Ex-PlayStation Studios chairman: Xbox Game Pass is a “casino” where “the house always wins”

Shawn Layden, former chairman of PlayStation Studios, recently told The Expansion Pass podcast that developers cannot profit from Game Pass even if Microsoft can, turning the subscription service into a casino for developers and studios where “the house always wins.”

Low breakeven chance for developers?

According to Layden, Game Pass replaces a $69.99 launch price with a day-one subscription that eliminates developers' one chance to break even once a game releases. Instead, studios have to rely on Game Pass overages and profit sharing for revenue.

Previously, Shawn Layden said that Game Pass would need almost 500 million subscribers to break even. However, he now states that his previous statement was hyperbole. Currently, Microsoft hasn’t released any Game Pass profit figures to test that theory, and Xbox’s own chief executive has already claimed that the model needs to change to remain sustainable.

Layden essentially portrays Game Pass as a casino for studios and developers where the operator comes out ahead, while the developers at the table do not. On The Expansion Pass podcast, Shawn Layden stated:

“I think I said somewhere that in order for Game Pass to become profitable you have to have something like 500 million subscribers. It’s a number chosen for hyperbole. But it turns out it wasn’t that wrong? And people would always say, well, Microsoft is profitable. But that’s like saying the casino is profitable. The house always wins, right?”

He then discussed how studios rely on Game Pass for profitability, hoping to shed light on their titles. According to him, “In a subscription model, that’s just impossible to do. Strictly speaking, your $69.99 game has one chance to bust and break through.”

Further criticizing the model, he compared Xbox’s strategy with Sony’s and noted that PlayStation never went down that route or released its AAA exclusives on PlayStation Plus on day one.

A financial reconsideration on the cards for an AI-focused Microsoft?

Xbox is also starting to feel the brunt of Game Pass, according to a leaked memo from April in which current Xbox CEO Asha Sharma wrote, “Short term, Game Pass has become too expensive for players, so we need a better value equation.”

At the end of the day, Microsoft has never published Game Pass profit figures, including for the quarter that ended on June 30, when Xbox content and services revenue fell by 10%.

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