Sunday, December 4, 2022

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    Microsoft reveals how much money Xbox Game Pass makes

    how much money Xbox Game Pass makes: The Brazilian government approved Microsoft’s merger with Activision Blizzard last week, following the approval of Saudi Arabia in August. Nevertheless, Microsoft is still waiting for the respective market regulators from the UK, US, and EU to make a decision, so the deal is by no means finalized.

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    There are some juicy details emerging from the process. It was revealed how much money Microsoft makes from Xbox Game Pass when Brazil’s Administrative Council for Economic Defense (CADE) released its report setting forth its reasons for approving the deal (TweakTown via Forbes).

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    In the CADE report, we learn that Xbox Game Pass generated $2.9 billion from console sales in 2021, while publicly available data indicates that Microsoft’s Xbox gaming division as a whole generated $16.28 billion for the same period. Please note that the first figure does not include PC Game Pass. Last year, Xbox Game Pass subscribers reached 25 million.

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    In spite of Xbox Game Pass accounting for 18 percent of total Xbox revenue last year and 23 percent of Microsoft’s games and services revenue ($12.6 billion), the money generated by this division is a very small part of the company’s overall business. In calendar year 2021, Microsoft generated $184.9 billion in revenue, with Xbox Game Pass accounting for just 1.57 percent of the company’s overall revenue.

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    The same CADE report estimates how much of the market Nintendo, Sony, Microsoft, and EA have carved out from “multi-game subscription services”. According to the table, Nintendo Switch Online holds a market share of 10-20 percent with revenues of $932 million, while Electronic Arts (we can assume EA Play) holds a market share of 0-10 percent with revenues of $356 million. The figures are for 2021.

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    With $2.9 billion in revenues, Microsoft holds 30-40 percent of the market for Xbox Game Pass. According to CADE, Sony holds a 40-50 percent share of the market, but does not provide specific information regarding its revenues. According to Forbes, Sony could have generated up to $4.2 billion last year from PS Plus and (the now defunct) PS Now.

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    In general, PlayStation continues to be the leading business among the three main console manufacturers, with overall revenue amounting to $24.87 billion for Sony last year, $16.28 billion for Microsoft, and $15.3 billion for Nintendo.

    The head of Sony’s PlayStation Studios, Herman Hulst, has commented to Reuters that the company is looking to make “further investments” in order to expand its presence on PCs, mobile devices, and live services. As gaming accounts for a much larger part of Sony’s overall business, its success in this market is extremely important.

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    The company is competing against a much deeper-pocketed rival in Microsoft, which makes a much greater profit from its software and cloud computing services than it does from games. As it attempts to complete the $69 billion mega-deal for Activision Blizzard, Microsoft has demonstrated that it is capable of subsuming one of the industry’s largest publishers.

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    The antitrust folks have a big decision to make as Microsoft awaits decisions from key market regulators in the UK and US. They will be determining the extent of Microsoft’s competitive advantage, as well as the size of its games business. The US Federal Trade Commission is expected to make its decision in late November, while the UK Competition and Markets Authority will publish its report on March 1, 2023.



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