Moon Studios Chief Executive Officer Thomas Mahler, the creator of the Ori series and No Rest for the Wicked, has publicly offered his diagnosis of why Xbox Game Pass has struggled, arguing that the subscription model was fundamentally viable but collapsed because Microsoft’s first-party studios never produced the calibre of games needed to justify the monthly fee. The intervention came as the industry digested reports that Microsoft is planning significant cuts across its gaming division, including the potential closure of Double Fine Productions, Compulsion Games, and Ninja Theory, all studios acquired during Xbox’s aggressive expansion push to feed Game Pass with content.
Responding to Duke Nukem creator George Broussard, who had wondered where Game Pass came from, Mahler tweeted that Game Pass is a little like communism in that it does not give developers the incentive to go the extra mile, arguing that subscription services live and die by their content quality, and Xbox could never quite deliver on that front, citing the reception of Bethesda’s Starfield compared to Skyrim. Mahler argued that Game Pass needed studios to produce smash hits and cultural events that everyone wants to play, questioning what the big Xbox game in recent years was that was just delightfully good, concluding that game does not exist and that almost every single first-party studio in recent years has been floundering.
However, the quality of the content was likely not the main issue. Xbox did add several great games to Game Pass, both first-party titles like Forza Horizon and Indiana Jones and the Great Circle, and third-party titles, and even attempted to add Call of Duty. The bigger structural problem is that Game Pass faces a contradiction either way: hits risk cannibalising premium sales, while weaker titles may not be strong enough to meaningfully drive subscriptions. Data from Alinea Analytics illustrates this cannibalization problem concretely. Forza Horizon 6 has generated $270 million on Xbox via copies sold and premium upgrade passes, but with almost a month after launch still commanding 2 million players a day and over a fifth of its Xbox players logging 50 hours or more, many of those committed players came in through Game Pass who would have happily bought the game outright. Meanwhile, Escape the Backrooms has sold under 30,000 copies on Xbox worth under $300,000 versus almost 600,000 copies on PlayStation worth $7.2 million, where it is not on a subscription service.
Game Pass’s last known subscriber figure was 34 million, published back in February 2024, with growth understood to have slowed in recent years. Xbox recently confirmed that a price rise introduced last year shed millions of subscribers in a matter of months. Bloomberg reporter Jason Schreier offered a counterpoint to Mahler’s analysis, noting that it is really hard to make great art when working under the fear of layoffs and turbulence and cancellations and shutdowns, suggesting the quality problem was at least partly a consequence of the instability Xbox itself created rather than a structural incentive failure inherent to the subscription model. The debate captures the essential tension in Game Pass’s situation: a model that could theoretically generate enormous subscriber loyalty if the content is compelling enough, but which simultaneously undermines the financial returns that fund the creation of that compelling content in the first place.
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