Xbox Game Pass Is Profitable, But Industry Insiders Say The Pass is Bad for Gaming

Despite ongoing skepticism in the wake of massive layoffs at Xbox, Game Pass remains profitable — even when accounting for lost revenue from first-party titles, according to new insider information.

The profitability of Xbox Game Pass has been a hot topic after waves of restructuring hit Microsoft’s gaming division. Earlier this week, GamesIndustry.biz’s Christopher Dring cast doubt on the platform’s success by noting that first-party development costs were not included in Game Pass’ profit and loss analysis — suggesting the service may not be as financially sound as previously believed.

However, Dring walked back that implication in a follow-up post, clarifying that sources within the industry have confirmed Game Pass remains in the black — even after factoring in lost premium sales, microtransactions, and other missed revenue tied to exclusive titles.

“Yes, dev costs/spend do not come under Game Pass P&L,” Dring explained, “because obviously, development investment can also be recouped through DLC, microtransactions, and cross-platform sales.”

💰 PS5 Ports Softening the Blow

One major factor in Xbox's revenue recovery strategy? PlayStation 5 ports.

With Xbox first-party titles like Hi-Fi Rush, Oblivion Remastered, and Forza Horizon 5 making waves on PS5, these premium sales are reportedly boosting margins significantly. In April, Oblivion Remastered topped the PlayStation charts, proving that cross-platform exposure can help offset declining Game Pass revenue from exclusive access.

🚨 Is Profitability Enough to Justify the Model?

Not everyone is convinced this means Game Pass is sustainable long-term.

Industry veterans are sounding the alarm. Arkane co-founder Raphael Colantonio described the model as “unsustainable,” criticizing Microsoft's deep pockets for subsidizing a system that could damage the industry’s creative ecosystem.

“Only the gamers like it because the offer is too good to be true,” Colantonio warned. “Eventually even gamers will hate it when they realize the effects on the games.”

Michael Douse, head of publishing at Larian Studios, echoed the sentiment, questioning the longevity of a service model propped up by Microsoft's vast financial resources: “What happens when all that money runs out?”

With major projects like Perfect Dark, Everwild, and a Zenimax MMO reportedly shelved, and thousands of staff laid off across Xbox Game Studios, it raises a chilling question: Is Game Pass succeeding at the cost of creativity and developer stability?