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Xbox Game Pass users double, Xbox Live breaks records in Q2 earnings

Xbox Game Pass
Xbox Game Pass (Image credit: Matt Brown | Windows Central)

Microsoft recently relayed its FY20 Q2 earnings, detailing increased revenue to $36.9 billion, with impressive growth across the past quarter. That also brings a 21 percent decline in overall gaming revenue, as efforts shift toward the upcoming Xbox Series X, and fewer third-party titles leave their impact on the market. However, Microsoft's ongoing investment in Xbox subscriptions partially offset those losses, with Xbox Game Pass and Xbox Live smashing records.

Speaking on Microsoft's second-quarter 2020 earnings conference call, CEO Satya Nadella confirmed Xbox Game Pass subscribers "more than doubled this quarter," as the Netflix-style subscription steadily emerges a centerpiece of Xbox and PC offerings. Nadella also confirmed it set "a new record for Xbox Live monthly active users," primarily attributed to the strength on its Xbox consoles. Firm user counts for either service weren't provided.

Growth of Xbox Game Pass and Xbox Live Gold comes as little surprise, both framed as core components of the modern Xbox vision. Following expansion to PC and the introduction of the all-inclusive Xbox Game Pass Ultimate, the rotating library of over 100 titles proposes an unmatched value proposition for both newcomers and Xbox veterans.

Matt Brown is Windows Central's Senior Games Editor, Xbox & PC, at Future. Following over seven years of professional consumer technology and gaming coverage, he’s focused on the world of Microsoft's gaming efforts. You can follow him on Twitter @mattjbrown.

38 Comments
  • Game Pass users almost doubled... I wonder what those numbers are, and then how many have actually started paying full price for the service as well. I won't pay for another 2 years and I'm sure many people are in the same boat.
  • I will. The value of game pass is insane.
  • I will eventually too (well hopefully I will find discounted pre-paid cards), but my point was that I have over 2 years left of not paying for GP. How many people that are using the service are like myself? I know this is a long game they are playing with this, but it would be great to know some actual numbers as an investor.
  • I'm pretty sure only the few (maybe less than a few percent) enthusiasts among us are the ones that took advantage of the "special offer" and buffed up our subscriptions.
  • So here are a few questions, why would the number of subscribers suddenly double in 3 months? What suddenly got people to pay full price for it during those months vs other previous years? Also if most have paid full price for it wouldn't the revenue from subscription actually rise?
    Here Xbox content and services revenue, spanning supporting Xbox titles, subscriptions, and other fundamental components of the Xbox ecosystem is down 11%
  • I'm just saying most people just pay the list price and not bother to look for workarounds for an already insane deal. We read gaming news so we find it out that way.
  • Yeah but who is to say the majority of people didn't get it because they read or heard of the deal?
    If tomorrow Sony starts selling the PS4 for 10 bucks and the userbase doubles. Wouldn't it be obvious that the userbase doubled because of the deak? But like I said in the first point revenue dropped, so that obviously shows that most people who got in got it through the deal.
    I mean think about it. One of the only way to get game pass during that time was to go through the MS store. And there the first thing you saw was $1 deal. You think people would pay $10/15 if they could get it for 1?
  • It's not so much about the special offer perse, it's more about the months and months that were offered for $1. I understand why Microsoft did it, get people into the service, acknowledge the value and they stick around. But to say that people aren't buying games/systems in the Holiday period (i.e. Christmas time) because a new console is coming out in ten months is flat out laughable.
  • I would assume that by offering to convert existing time like they did, they realized they would take losses at least in the first few years with users who were already Gold or on the service. I know this is the long game they are playing, but what is the break even point? Look at Netflix taking major losses currently, look at Spotify that took losses for years, maybe they looked at those examples for their road map. I would just love real numbers. I think the trials will always be there, and they are a really good thing to get people to see the value in the service. I don't think this really factors into the loss after this initial 3 year period unless they keep converting people's time.
  • Been paying full price for 4 months now. And as MS have more first party content than ever before, I doubt I'll cancel. I have had Netflix now constantly for 8 years running. I see no reason why Gamepass will be any different for me.
  • I haven't paid full price for gamepass since it's introduction. Ever since MS started handing out $1 promotions that's all I've done. Creating new accounts, signing up for $1 (whatever the deal may be at the time $1 for one / two / three months) and that's that. Gold and Gamepass games are shared and accessible on my main account.
  • Yeah, I've paid about 15 bucks for game pass all up and I've had it since its inception., with 9 months still left. There is no chance in Hell that Game Pass is "bolstering" their gaming revenue currently. If anything I would argue it is the cause of the reduction because I imagine the majority of people that would have bought GoW5 over the past few months, didn't, because they had no reason to.
  • Well the FY report shows it has increased Xbox Live revenue. That's kinda the point of the announcement. The overall revenue is down because next Gen is less than 8 months away. Sony revenue will be down for the same quarter as well. Because sales of games will be much lower across the board as will console sales. Next Gen is the cause for revenue down across the industry. Not Gamepass. Gamepass has increased Live revenue.
  • "Sony revenue will be down for the same quarter as well. Because sales of games will be much lower across the board as will console sales."
    I would understand console sales dropping but why should game sales be much lower?
    Console sales could slow down as people wait for next gen. But why would people stop buying games?
    Shouldn't there be more people buying games and software if more people than ever owns the console. I mean isn't it strange that Xbox content and services revenue dropped by 11% even though this was the most active users on XBL this generation.
    Surely the $1 game pass has nothing to do with it. LOL
  • It's common for 3rd party games to be pushed back and release later coming upto a new Gen. 3rd party games sales have always been an issue on current Gen in the 16 months leading upto a new generation. Gamers tend to buy less games in the last part of a generation. And almost all companies (publishers and Console manufactures post declines when the new generation starts being hyped. And especially when you enter the final 12 months of a Gen. Console drop in prices/amount of sales/3rd party game releases. The 3 big reasons every Gen has a decline across the board at the end. It's happened every Gen so far. This is clearly going to be no different. 3rd party publishers like to make their big games closer to the launch of the new system. As you can clearly see by literally tons of delays for 3rd party games almost announced weekly now. Basically 3rd party game sales for FY2020 will be massively low across all devices. It's not strange in the slightest. That 11% drop was forecast to be much higher. 24% I believe. That's why people are saying Gamepass and Live subs have offset the decline to be nowhere near the normal Gen end. It actually wouldn't surprise me if Sony decline is higher than 11%. I believe they had an expected decline of 15%. Although Naughty Dog won't say it, TLOU 2 having its Multi-player seperately is purely due to next Gen. They will release the campaign on PS4. A patched over version for PS5. And the multi-player will be PS5 only. Just watch. This is what a new Gen does to game releases.
  • Sorry but you're not really replying to the point. 1) There are more gamers than ever before.
    2) Way more than double the amount of new subscribers to game pass.
    3) But all these players spent 11% less money than last year. More players ever + more than double new subscribers brought less revenue.
    What does these players play? Did they not play games? Is game pass responsible for the drop? Even if there were less new games available, games are still out there for anyone who wants to buy them. What do you think those record active users were doing?
    They weren't spending on buying games. Maybe they were just playing on game pass.
    Yes, game pass got some revenue thanks to all the new members but isn't also responsible for people buying less games? You say, Sony is expecting a 15% decline in game revenue. Do you have a link for that? Also link to where MS predicted a 24% drop.
    Also, please stop with your speculation about TLOU 2. You don't work for ND.
  • Sorry I thought I did answer it. MS announced that Xbox Gamepass and Live Gold subs offset the decline of the games sales/console sales and console price drop. It doesn't matter that there are more gamers now than before. There are many reasons why punters spend less on games coming up to a new Gen. It's always happened. It happened on PS2 when their were over 150 million console owners. Some of the reasons why game sales define across the industry at every end Gen. Puishers save big sellers for closer to the end of the Gen. So they can make them cross Gen. So delays of big games as we have seen cause less spending. Look at the 3rd party sales and releases over the last 6 months compared to FY Q2 2019. Fortnite spending has drastically declined from Q2 FY 2019 as well. Across platforms. Fortnite was a major contributor to big 3rd party sales Last year. The PS3 and 360 had similar declines moving into their final 12 months. Sony posted a total of 12% decline for fiscal year ending March 2013 for its Playstation business. Even though they had at that point their most gamers of the generation, they sold less games and less consoles. It's a common thing. This isn't uncommon. Gamepass andive Gold revenue as MS pointed out has offset their decline. It was expected to be around 24% total by analysyts. But it's only 11%. https://www.gamesradar.com/annual-playstation-sales-and-income-decline/ On Naughty Dog. It's my own opinion based on thr last 3 generation ends of ganes being delayed. And decisions being made. There is no other viable reason why ND would hold back the MP segment of the game till after the campaign releases at this stage of the generation.
  • "It happened on PS2"
    I really don't know about that. Do you have links that showed that PS2 or PS3 software sales went down as the generations ended?
    https://pbs.twimg.com/media/EIG5to0WsAAjVqm?format=jpg&name=large
    I've found this image that shows revenue which includes content sale on PSN. I know it's part of the data as it doesn't include physical copies and include services like PS+. But this doesn't show a major drop in 2012/2013.
    Right now it's kinda steady. These are the Software sales by PS as per their last financial report (before the PS4, all numbers in bln Yen):
    FY12 Q1: 43
    FY12 Q2: 60
    FY12 Q3: 84
    FY12 Q4: 79 FY13 Q1: 64
    FY13 Q2: 93
    https://www.sony.net/SonyInfo/IR/library/presen/er/13q2_sonypre.pdf
    I hardly see a drop. The link you provided clearly indicates that the 12.2% include hardware sales and that's probably why the result dropped.
    "PlayStation division sales fell 12.2 per cent year-on-year to £4.6b ($7.1b), largely due to weaker demand for PS3" "It was expected to be around 24% total by analysyts."
    Which analysts? Do you have links to them? Do they exist? What about the link showing that Sony expected decline of 15%?
    You didn't post that. "On Naughty Dog. It's my own opinion based on thr last 3 generation ends of ganes being delayed. And decisions being made. "
    Last gen TLOU was released late on the PS3. It had multiplayer and got the DLC the following february. Multiplayer or DLC wasn't exclusive to the remastered version. So if you want to speak of experience of past generation, isn't the first version of the same game made by the same company all the experience you need?
  • I posted an article which showed that from April 1st 2012 - March 31st 2013 PS3 console games sales dropped by 8% from the previous year 2011 - 2012. And that was even worse from April 1 2013 - PS4 release. In fact PS4 release saw a 64% increase for Playstation in PS4s first quarterly report. https://www.gamesradar.com/annual-playstation-sales-and-income-decline/ I cannot find a FY report anymore online for 2004-2005 leading up to 360 launch. I'm sure it's on VGChartz somewhere ( I was a member from the start on that site but left in 2015).
  • WHERE in the article it says that PS3 console games dropped by 8% from 2011 to 2012?
    "And that was even worse from April 1 2013"
    I've literally posted the software sales and the link to the financial reports and your still ignore that and say stuff that aren't in the link you provided. It's impossible to have a discussion with you.
    Impossible to discuss with someone who can't prove his statements and ignores proof that is being provided.
  • "and 153.9 million home consoles games, down from 164.5 million." Right there in the article I posted. Roughly an 8% decrease in Console game sales. Did you read that in the article???? Also, Sony just released their FY Q3 today. And it has proved everythig I said. In fact it's dropped alot more than even I predicted. MS game and services division fell 11% of which MS said the losses for the is division were offset by Gamepass and Live Gold doing so well. Soys Games and services division for the same Quater has fallen 20%. Revenue drastically down. And Sony also say decline is down to console sales and 3rd party software sales. http://gamrconnect.vgchartz.com/thread.php?id=241829 Instead of fight with me. How about listen? Sonys report today has just backed me up with everything I've been trying to say to you. The difference is MS had the Ganepass and Live gold success to offset some of the losses. Sony haven't had that. Which is why Games and Services fell sharper than Xbox games and services.
  • "Instead of fight with me. How about listen?"
    Are you joking? I was asking questions. And you kept bringing the same point while totally igonring my points. While the game revenue may have dropped between 2011-2012.
    I showed the other financial report that showe that it actually increased by a lot between 2012 to 2013 (excluding the PS4). So It's not always happening.
    Ups and down, you're trying to make it sound like it's a rule and sales always drops. A drop here and there doesn't make it a rule. You haven't posted the links to analysts who predicted that they were expecting a drop of 24%.
  • Because it's hardly relevant anymore is it? I'm pretty sure if you type it yourself on Google you will see MS beat Analysts predictions. There's tons of articles on it. Also you need to re evaluate 2012-2013. Games sales declined from previous without PS4 included. 2012-2013 only had 6 months without the PS4. April 1st - November. PS3 game sales dropped again up until PS4. PS4 saved that FY massively. But Alas this conversation is moot now everything I predicted based on previous Gen ends Sony has just confirmed via there report. Back to the original point as to why we are having this discussion? Gamepass and Gold offset Xbox Games and services decline. Fact. 3rd party game revenue at end of Gen a major factor in declines for both companies. Fact. Sony declined more than MS in Games and Services for the same quarter. Fact. All in all Gamepass and Live Gold seem to be making decent revenue for Xbox to offset the drop as much as it has. MS should be commended for making such great services that people see value in.
  • "Well the FY report shows it has increased Xbox Live revenue. That's kinda the point of the announcement." Nowhere in the Financial Report does it say that.
  • When a company reports officially on a FY report that an area was 'offset' by Subs on Gamepass and Live, that means the gaming division decrease as a whole was helped by an increase in Gamepass and Live revenue. That's how it works. The gaming division was down due to mostly 43% decline in console sales revenue. (price cut and slower sales end if generation). And 3rd party games (namely lack of big new releases and Fortnite spending has taken such a drop its impacted sales revenue for MS and Sony this quarter). MS confirm the increase in Subscriptions and revenue for Xbox Gamepass and Live Gold offset the losses, helping reduce the overall revenue decline. That's a big deal for MS. It means Gamepass and Live Gold Subs had revenue growth to offset the losses of other departments. MS decline forecast was higher by every analyst. Instead MS have come out of the FY Q2 2020 much better than expected.
  • Right, so no where does it show that Xbox Live revenue increased like you initially claimed.
    We know game pass members doubled, so can't the offset be due to that more than XB Live subscription?
  • Of course it increases if it offset the decline. This is a Financial report to shareholders. You cannot lie on this. It's against major laws. All through 2019 Playstation declined. Every quarter. And it will continue for both companies right up to PS5 and Series X launch. Console revenues run on Cyclical Financials. If you take some time to look back through every player in the console market, you will see every company declines at this stage at every generation. What MS are reporting to the shareholders is it would have been more had Gamepass/Live gold not offset some of the decline. That's the official report to shareholders. Gamepass and Live Gold has actually increased every quarter since Gamepass inception. It's a business plan that is currently doing well for Xbox. And until we see a FY report where it declines, then it's only been a good thing for Xbox every quayer so far when talking about Gamepass and Live Gold.
  • Looks like you didn't understand my post. "Gamepass and Live" not just Live.
    Your iniital post said this:
    "the FY report shows it has increased Xbox Live revenue"
    No where in the report does it say that the XB Live revenue increased. The combination of XBLive AND gamepass increased. For all we know Game pass geenrted most or all of this increase in reveue.
    I hope you know that Game pass, XB live and XB Live Gold subs are not the same thing. Game pass + XB Live is not the same as ONLY XB Live. "Gamepass and Live Gold has actually increased every quarter since Gamepass inception."
    Do you mean revenue? Do you have link to this?
  • Sorry for the confusion. MS lumps Ganepass and Xbox Live under the same branch. They both come under Xbox Live services. I believe MS said Xbox Gamepass and Live Gold offset the decline of lack of game sales in this quarter. Sorry if I wasn't clear. Xbox Live services on their FY report has shown an increase in every report since Gamepass inception.
  • "Xbox Live services on their FY report has shown an increase in every report since Gamepass inception."
    https://www.statista.com/graphic/1/531063/xbox-live-mau-number.jpg
    No it hasn't. It's up and down every quarter. But it does trend upwards.
    But that tends to happend when you start adding users from various platform as your active XBL users. I mean Win10, android, iOS, Switch and now many games launch on Steam (like Halo MCC or AOE DE). Yes that increases the XB MAU...
    And that trend started long before game pass came into being.
  • That graph doesn't include Gamepass. That's an active monthly user graph. Completely irrelevant to FY revenue and profit. Since Gamepass has launched it has only increases in sub numbers (MS report this in every FY since Gamepass released.) Also the graph you posted does show an upward trend. Upward trend on a graph is exactly what you posted. Your right it does have little blips down sometimes, but the trend on that graph is Only upward. Not remotely downward at all. But alas. Sonys December 31st 2019 report is now out. And backs up everything I said to you. In fact I told you what this report would show before it came out today. And you tried to argue with me and make out I had 0 idea what I was talking about. Well the exact opposite has happened. It's shown every thing I said was accurate. And I came to my conclusion like every other Videogame person who has paid attention to FY reports for the last 20 years because it Always happens 18 months out form the end of a generation. Sony even blame 3rd party software sales just like MS did. I'm guessing now Sony has said it you will believe it now. SMH. http://gamrconnect.vgchartz.com/thread.php?id=241829
  • So when you said "Xbox Live services" you were talking about revenue by XBL AND game pass?
    I thought you meant XBL active users. Hence my reply.
    Your response was in large part off-topic as you were again talking of Sony and other bs... So I'll ignore that part. Anyway, do you have a link that shows that the revenue kept rising every quarter? "Since Gamepass has launched it has only increases in sub numbers (MS report this in every FY since Gamepass released.)"
    So do they report on the actual numbers? Did they tell us that the number increased from previous quarter every quarter?
  • I'm guessing your only looking at the figures paper reports. What you need to do is go and look at the transcript for the calls to Shareholders. Much more information. For example this last quarter MS verbally said Gamepass and Live Gold offset that sectors decline. MS have said every quarter in their videocall Gamepass subs have increased. It will be alot of digging for you, I believe you can get full transcripts of the calls. Personally I just use articles that have these transcripts already. You can have a look for yourself. I've wasted far to much time on this. Only to be proven right during the conversation by none other than Sony themselves. What your doing now is trying to find 1 element you can use on me. As I said to be honest your asking for things that happened years ago. And I don't have the time to waste digging it all up. I'm fine with whatever you think. As I said I've been proved everything I said Sony would report has happened. And I based that prediction on all the previous FY reports I've been apart of discussing over th last 20 years in VGC and other forums. What MS and Sony reported was expected and very very normal. Apart from this is probably the first time Gamepass and Live Gold had this much impact on offsetting losses.
  • "Record" XBL active user and massive growth of game pass members at the same time it suffers major dip in revenue. How funny.
    Well that's what happens when you give way game pass ultimate at $1 deals. I knew that MS weren't going to ignore communicating on the artificial rise in membership of game pass thanks to crazy deals and try to make it sound as though the rise is because it's popular. I would think the rise in XBL active users is also thanks to Halo MCC relealising on steam. And ofc unlike, Netflix, PSNow or other service NONE of the actual numbers are communicated, just PR statements with no context.
    I wonder how many of those members are actually paying full price. I would guess not a lot seeing the massive drop in revenue...
  • Chose not to comment. So deleted the comment.
  • I would say that is impressive. But, who knows how many people signed up for $1. I love the service but subscriber numbers are shrouded in secrecy.
  • As expected. Nintendo won't show a decline yet. They aren't at the end of a Gen cycle. Sony will show the same decline in Playstation sales. Simply due to 3 reasons. 1. New console Gen coming, lower console sales currently than any previous time of the same FY quarter. 2. Lack of big 3rd party releases in this quarter. As a comparison Red Dead Redemption 2 released the same quarter the previous year. 3. Price drop on existing hardware. Xbox One X is £299 now. It was £449 previously. Great to see Xbox Gamepass increase again. It has increased at every single quarter since it launched. When Netflix first released you could get huge deals on Netflix for the first 2 or 3 years. Sometimes getting Netflix deals as much as £2.99/month. Even deals of £20/ year I took advantage of back in 2010. And the more original content Netflix made, the more they kept people on the service. Previously Xbox Live active monthly user record was 64 million users in a month. So that has obviously been beaten now. With MS engagement of the PC Gamer I fully expect Gamepass and Live user count to continue to grow over the next few years. It would not surprise me to see over 100 million active users a month on Live by 2023. Especially with huge games like Age Of Empires 4 releasing to the Xbox PC players on Gamepass soon. I'm currently building a beast of a PC to take advantage of Xbox PC Gamepass myself. So I'll be joining the PC crowd along with my Series X later this year playing Age Of Empires 4. The Ultimate Gamepass deal is just too good. Currently playing A Plagues Tale Innocence on Ganepass at the minute. Great game. Definately a developer that could do with AAA funding. What they achieved with this game like Ninja Theory did is amazing with the little money they had. Some of the visuals are fantastic.
  • We can discuss hours about all of this... The problem is simple. MS and people (like in this article) want to compare game pass to Netflix.
    But Netflix actually communicates on the number of subscribers and profit/loss. MS doesn't.
    They used to communicate on console sales but they later said it was irrelevant (just when the competition dominated). They later communicated and praised the number of XBL active users.They said how relevant and great it was... Now they even stopped communicating on that (just when the competition got more than 100m active users on their ecosystem). Now it's just PR statements and marketing terms with NO relevant data or numbers.
    That's the whole problem here. MS hidding facts and numbers...