FollowingXbox‘s continued revenue decline this past quarter, CEO Asha Sharma tried to focus on the positives (like record sales of Minecraft and World of Warcraft Forever), but Circana analyst Mat Piscatella has painted a rather troubling picture of Sharma’s sweeping initiatives: they’re having very little impact. Speaking on the latest episode of Christopher Dring’s The Game Business Show, he said:
With Xbox and everything they’re doing, all of the new programs they’re putting into place… At least in the sales and engagement data that I look at, I’m not seeing that have any positive impact. The disc-to-digital program hasn’t changed their sales of new physical software trend at all. No matter what they do in terms of the console side, saying Gears is going to be exclusive, that hasn’t made any difference in terms of the hardware trend. In fact, the hardware trend keeps getting worse. They’ve lost some distribution in the US. So it just seems like everything they’re doing is not having a positive impact.
I don’t know what they do. It’s really hard to find any signs of positivity or hope on that platform right now. Everything they’re doing seems to be getting Twitter likes from the most passionate part of their fan base, but other than that, in terms of the actual results, I’m not seeing anything right now. And I’m looking really hard. Gears is beautiful. It is a gorgeous game, but you make it exclusive, kind of chop the legs out from under its potential as an individual title in order to try to boost your platform, and at least in the short term, it hasn’t made a difference.
Moreover even the big business decision to remove Call of Duty: Modern Warfare 4 (and future installments, too) from Game Pass at launch to boost full-price sales has seemingly failed
Last year, with the Game Pass day-one launch, according to our US engagement tracker or worldwide engagement tracker data for Xbox, we had about 28% of players last year on Xbox who turned on their Xbox on that day and played Call of Duty. So, a good chunk, right? This year, on the same day the game was fully released, that was 14%. So that engagement rate was cut in half because the game wasn’t available on Game Pass on day one.
We’ve seen this dramatic downtick in terms of the daily engagement rate on Call of Duty on Xbox because it isn’t on the subscription service, and we didn’t see a whole bunch of Xbox players buy the game this year because it wasn’t available. Maybe there’s a gap there because still 14% of people played. So you had some gap there. But it wasn’t like they maintained the player count. All the people who played on Game Pass last year went out and bought it this year—that just doesn’t look like that was the case at all.
So, what did it buy you? All this really does is you’ve hurt the value proposition of the one key differentiator of your platform: Game Pass. So you’ve removed some of that value proposition there. You haven’t improved the value proposition anywhere else, and you’ve raised the price significantly a couple of times. That’s a bad combination, especially leading into a holiday.
There is one important caveat: Piscatella acknowledged that he did not yet have the sales data needed to establish whether more players bought Call of Duty outright this year. The drop in engagement is clear, but the financial payoff of removing it from Game Pass remains an open question. Even so, his broader criticism is difficult to dismiss: Xbox has weakened a key subscription benefit without a visible improvement in its console and game sales.
Sharma, for her part, maintains that console sales are constrained by supply issues, while Microsoft expects content and services revenue to return to growth next quarter. Those are different measures from the engagement and hardware trends Piscatella is highlighting here, but together they underline the challenge ahead: a stronger publishing business does not automatically translate into a healthier Xbox console ecosystem, and, for now, the promised turnaround remains unproven.
About the author: With over two decades of experience in gaming journalism, Alessio Palumbo has led the gaming vertical at Wccftech since August 2015. He started working at a young age for Italian websites like Everyeye.it, Gamestar.it, Nextgame.it, and Multiplayer.it before kickstarting the indie English-language publication Worlds Factory as its founder and Editor in Chief.
In the last decade, he has coordinated the overall output of Wccftech’s gaming section, managed PR relations, assigned reviews, produced daily news coverage, edited gaming content as needed, and delivered game reviews.
Arguably, his trademark content is the long series of exclusive developer interviews that have been cited by Wikipedia and by the biggest news media and gaming publications.
His passion for technology also makes him knowledgeable when it comes to gaming hardware and tech. His favorite genres include RPGs, MMORPGs, and action/adventure games.
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