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Game Pass Falls Short of Growth Target for Second Straight Year

Courtesy of Microsoft

For the second year running, Microsoft has fallen short of its growth target for Xbox Game Pass subscriptions, per a company financial filing made earlier this week.

Although the Xbox department had a record-breaking quarter as a whole, with hardware revenue growth of 13% and PC Game Pass subscriptions leaping up 159% year on year, a new filing shows Microsoft had more ambitious goals for the service as a whole (H/T Axios).

Microsoft aimed for a 73% growth rate for Game Pass for the fiscal year ending June 30, 2022. The company fell well short of that number, reaching just 28% percent growth. The fiscal year previous had a target of 48% and reached 38%, but the two missed goals were preceded by a year of over-achievement in fiscal year ending 2020.

The news comes on the heels of comments from Xbox head Phil Spencer in which the executive said Game Pass is profitable even though its growth has slowed. He believes the slowed growth is indicative of having "reached everybody on console that wants to subscribe."

Game Pass currently makes up around 15% of Microsoft's overall Xbox content and services revenue, but at WSJ Live this week, Spencer said prices for the service may rise in the not too distant future.

"I do think at some point we'll have to raise the prices on certain things, but going into this holiday we thought it was important to maintain the prices," he said. "We've held price on our console, we've held price on games, and our subscription. I don't think we'll be able to do that forever. I do think at some point we'll hvae to raise some prices on certain things."

Microsoft did not provide a firm number of Game Pass subscriptions, saying only that over 25 million Game Pass subscriptions had been delivered — the same milestone marked in January.