UK regulator finds Xbox Game Pass eats into game sales

The UK CMA's newest report confirms that Xbox Game Pass has a negative impact on game sales. 

GamesIndustry found buried in the regulatory board's investigation into the Microsoft-Activision Blizzard merger a brief aside on how the popular subscription service affects games added to its library. According to Microsoft's internal analysis, a game's sales decline "twelve months following their addition on Game Pass."

Numbers given throughout that section of the report are redacted, but the fact that those numbers are redacted indicates they aren't anything to dismiss. 

Notably, these findings clash with what Xbox head Phil Spencer has said about the service. In 2018, Spencer famously said that Game Pass "actually leads to more sales of [a] game. [...] When these games hit something like Game Pass with all these players, it instantly raises the awareness."

More recently, Spencer said in October 2022 that the service was profitable and accounted for 15 percent of the company's content and services revenue. 

Microsoft adds games to Game Pass on a consistent basis, and the length those games stay on the service fluctuate. But whatever numerical decline there is in a game's sales for a year after they come to Game Pass is hardly comforting to hear, particularly for the titles that begin their life on Game Pass.

How Game Pass effects players' outlook on buying games

The Xbox maker also released data showing that players frequently switch between buying games outright and downloading them via Game Pass. Some players buy and continue playing a game a year after unsubscribing from Game Pass. 

In its own assessment, the CMA called out the limitations of Microsoft's framing of Game Pass. It pointed out that players will continue to buy games even if they're on a subscription service, and added that it was unclear of the ratio for subscribers who buy games to own versus non-subscribers who purchase games. 

Even so, it acknowledged that there was "some substitution" in play from buying games to downloading them via Game Pass. There may also be "some diversion" in going to Game Pass to purchasing a game, though that may be unclear since "the magnitude of any substitution effect is lower and more difficult to detect by just looking at the data."