Game Pass Wont Increase in Price Even After ABK Merger Says Microsoft
Game Pass has been a staple of Microsoft's overarching gaming strategy ever since it launched six years ago. Debuting on consoles in June 2017 and on PC two years later, it served as Microsoft's Netflix-like subscription service for games, as endorsed by the very top of the company, including CEO Satya Nadella.
While Microsoft has since clarified that it does not intend Game Pass to replace regular purchases but rather to offer an alternative option, every step of its strategy has been clearly designed to push the subscription service, from the decision to tie XCloud to Game Pass Ultimate to the massive investments in first-party to acquire content. From E3 2018 onward, Microsoft has acquired 15 game development studios (Playground Games, Undead Labs, Compulsion Games, Ninja Theory, Obsidian Entertainment, inXile Entertainment, Double Fine Productions, Bethesda Game Studios, Arkane Studios, id Software, MachineGames, Roundhouse Studios, Tango Gameworks, ZeniMax Online Studios, and Alpha Dog Games), in addition to building The Initiative and World's Edge. All the games these studios made or will make are now available or will be available in the Game Pass library.
Last year, Microsoft also announced the groundbreaking $68.7 billion deal to acquire Activision Blizzard. Shortly after the shocking news, the company confirmed that Activision Blizzard's prized games, from Call of Duty to Diablo, would eventually be added to Game Pass. That alone prompted gaming analysts like Michael Pachter from Wedbush Securities to claim that Microsoft could quadruple the number of subscribers once those blockbusters were added to Game Pass.
On the other hand, many gamers have been wondering whether Microsoft would increase the subscription pricing if games like Call of Duty and Diablo were added. That idea seemed to be reinforced by the recent decision to discontinue the long-standing $1 promotion for new customers.
However, on page 25 of the memorandum defense against the FTC's motion for a preliminary injunction to block the Activision Blizzard merger, Microsoft lawyers have clearly specified that no price increase is planned based on the acquisition.
Finally, the FTC ignores critical variables in the economic analysis by disregarding the new
options the merger will create for playing Activision content.
Here, the acquisition would benefit consumers by making Call of Duty available on Microsoft’s
Game Pass on the day it is released on console (with no price increase for the service based on the
acquisition), on Nintendo, and on other services that allow cloud streaming.
While it could be simply a statement for the judge's benefit, it's hard to imagine Microsoft making such promises and then increasing the Game Pass pricing immediately if it gets the merger through. The price is likely to stay in place, at least for a while.
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