Earlier today, Microsoft confirmed that the launch of the Xbox Series X and Series S was the biggest launch for an Xbox console in company history, selling more new hardware than any of the previous three generations in its debut.
But the biggest measure of success for Microsoft isn’t just the number of consoles sold, but also the amount of those purchasers who are now in the Xbox ecosystem for the long haul, whether it be simply from buying a few games or paying for the Game Pass subscription.
According to the company’s launch press release, 70 percent of the new Series X and S consoles sold at launch are now attached to a new or existing Game Pass subscription. Obviously that number is going to be slightly inflated at launch because Microsoft is know for providing lengthy free trials and cheap buy-ins for the service for new members.
Converting a large portion of its userbase to the Game Pass Ultimate subscription was a major focus for Microsoft heading into the generation and the one real leg up it has in this next-gen race against Sony and the PlayStation 5.
In place of the older Xbox Live Gold subscription that players needed to pay $60 per year for to play online with friends, Microsoft has bundled that together with Game Pass into the Ultimate bundle, which provides the online service and access to nearly 500 games for $15 per month.
This not only gets Microsoft a solid base of recurring revenue from the subscription, but it also allows players to play more games, as evidenced by the record setting 3,594 titles that were played on launch day, spanning four console generations.
According to industry analyst Daniel Ahmad, the average gamer only buys two games per year, which prior to this generation of consoles, usually meant $120 spent per customer. The average PS4 user has around 13 games in their library, while Nintendo Switvh users average around seven games.
Game Pass allows users to pay around $180 per year, before any deals or promotions, and they get access to hundreds of games, including all of Microsoft’s first party titles and other AAA franchises. Ahmad also notes that this doesn’t stop those users from spending on other franchises like Call of Duty, FIFA, or other titles that catch their eye, it just gives them more flexibility in doing so.
And it works doubly well for Microsoft, because according to the company, Game Pass subscribers generate 20 percent more in sales from buying non-Game Pass games and DLC than users who don’t have Game Pass. Essentially, Game Pass users are more likely to spend money to get a game outside of Game Pass, DLC for a game they are playing, or potentially purchase other games from a series that they discover on the platform through the subscription service.
Microsoft sees Game Pass as the ultimate way to increase the lifetime value and profitability of each console player, which is exactly why Game Pass is continuing to expand on multiple platforms and why more benefits, like EA All Access and a Disney+ free trial, are constantly being added.
Nintendo and Sony also benefit in a similar fashion, though not to the same degree, with Switch Online and PlayStation Plus respectively. Both platforms tote around a 40 percent attach rate for those subscriptions, which offer online play, a few free games or perks each month, and occasional game discounts in Sony’s case.
Xbox is going hard with the Series X and S because it needs to maintain its presence in the console market because of the other benefits it gains from having that platform too, which you can read more about in one of Ahmad’s extremely detailed threads from earlier this year.
It is and has been clear for a good while, however, that Game Pass is the future of Xbox, and this console launch just backs that up.