $150, the first time in Xbox history that a console has gotten more expensive after launch rather than cheaper. The combination of higher subscription costs, a shrinking game catalogue following the studio closures, and a service that demonstrably devalued its own biggest releases has left the platform in a difficult position.
For subscribers still on the service, some of the best value has always come from smaller titles. If you want to check which tiers include specific first-party games, our guide on whether Halo: Campaign Evolved is on Xbox Game Pass breaks down exactly what each tier includes.
The core tension was visible from the start. Former Bethesda VP Pete Hines put it plainly after leaving the company: if you run a subscription that depends on content without properly supporting the developers creating that content, the subscription is worth nothing. Internal Xbox staff raised similar concerns for years, questioning how a $60 game costing millions to develop could sustain itself behind a $9.99 monthly threshold.
What most players miss is that the model might have worked at a smaller scale. The Xbox 360's Live Arcade service genuinely transformed indie gaming, turning Braid, Castle Crashers, and Limbo into cultural moments. Indie games are cheaper to license, faster to consume, and better suited to a subscription format where players dip in and out across a month. Instead, Xbox bet everything on prestige triple-A exclusives and third-party blockbusters, a strategy that required subscriber growth the service never achieved.
With Asha Sharma now steering the ship and Spencer's studio empire largely dismantled, the path forward for Game Pass is genuinely unclear. The subscriber count is dropping, the price is up, and the flagship content strategy has been publicly reversed. For a deeper look at what Xbox Game Pass titles are worth your time right now, browse our full gaming guides library for the latest coverage.
