As discussions swirl around the impact of Xbox Game Pass on the gaming landscape, a leading industry analyst suggests that the primary threat comes not from subscription services but from dominant live service titles. Recently, Microsoft executed its fourth round of layoffs in under two years, affecting numerous projects, shutting down studios, and resulting in approximately 9,000 job losses. This decision understandably displeased many within the company, especially given that the memos announcing the layoffs claimed Xbox has “never looked stronger.”
Following these events, significant criticism targeted Xbox Game Pass. Arkane founder Raphael Colantonio described the service as “an unsustainable model” that has been “damaging the industry for a decade.” Despite these assertions, subscription spending in the U.S. video game market reportedly hit an unprecedented monthly high in May 2025, encompassing console subscriptions such as Game Pass and Nintendo Switch Online, as well as various MMOs.
Industry Perspectives on Subscription Models
Notably, former Square Enix executive remarked that the challenges Microsoft faced stemmed from competition with AI rather than Game Pass’s “barely any growth.” Similarly, a former PlayStation leader voiced concerns about subscription services, including Xbox Game Pass, potentially being “dangerous” for developers, while claiming that Sony’s PS Plus represents a more balanced approach.
Meanwhile, Circana games industry analyst Mat Piscatella offers a differing viewpoint on the negative perception of Game Pass. He argues that titles such as Fortnite and Marvel Rivals pose a more significant threat. Piscatella emphasized, “The top 10 live service games sucking nearly half of all gaming hours from the PS and XBX ecosystems before any other game can even get a taste is a far bigger threat than the sub model.”
It’s undeniable that the live service model has become the ultimate objective for numerous companies, yet many titles have attempted to capitalize on this trend only to fail abruptly, as evidenced by games like XDefiant, Rumbleverse, and Concord. Nevertheless, those that succeed, such as Fortnite, provide an immense amount of free content that is difficult to match.
Ultimately, the concern surrounding Xbox’s strategy of launching all first-party titles on Game Pass from day one—paired with significant layoffs—has amplified worries about the platform’s sustainability. In related news, after seven years in development, the new MMO from the creators of Elder Scrolls Online has reportedly been canceled amidst the ongoing layoffs at Xbox.