Microsoft has reportedly put a halt to new third-party deals for its Xbox Game Pass subscription service, according to industry veteran Fernando Rizo. Rizo, a partner at consultancy Caboodle Games and former executive at Splash Damage, shared this information, stating that numerous developers with deals in advanced stages of discussion were informed that these agreements were no longer proceeding.
Rizo shared these insights during a podcast with Shams Jorjani, CEO of Arrowhead Studios, following conversations with various developers at Italy's First Playable trade show. He described the situation as "everybody got the rug pulled out from under them," indicating a sudden and unexpected shift in Microsoft's approach to securing third-party content for Game Pass.
This pause in negotiations could coincide with Microsoft's end-of-financial-year review, which concluded on June 30th. However, it may also signal a more significant policy change for Game Pass, a service that has been central to Microsoft's gaming strategy, often described as the "Netflix of gaming." While the service has reportedly achieved profitability and attracted millions of subscribers, its growth and impact may not be meeting Microsoft's expectations, especially in light of substantial studio acquisitions and investments in generative AI.
A recent decision to no longer offer Call of Duty games on Game Pass while simultaneously lowering the subscription price for certain tiers suggests that revenue generated from the service may not fully offset potential lost direct sales for major titles. Rizo believes that while Game Pass itself is not ending, there will likely be a hiatus on new third-party additions as Microsoft navigates internal restructuring, including potential layoffs and studio closures or sales.
It is important to note that this information is based on Rizo's account of conversations and anecdotal evidence. While Rizo expressed his feeling that "it might have been one of the last ones [anyone] did" in terms of Game Pass deals, direct corroboration from other senior figures in the video game industry has not yet been widely reported. Some speculate that the situation could be isolated to specific developers or that Rizo's contacts may not have been successful in convincing Microsoft of their game's value for the service.
Further details on Microsoft's business strategy and its implications for Game Pass are anticipated with the release of the company's latest financial reports. Separately, Microsoft has faced ongoing boycotts related to its business ties with the Israeli military concerning the conflict in Gaza.