Xbox CEO Asha Sharma has admitted that Game Pass failed to grow at the pace Microsoft expected, with IGN reporting – citing a Wall Street Journal analysis – that the service currently sits at roughly 30 million subscribers against an internal target of approximately 77 million by this year, a shortfall of nearly 47 million paying members.
Here’s the context: The 77 million projection was not a casual stretch goal. It was built into the internal modeling that underpinned Microsoft‘s $69 billion acquisition of Activision Blizzard, with documents surfaced during the FTC vs. Microsoft trial in 2023 showing the company had also targeted 100 million subscribers by 2030. The core logic was straightforward: own the biggest game franchises, launch them day one on Game Pass, and convert the install base into subscribers at scale. Call of Duty was supposed to be the engine that drove that conversion.
It did not work out that way. Game Pass had reached 34 million members as of February 2024, meaning the subscriber base has actually contracted in the period since – a decline IGN attributes in part to a price increase that current Xbox chief strategy officer Matthew Ball acknowledged caused the service to shed millions of subscribers over a span of a few months. Sharma, after replacing Phil Spencer, cut the price of Game Pass and pulled Call of Duty out as a day-one title in an attempt to stabilize the service. For context on how damaging the price increase was to subscriber numbers, the reversal came quickly – but the recovery has been slow.
Honestly, Sharma’s admission reframes the entire post-acquisition era as a strategic miscalculation rather than a work in progress. Microsoft spent nearly seven years and extraordinary capital building a subscription model premised on content volume, console ecosystem scale, and day-one launches pulling people in. The result is a service with fewer subscribers today than it had over a year ago, and a company now cutting 3,200 Xbox jobs – including the closure of four studios acquired specifically to feed Game Pass with new content. The studios exiting Microsoft ownership, including Double Fine, Ninja Theory, Compulsion, and Undead Labs, are now under no obligation to launch their future games on the service, which makes the content pipeline question immediately acute. You can read more about the scope of the Xbox restructuring and the studios affected.
In a staff email, Sharma stated that Xbox’s business is not healthy, that the company is operating at margins 3–10x lower than comparable platform and publishing businesses, that it entered Gen 9 with a smaller install base and higher cost structure, and that while bets on Game Pass, multi-platform, and a broader content portfolio created meaningful value, those businesses did not grow at the pace Microsoft expected.
That is as direct an acknowledgment of strategic failure as platform holders typically make in writing. The framing – that the bet created “meaningful value” but not at the required pace – is doing real work as corporate hedging, but the underlying math is not ambiguous. The gap between 30 million and 77 million is not a rounding error; it is a fundamental question about whether a subscription model can scale in console gaming the way Microsoft modeled it would. The question of whether Microsoft considered more drastic structural changes during this period is one our coverage of Microsoft potentially spinning off the Xbox division explores in more detail.
What remains unclear is whether the next generation of first-party releases – The Elder Scrolls 6, future Halo titles, whatever Bethesda‘s pipeline holds – will continue to launch day one on Game Pass or shift toward traditional premium sales to recover direct revenue. Sharma has signaled the service is returning to growth after the price-cut correction, but returning to growth from 30 million and reaching a scale that justifies Microsoft‘s total investment are very different targets.
What to watch: Microsoft‘s next earnings disclosure will be the first hard data point to confirm or complicate Sharma’s claim that Game Pass is growing again. The first major day-one first-party release under the new strategy – whatever it turns out to be – will be a meaningful signal about whether Game Pass retains its core value proposition or quietly repositions toward something closer to PlayStation Plus.
Does the admission change how you think about the value of a Game Pass subscription going forward? And if day-one first-party releases are no longer guaranteed, is there a version of Game Pass that still makes sense at any price point? Let us know in the comments.
