Xbox CEO Asha Sharma has admitted Game Pass has failed to grow as Microsoft had expected, with reports indicating it is tens of millions of subscribers short of previous targets.
The Wall Street Journal said that Microsoft had expected Game Pass subscriptions to hit around 77 million this year, but it currently has only about 30 million. As revealed during the FTC vs Microsoft trial of 2023, Microsoft had hoped for 100 million subscribers by 2030, which seems very unlikely at this stage.
This week, Microsoft announced 3,200 staff at Xbox are set to lose their jobs this financial year, with 1,600 going now and the rest to follow — leaving thousands of employees with an anxious wait that could drag out for months.
As part of the cuts, Microsoft has jettisoned four studios which were brought in to bolster Game Pass with new games under the Phil Spencer era, with another studio in negotiations to be sold or shut down.
In an email to staff, Sharma admitted Microsoft’s gaming strategy had failed, and a key part of that failure had to do with Game Pass.
“Our business today is not healthy,” Sharma said. “We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset Xbox.”
The whole point of Game Pass is that it provides enormous value to subscribers via an expanding library of games, boosted by big day one launches from Xbox studios. Microsoft invested huge sums in acquiring content for Game Pass, including an eye-watering $69 billion on Activision Blizzard. Spencer hoped to boost Game Pass subscribers by launching new Call of Duty games day one. But subscriber numbers have failed to grow, with console numbers in particular hitting a wall.
Through it all, Microsoft’s Game Pass strategy has left many scratching their heads. Spencer increased prices by 50% in October last year in a move current Xbox chief strategy officer Matthew Ball recently revealed had caused Game Pass to “shed millions of subscribers over the span of a few months.”
The exact number of subscribers Microsoft had in early 2026 is unclear, but we do know Game Pass had at least 34 million members as of February 2024. By July 2025, Xbox Game Pass revenue had reportedly reached nearly $5 billion for the first time.
One of the first decisions Sharma made after replacing Spencer was to cut the price of Game Pass and pull Call of Duty out as a day one title. Sharma recently told Bloomberg that Xbox had “been able to reset Game Pass after an eight-month decline.” “It’s now returned to growth and expanding retention,” she added, “and most importantly, we’re starting to get back to being closer to our players and our community.”
What now for Game Pass? With Double Fine, Compulsion, Ninja Theory, and Undead Labs all exiting Microsoft ownership and under no obligation to launch their future games on Game Pass, we may not see State of Decay 3, Senua, and whatever Double Fine and Compulsion have up their sleeves launch on the subscription service.
How does Microsoft grow Game Pass with what it’s got? If even new Call of Duty games fail to grow subscriber numbers at an acceptable rate, what can? Could we see Microsoft pull more of its games out of Game Pass as day one titles, hoping for more direct revenue instead? Will Bethesda’s The Elder Scrolls 6 launch day one on Game Pass? Will the next mainline Halo game? Could we see Game Pass become more like Sony’s PlayStation Plus, which does not launch first-party games day one?
Is it time to admit that Game Pass has failed?
Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].
