Here’s Why Xbox Raised the Price of Game Pass Worldwide

Weeks after Xbox raised Game Pass prices around the world, a new report offers an overview of what’s going on inside the company. This was reported by sources close to the company. Microsoft demands more profits from its video games divisiona decision that forced Xbox to look for new sources of income and cancel projects.

If you ever wondered why Gears of War reboot or Forza Horizon 5 released on PS5, the answer goes beyond the exclusivity-free future that the Xbox boss has been proposing in recent years. low sales and purchases by Activision Blizzard at $69 billion was enough to get Microsoft executives involved, who now demand a 30% profit margin, a percentage higher than the average run by companies like Sony or Nintendo.

According to Bloomberg, Microsoft CFO Amy Hood set a goal of 30% within the “limits of responsibility” of the gaming department. The change was implemented in the fall of 2023, when the purchase of Activision Blizzard was completed after receiving regulatory approval. Sources note that Hood and his team have become more important in the gaming business. would explain every Xbox decision in the last two years.

According to S&P Global Market Intelligence, prior to the new target, Xbox maintained profitability between 10% and 20%, which was within the video game industry average. Phil Spencer and company were able to focus on developing games without having to meet a specific quota, although this changed due to a number of factors.

Game pass and Call of Duty They turned out to be counterproductive for Xbox

Plans to buy studios to fill the Game Pass catalog have drawn closer attention from Microsoft. Promise Netflix’s creation of video games did not bring profit millionaires and led to losses in specific cases, such as when all Xbox games were launched on the service on the first day.

The most obvious example is Call of Duty: Black Ops 6which was Losing $300 million due to launch on Game Passaccording to the report Bloomberg. Other educational games are also added to this. first partyHow Halo Infinite, star field or Forza Motorsportwhich didn’t sell enough to be considered a success.

The new profit margin changed Xbox’s plans. According to the report, the gaming division was looking for ways to cut costs and increase profits. Between 2024 and 2025 the company thousands of employees were laid off and canceled at least four important projects. Gone are games like Everwild or Perfect Dark, which were in development for over seven years, as well as Zenimax Online MMO, John Romero’s first-person shooter (Rock) And Smugglingis a game developed by Avalanche Studios.

While the 30% requirement has not been made public, the implications are clear in Xbox’s decisions. The Game Pass price hike, which raised the cost of Ultimate by 50% and angered users, is part of the company’s strategy to prefers to invest money in artificial intelligence instead of video games. The changes had a positive impact on revenue, with Microsoft reporting 34% growth in its most recent fiscal quarter.

Price increases are likely to continue, although this will now affect games that could reach $80 in 2026.