Microsoft’s PC Game Pass subs had massive surge during Q1 2023

Microsoft posted its financials for the first quarter of 2023, and the results are a land of contrasts. For Xbox, the biggest news would be that subscriptions for Xbox Game Pass on PC had an incredible surge of 159 percent, according to CEO Satya Nadella. 

Yesterday during The Wall Street Journal’s Tech Live conference, Xbox head Phil Spencer called Game Pass “profitable’ for Microsoft, as the service makes up 15 percent of the company’s broader revenue from content and services. PC continues to be the service’s big driver, while console growth has started to stall. 

According to a new report from Axios, though, PC Game Pass’ subscriber jump couldn’t help the service reach an annual company target allegedly tied to Nadella’s pay. Microsoft had hopes the service would grow by 73 percent by the end of June 2022, but Game Pass reportedly only reached 28 percent growth. 

Regarding Xbox Cloud Gaming, Nadella boasted that 20 million users have used the streaming service, up from last year’s 10 million. It doesn’t hurt that Microsoft’s recently gone out of its way to make the service easily accessible. 

As far as the Xbox consoles are concerned, overall hardware revenue was up this quarter by 13 percent, while having a small dip in content by 3 percent. 

During Microsoft’s earnings call, executive VP Amy Hood attributed that drop to “declines in first-party content as well as in third-party content, where we had lower engagement hours and higher monetization, partially offset by growth in Xbox Game Pass subscriptions.”

A lack of first-party titles or content has been a consistent issue of Microsoft for years, as its big releases tend to be less frequent than Sony or even Nintendo. 

One interesting little tidbit from Microsoft CEO Satya Nadella is that nearly half of Xbox Series S owners are completely new to the Xbox ecosystem. The Series S is a cheaper, all-digital alternative to the Xbox Series X, and is proving itself to be a suitable onboarding system to the larger Xbox brand. 

Looking towards to the future, Hood briefly touched on the still-in-progress merger with Activision Blizzard. Even as UK regulators are conducting a deeper probe into the acquisition, Hood affirmed that the deal is still expected to close by the end of 2023’s fiscal year.