Microsoft finally admits Xbox Game Pass does cannibalise sales

Microsoft has admitted what observers had already assumed – that Xbox Game Pass is harming game sales rather than benefitting them.

A newly-published report from the UK’s Competition and Markets Authority, reveals internal analysis from Microsoft confirming games’ presence on the popular subscription service cannibalises the sales of that title.

“Microsoft also submitted that its internal analysis shows a [Redacted]% decline in base game sales twelve months following their addition on Game Pass,” the report into Microsoft’s disputed proposed purchase of Activision Blizzard.

Other redacted sections of the report say that Microsoft internal documents also “recognise that adding titles to Game Pass would lead to cannibalisation of B2P (buy to play) sales.”

These paragraphs are notable because Microsoft had previously gone on the record saying Game Pass actually helped with game sales. As GameIndustry.biz points out, Xbox chief Phil Spencer said it encourages gamers to go where others are and fork out for the game.

“When you put a game like Forza Horizon 4 on Game Pass, you instantly have more players of the game, which is actually leading to more sales of the game,” Spencer said in 2018. He added: “You say, ‘Well isn’t everyone just going to subscribe for $10 and go play this thing?’ But no, gamers find things to play based on what everybody else is playing.”

It must be said the comments were more than four years ago, so it’s possible the situation has changed in that time and Spencer was being truthful.

The CMA’s report is part of the ongoing investigation into the takeover of the Call of Duty and Warcraft publisher, which Microsoft is desperately trying to get over the line in a number of countries. Regulators in the UK, EU, Brazil and the United States have objected, believing it would harm competition in the gaming market.

The CMA has suggested Microsoft sell off Call of Duty completely in order to green light the proposed $70 billion purchase.