Microsoft Focuses on Expanding Game Pass, Not Winning the 'Console Wars'

Microsoft has confirmed that the Game Pass subscriber count remains steady at 34 million, despite ambitions to become the "Netflix for games." Analyst Michael Pachter from Wedbush Securities suggested in the latest episode of Pachter Factor that Microsoft could boost cloud gaming engagement by providing Game Pass subscribers with a dongle and controller, although cloud gaming's growth remains modest.

The inclusion of Activision Blizzard games into the subscription, starting with Diablo IV on March 28, is expected to increase the number of active subscribers. However, the goal of reaching 250 million seems far-fetched at the moment. Pachter points out that Microsoft's strategy is not aimed at winning the "console wars" but rather at offering games to 3 billion people worldwide, not just the 300 million console owners.

He notes that Microsoft’s strategy is focused on expanding the gaming business through the Game Pass subscription rather than selling consoles. According to Pachter, Microsoft could have dominated the current console generation by lowering Xbox prices and offering attractive Game Pass subscription deals. However, their goal is to reach 250 million subscribers, not tied to console ownership.

Pachter also predicts that the cost of Game Pass will decrease in the future, allowing more users to play for less. He believes Microsoft will win in the long term by offering content such as Hellblade 2, The Outer Worlds 2, Elder Scrolls 6, and the Call of Duty catalog within the Game Pass subscription.

While some players may see this as Microsoft losing the 'console wars' compared to Sony, Pachter argues that Microsoft is significantly ahead in profitability by focusing on subscriptions and cloud technologies rather than hardware sales.