But then he retracted that, as sources reached out to clarify that actually, that’s incorrect. “When you factor in lost revenue from first-party games (not just unit sales, but also microtransactions), Game Pass remains profitable,” he stated. However, this still doesn’t take into account the development costs for those games.

Some people have questioned why this debate matters at all, and how the profitability of Game Pass affects actual players. I believe it does matter in several ways, and it's not about being emotionally attached to Microsoft’s finances.

Firstly, if you enjoy Game Pass and what it provides, you wouldn’t want it to disappear. If it’s performing poorly financially, Microsoft might discontinue it and change strategies once again, which would mean losing a service you appreciate.

If you don’t like Xbox Game Pass—not for trivial console war reasons, but due to what it signifies for the industry—its profitability raises concerns. There’s an element of treating game purchases as a service, which some may dislike becoming as prevalent in gaming as it is in TV and movies. It also perpetuates a sense of limited ownership already present in many games today, with features being added or removed arbitrarily.

Internally at Microsoft, there are broader questions surrounding Game Pass. A few years back, there was uncertainty about whether Microsoft would continue investing in Xbox. Clearly, they haven't shut it down, but recent mass layoffs and canceled projects have sparked fears that things could head in that direction.

If Xbox Game Pass is either barely profitable or outright unprofitable for a corporation now intensely focused on AI development, it’s easy to imagine a low-margin division like Xbox being better off diverting billions into AI instead. That reportedly is what occurred recently with layoffs and closures, where funds were redirected toward AI initiatives. Should that trend continue, you simply…lose Xbox. The brand, the consoles, the games—everything. But if Game Pass, currently the central offering of Xbox, is indeed generating significant profit, such an outcome becomes less likely.

The long-term success or failure of Game Pass has wide-reaching implications: how gamers spend their money, how they access games now and in the future, and even the continued existence of Xbox and its associated titles. What once seemed implausible is now increasingly conceivable, despite Xbox insisting it isn’t going anywhere. This is the same company where only months or days ago executives were enthusiastically discussing upcoming games, yet last week those projects were shelved. So it’s unclear what will happen next—but we do know it largely depends on whether Game Pass thrives or falters.

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