Former Xbox Vice President Concerned Game Pass Could Harm the Industry

Ed Fries, the former Microsoft vice president of game publishing who launched the original Xbox, recently appeared on a podcast discussing some of the concerns he has about Xbox Game Pass† Fries said he’s “afraid” the service could lead to a future where people stop buying games, but choose to just pay a monthly subscription fee to access everything. According to him, this is a similar scenario to what happened with Spotify and the transition to music streaming, an outcome that he says has not been great for musicians or record labels. And he fears a similar future for the games industry.

Yesterday, Fries appeared on the Xbox Expansion podcast in an in-depth interview on multiple topics, including: Halo, the director’s involvement in the Xbox launch at Microsoft, the issues the console faced in Japan, and current Xbox boss, Phil Spencer. Towards the end of the interview, the host asked Fries if there were any changes or tweaks he would make to Xbox’s current strategy. While he didn’t provide any details, he called out Game Pass as the only thing the company did that made him “nervous.”

“Game Pass scares me,” explains Fries. “Because there’s a somewhat analogous thing called Spotify that was made for the music business. And uh… when Spotify took off, it destroyed the music business. I mean, it’s literally cut the music business’ annual revenue in half and it’s made people just stop buying songs.”

“So we have to be careful not to create the same system in the gaming industry. I mean, these markets are more vulnerable than people realize,” continues Fries. “I saw the game industry destroy itself in the early 1980s. I saw the educational software business destroy itself in the mid 90’s. So Game Pass makes me nervous. As a customer I love it. I love Spotify as a customer: I have all the songs I could ever want…it’s a great deal as a customer. But it’s not necessarily great for the industry.”

Kotaku has contacted Microsoft for comment.

Fries went on to claim that the rise of music streaming services like Spotify had convinced Apple to stop selling songs because, in his words, “nobody buys them anymore.”

However, as reported by VGC, some of the former Xbox exec’s claims are being disputed by people in the music industry. One statistic used to refute Fries’ claim that the industry had halved after the rise of streaming was that when Spotify launched in 2011, the global record industry was bringing in about $US15 ($21) billion in revenue. In 2021, a decade after Spotify popularized music streaming, the industry reported $25.9 billion in revenue.

That said, as the industry as a whole has continued to grow, individual artists and smaller bands have reported earning very little from streaming services as most of the popular ones only pay a fraction of a cent per stream.

It should also be noted that while Apple has made changes to iTunes and its digital stores, you can still buy songs and albums

While some of Fries’ claims are debatable, it’s not the case that Game Pass has indeed changed the industry. With over 25 million subscribers, Game Pass has become a major focus for Xbox and its boss Phil Spencer, and the company continues big games and popular indie titles to the service every month. Fans have widely embraced Game Pass as people with less money can play more games than ever before. Sony even seems to be change the long-running PlayStation Plus service to be more like Game Pass, adding more levels that offer larger libraries of new and old games, much like Microsoft’s offerings.

While Game Pass has certainly changed the way people buy and play games, it’s not all good news, especially for smaller developers.

indie studio The Game Bakers recently spoke with Direction point about the studio’s decision not to release a new update for furic on Xbox because it didn’t sell well on the platform. According to the developers, it is becoming increasingly important on Xbox that smaller games are launched via Game Pass or risk being left behind. And even if you release your indie game on Game Pass, like the studio did with 2021’s portit is not a guarantee that it will lead to increased sales or profits.

A similar situation arose with Square Enix’s AAA looter shooter, outsiderswho has not yet made a profit one year after launching on Microsoft’s subscription service.

Read more: After years of hype, the Xbox Game Pass Burnout is here

It seems reasonable to imagine that as Xbox Game Pass continues to grow and more games are added at a faster rate, it could become even more difficult to stand out from the crowd and achieve success with the service. And if Sony’s PS Plus Refurbishment helps bring in more subscribers, it’s entirely possible that both these big companies and newcomers who want a slice of that pie will continue to expand the reach of game subscription services, something that Fries is also concerned about.

For now, Game Pass is still quite small compared to Spotify, with most games still being released on multiple platforms and not exclusively as part of a subscription service, a fact Fries acknowledged during the podcast.

“The percentage of all games that are on Game Pass is still small, and there are a lot of games,” admits Fries, “200 games a week appear on Steam, and more than that on mobile, on iOS and Android.”

“So, you know, it’s something I worry about going forward. But it’s something I’m concerned about.”

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