In the latest episode of Pachter Factor, Wedbush Securities Analyst Michael Pachter made some interesting statements on Game Pass, starting with the reported subscriber figure. According to him, Microsoft is not actually counting Game Pass Core (formerly Xbox Live Gold) members in the 34 million subscribers.
Pachter also made a bet with any viewers that the subscription service would go all the way up to 200 million. That’s twice his previous prediction, albeit this time he specified he is referring to a time frame of ten years.
Their Xbox Live Gold membership was 50 million. Their Game Pass subscription number was 25 million, and then when they changed how they reported Core, the number went to 34. Why didn’t it go to 75? Why didn’t it go to 50? It didn’t because whoever reported that they are counting Xbox Live Gold members as part of Game Pass is reporting it wrong. Sorry. It’s just not right. Xbox Live Gold membership has not gone down. That’s not how they count it.
When we start to get Activision Blizzard games I expect subscribers to pick up. I do think that Game Pass is going to become huge. I do think the number is going to be 200 million plus subscribers. I’ve been saying that in the next 10 years, I think it’ll get to 200 million and I’ll make that bet with anybody. I promise I’ll pay it will be 200 million in the next 10 years. They are that committed to it
I don’t think new subscribers have dried up. The huge acquisitions were really just Bethesda which is starting to show some traction and then Activision, which has no traction yet because the first title hasn’t shown up. Come back and ask me that question a year from now once they have Call of Duty on there.
Do note that the episode was evidently registered before the launch of Diablo IV on the subscription service. We have since learned that Xbox is now the biggest platform for the game, thanks to its release on Game Pass.
In the aforementioned Pachter Factor episode, the analyst also discussed the recent strategy change that saw Microsoft bringing games like Hi-Fi Rush, Pentiment, Grounded, and Sea of Thieves to rival consoles. According to Pachter, the exclusivity model is just wrong and doesn’t work anymore.
Why are they bringing their exclusive titles on other platforms? The reason they’re doing it is because the Nintendo model and the Sony model of proprietary titles on proprietary platforms is the wrong model. It’s a broken model. Nintendo started this in 1985. It worked for 40 years. Sony emulated that in 1995 with PlayStation, Microsoft emulated that in 2001 with Xbox and for a long time it worked and then it didn’t.
Supporting your content by managing the distribution on your platform is like a movie studio owning a chain of movie theaters and the only way you can watch their movie is in their theaters. Now, that’ll work and they’ll make money, but they won’t make as much money as they do if they distribute their movies in six or seven different other ways.
Microsoft’s going to have timed exclusives. They’re going to put some content on PlayStation and Switch, they’re going to put some content exclusively on Game Pass, and they’re going to tweak it and figure it out. Buying Activision, they agreed with regulators that they would do this but they didn’t agree because the regulator said so. They always were going to do this. Buying Activision and pulling Call of Duty off of PlayStation wouldn’t have made sense, they would not have sold as many copies of Call of Duty if they put it exclusively on Xbox.
It is true that the exclusivity model seems outdated when the industry is faced with rising budgets and the pressing need to find new gamers. However, only Xbox seems intent on truly breaking down the barriers between console platforms. PlayStation is only doing it with PC, and with a significant delay, too. There’s no indication Nintendo will do any of that in the foreseeable future, either.
