Arkane Founder: 'I Think Game Pass is Unsustainable' - News
by William D'Angelo , posted on 06 July 2025 / 4,415 Views
The founder and former president of Arkane Studios Raphaël Colantonio, who left in 2019, took to social media weighing on the huge Microsoft and Xbox layoffs.
"Why is no-one talking about the elephant in the room? Cough cough (Gamepass)," said Colantonio (spotted by VideoGamesChronicle).
He added, "I think Gamepass is an unsustainable model that has been increasingly damaging the industry for a decade, subsidized by MS’s 'infinite money', but at some point reality has to hit. I don’t think GP can co-exist with other models, they’ll either kill everyone else, or give up."
A user stated that Game Pass wasn't designed to be profitable in the short or medium term and Colantonio agrees.
"But it’s a long game that involves throwing a tsunami at the entire ecosystem of the industry," he stated. "Only the gamers like it because the offer is too good to be true, but eventually even gamers will hate it when they realize the effects on the games."
The layoffs at Xbox have seen Perfect Dark, Everwild, and the ZeniMax Online Studios MMORPG cancelled, as well as The Initiative shutdown. Candy Crush developer King is laying off about 200 employees and as many as 100 people at Blizzard working on Warcraft Rumble have been let go. Many other studios at Xbox also saw at least a handful of people let go.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.
More Articles
I'm 95% sure the objective is to push other companies out of the business rather than to make money. Luckily there is Steam...
That's pretty much the modern business playbook; grow at any cost, corner the market, worry about sustainability later.
Luckly Xbox can't deal with Playstation/Steam, even while burning money.
That's exactly what it is. It's an illegal tactic known as predatory pricing that kills off all competition by selling goods below the cost to make them. This pushes everyone else out of the market. Once you are the only game in town you raise prices through the roof. https://www.investopedia.com/terms/p/predatory-pricing.asp
Duh.
I mean... adding several 300+ Million dollar games per year, of course
Should really be about 100 Million dollar games
But to be fair, the entire industry seems to be unsustainable at the current 300+ Million dollar games range lol
The reason it would be unsustainable in the long run would probably be because the profit it creates is not high enough to justify the model to shareholders. Even with Microsoft's backing, if it isn't pulling in enough they will probably change things eventually.
I think everyone can feel it in their bones. It a good deal right now, too good. But there will be a reckoning of some kind later down the line.
It seems like a large portion of the industry is unsustainable right now, because AAA development costs have gone through the roof. Since AAA games cost so much to produce, nobody can afford failures. And it's just the reality of life that there will be failures.
I think for game pass to be successful long-term, it's going to need to reduce reliance on AAA games. But, that's the same for the entire industry, not just game pass.
Colantonio vs armchair experts. LOL.
You do understand he said, "I think" to all the claims he is saying, right?
I depends on how many games are in the service, and how expensive they where to get there. It can be suustainable, it just depends, the fewer games in there, the more profits for each title pr the subscriptions.
Gamepass in and of itself doesn’t have to be profitable to be sustainable.
It can be a successful loss-leader in that it can lose money but be a big enough draw to boost sales of the Xbox consoles.
However, its hard to tell if its doing that to the scale required, and probably isn’t. This would have been compounded by Microsoft’s purchase of ABK for such a large amount of money that its necessitated major cuts to increased profitability. But these would be short-term profits and could negatively impact Gamepass if its content dries up in the medium to long-term. Plus many of Microsofts franchises are no longer exclusives (another decision that seem to come from the ABK purchase) which lessens the draw of Gamepass.
These layoffs are due to MS AI ambitions and investment. Layoffs effected varies MS departments and Xbox was one of them. It didn't have anything to do with Game Pass. Xbox is doing well in fact which is why this sucks even more. It was about MS saving money where they could and I'm certainly not a fan.
So they laid off half of turn 10 studio only because of AI ambitions and investments? Nothing to do with their last game flopping horrendously in sales, which wasn't helped by Gamepass?
This is where you have to find another method of measuring success as Gamepass does disrupt traditional sales.
I would assume Microsoft are doing that as its common business sense. If they aren’t, they clearly aren’t as good as business as people give them credit for.
Literally, yes
They laid off 9000 people across MS
Xbox gets hit the hardest due to their lower profitability
Xbox themselves then choose were those layoffs would come from... which will obviously be from their teams that didn't produce a hit (Turn 10)
I see weirdo cultists downvoting you for posting facts 😂
Yup, we have zero evidence Gamepass contributed in any way to the layoffs at Xbox. Microsoft was laying off people across quite a few departments other than Gaming, and we even have some information that suggests the layoff decisions within the gaming division came from above Spencer, straight from CEO Satya Nadella and CFO Amy Hood. Everything suggests to me that Microsoft decided to batten down hatches to weather a suspected future financial storm, and to continue the metaphor, were tossing aside what the top brass considered to be excess cargo to lighten the load of the ship.
No doubt the layoffs were disappointing for quite alot of people, I'm certainly not a fan of them, but it's disingenuous to claim Gamepass of all things is responsible; Gamepass, which Microsoft has stated numerous times to be profitable, and that it increases the sales of games in the long term even though it cannibalizes some first year sales.
Gamepass has >30M subscribers. If we assume 100$ yearly fee on average, that makes 3B$ each year. If an AAA game costs 500M, that finances 5 (!) AAA games each year and still leaves another 500M$ for smaller projects. If you reduce the AAA releases to 3, than you have 1.5B$ each year for smaller projects. And all that assumes these games sell nothing outside of Gamepass.
So Gamepass is indeed a sustainable model. Even more so, we see Xbox makes 5.7B$ revenue in the last report. As you can see with above estimate, that means Gamepass makes up half of the revenues of the whole department.
Missing the costs of running the service in general and paying off 3rd parties. Plus sustainable does not mean profitable, we know MS has been heavily subsidising it to get it off the ground, can they keep up with demand of consumers for more content and games for the money charged if they start reducing the big budget games offered? People love it for the offerings currently but will they when all that is offered is CoD, 1 Besthesda and one big budget Xbox game a year and a bunch of lower budget titles?
Paying off 3rd-parties cannot be more expensive when developing the game. I calculated with game dev cost, licensing 3rd-parties should be cheaper. And running the service - involves what now? Yes, Gamepass includes a cloud gaming features, but how many people actually use it? Otherwise it is the same as shop infrastructure or more precisely on Xbox it attaches to the shop, adding the 'owned' flag as long as you subscribe. On Windows a shop had to be made for this, so they did. But that is a shop system - like every console manufacturer has. So no, that does not run up cost. Gamepass should be profitable if not something is massively wrong.
Bloomberg estimated MS spend $1 billion a year on third party content for gamepass. We know from the ftc trial that MS were looking at $100 million for Assassin's creed mirage, and $300 million for Star Wars Jedi Survivor to launch on the service. GTAIV is estimated to cost between $120-$150 million a year to keep on gamepass. Third party content costs are massive.
Comparatively, Sonys service is estimated to run at about a 50% profit margin. But they have limited first party releases, less content spending, and less deals on subscriptions. So their costs are lower. Some analysts put gamepass profit margins at as low as 10-15% due to the aggressive content spending and strategy of trying to expand.
Regardless, theyre not operating at 100% profit margins with gamepass, that's impossible.
Paying off 3rd parties is cheaper but it still costs money, when you are also having to make your own games and paying for the service it all adds up.
And you are right but I never said it wasn't making money, just isn't sustainable, in your suggestion, you are cutting making big budget games to what? Make it a better service? Will consumers go for that? I don't think they will, cutting big budget games will also result in fewer subscribers and therefore less revenue to them make other games.
MS have to keep up with demand of the consumer, which even if profitable, is going to always be hard to do. Plus, and at this point, ending the service would be just be stupid if, as you say, GP is basically making 50% of all Xbox revenue.
This doesn't negate what they're saying.
Every single game on gamepass still makes money through traditional sales, so even if each AAA game cost $500m (of course an overestimation), some portion of of that will be covered by actual sales, not the gamepass sub. Black Ops 6 was on Gamepass and still the best selling game of 2024 and its entire cost and more was covered by actual sales before we even talk about gamepass revenue.
For sure there are questions to be asked positive/negative impact on the industry but the notion of gamepass not being sustainable from a Microsoft perspective is not based off data.
So only 3 games in the whole year,thats it....from the entire industry...3...aaa games.
And Christopher Dring verifies this calculation. Regardless how much the downvoters want to see Gamepass as unprofitable - it is even considering first party sales lost: https://x.com/Chris_Dring/status/1942469649423052857
