Xbox Game Pass actually sparks full game sales

Xbox Game Pass subscribers are actually buying more games--something that surprised Microsoft's gaming head Phil Spencer.

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We've known for a while now that Xbox is no longer a console. Instead it's a service that bridges multiple devices like Xbox consoles and Windows PCs (and soon smartphones via streaming) with a deep, engagement-driven web of game sales, online content, and subscriptions all tied neatly together with Xbox LIVE. Microsoft has laid the foundations for a decades-long, billion-dollar strategy, and subscriptions like Xbox Game Pass are paving the way for the future. The real beauty of this strategy is that everything bleeds into one another to make a surprisingly mutualistic synergy.

For example, Microsoft's successful $10 a month Xbox Game Pass subscription is actually pushing more game sales.

"There's two stats that always surprise me. One: I think on a monthly average a Game Pass player plays 4 or 5 more games than a non-Game Pass player. They're playing a lot more games. They're also buying more games...which at first I'm like...that surprised me," Xbox's Phil Spencer said in a recent interview with Giant Bomb at E3 2018.

Spencer goes on to perfectly articulate one of the major reasons why Game Pass was made: to churn engagement.

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Ultimately Game Pass is a means for Microsoft to not only make revenue, but to organically promote engagement on its live services. This engagement isn't outright monetized via microtransactions--it's kind of a doorway or a portal to get more players using the service. Let's say you buy Xbox Game Pass and have both a PC and an Xbox One. You download some Play Anywhere games that are online-based and makes some friends.

The more friends you make, the more enjoyment you have via social interactions, you now become what Spencer refers to as "sticky" in the Xbox LIVE network, meaning you're more likely to log on and keep playing.

And the more you log on and play with friends, the more likely you are to buy new games to further these experiences.

"But what happens is that as they're turning on their console more to obviously go play more games, they're getting connected to more friends--that's also true for people in Game Pass--and they're going out and buying more games even though they're part of this subscription," Spencer said.

Once Microsoft gets Game Pass to mobile phones their engagement cycle will be absolutely massive and probably spike their gaming revenue like never before. But there's lots of hurdles there and it'll be interesting to see how these plans grow over time.