Xbox Is Changing Game Pass. Here are the Updates...

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All right, Xbox has reduced the price of Game Pass Ultimate by over 23% from 29.99 to 22.99 a month. It's also reduced PC Game Pass from 16.49 to 13.99 a month. As a result, Call of Duty games will not be included in the service when they launch. So, this is completely different than where it was. New Call of Duty titles will now arrive on Game Pass Ultimate and PC Game Pass around a year later. Existing Call of Duty games, including last year's Black Ops 7, will remain available on the service. Okay, Chris, so last week I let you have one sentence. I'll give you a little bit more this week. Last week, I think it was you know, the price reductions were rumored because Asha Sharma put a internal memo out that leaked, but I'm actually really surprised, pleasantly, that this moved so fast, given how big companies usually take forever. It's like a battleship kind of moving versus the speedboat. So, what's your take this

coming out so quickly and what they're trying to do?
This kind of makes sense in a lot of in a lot of levels, really. I mean, it doesn't solve jack [ __ ] right? Like subscriptions are still terrible for this industry and certainly not helping Microsoft differentiate their platform. And it results in cannibalization and obviously market share from Xbox continues to deteriorate. So, this solves nothing, just to be clear. However, reducing price so quickly shows that Sharma is actually doing something, you know? Let's be clear here, the value proposition of $275 for a subscription without Call of Duty doesn't make sense for the average consumer. That's not a value prop. Like, consumers are not idiots. Like, $275 is a lot of [ __ ] money for the [ __ ] that Xbox is producing, right? Like and fortunately or unfortunately, this year is actually a better year for Xbox in terms of releases, but if you look over the last 3 years, dude, nothing is worth $275. Like, it's insane, right? And the fact is that this type of subscription is for hardcore fans only,

and that's dwindling by the day. Like, you're adding you're putting all your content on PlayStation. Like, why would you buy an Xbox? So, I just don't think this really makes sense over the long term. I will say though that the value proposition for the PC one,
[laughter]
like, that actually seems pretty good. Like, at 13 bucks a month, I mean, I don't know. That actually feels a lot better, right? From a of a value property for someone like myself. Again, this seems like a stopgap measure. This is basically showing that she's doing something, you know? You know, she's decisive, she's quick to action, which is totally on brand for someone an apex predator. But, it doesn't really show that she has any appreciation of the broader issues about how [ __ ] up Xbox is and how poorly positioned they are with both content and service and the consumer and this [ __ ] thousand-dollar console that's coming out. So, they they got a lot of work to do. I think again, this is a stopgap measure. She needs to do something more dramatic

to even hope to get gain back share. And what she will see is when she does this price break, it ain't going to do [ __ ] you know? That's what's going to happen, right? It ain't going to do [ __ ]
The price break plus the ad tier to help make up the revenue, that's what Netflix is doing. If you Netflix just had their earnings, and if you listen, they out of nowhere over the last 2 years, Netflix advertising is like $3 billion. And I get gaming is different, and I understand, but if it's outside the game, not inside the game, it could have been a way to like
No.
deal with that.
No.
How would the ads work?
Well, I even made a point of why it worked for Netflix is because they could expand the audience, right? There is no audience. There's no MORE AUDIENCE TO EXPAND TO. LIKE, NO ONE wants to play [ __ ] Fable, right? The the the hundred billion people or two hundred million people that [ __ ] buy consoles, they want to play Fable or a portion of them want to play Fable. There's no one incremental. You know, my mom and my aunt are not going to play [ __ ] Fable, okay? So, that's the attitude you're talking about. It

doesn't make any sense. I mean, how many times do I have to go through this? It's like
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I feel like I'm just like screaming at the clouds at this point. Jesus Christ. It's so dumb.
Let me try this angle on you then. So, if they remove Call of Duty from Game Pass, then what was Call of Duty the whole point of buying them really for? I felt like that was the key reason and all of the marketing as I talked about when it launched, everything about Game Pass and the ultimate tier was Call of Duty, Call of Duty, Call of Duty. And remember the court battles that everyone was freaked out that there would be, you know, consumers weren't going to be able to get it if it was inside Microsoft and they had to do all the deals. Remember Ubisoft had to take on their streaming service in Europe. So, all of this was for what? In addition, like let's look at the math. So, it's an $84 a year savings, but they're removing a $70 game. So, Phil, help me with some math logic, but is that does that work out?
Every time I've seen someone try to do like game subscription math, it always like falls apart. The most amazing part

was when I was at EA. Remember remember Origin?
Oh, yeah. Oh, I do.
That became EA Play. If you remember, part of the value proposition, I believe it still is available, is you also save 10% on MTX, right? So, you have 10% off your MTX purchases across EA's portfolio of games. Now, you would do the math in your head and say, "Okay, well, who's likely to convert on the subscription for EA Play?" Well, you would think it's the people who play FIFA Ultimate Team and play Madden Ultimate Team that are huge spenders, right? Cuz if I get a 10% discount and I'm spending, let's say, 10,000, 15,000 dollars, I mean, that's a crazy savings, right? Even with that crazy savings that they would have, we still were not able to get those type of users to subscribe to EA Play. And so, so math is the wrong way to look at this. The the full game math that people would do also doesn't work because remember a lot of people buy games at discount too, right? You're only looking at the first wave of consumers who are paying full price. A lot of consumers will pick up let's say a FIFA at a disc or FC at, you know, a

far discounted rate a couple months down the line. So that math kind of falls apart too. But I think none of that economic calculation works because Western consumers in games do not play a multitude of games over the course of the year. That audience is very small. This is why subscriptions are fundamentally incompatible with the nature of games. We've gone over this over a million times. GameFly, OnLive, all this [ __ ] it never [ __ ] works. No one learns, no one wants to take the lesson, and yet this is just playing with numbers. It is a failed strategy. She needs to pivot out of this. I think she knows it, but she has to understand the nature of gaming. This is why when you bring in an an exact from a different point of view, they all like to hammer home subscriptions. Why can't we be the Netflix of games? All these analogies. And there are very clear reasons for that that Phil Spencer apparently did not absorb, but hopefully in, you know, his mind meld with her when he left he was able to do some lessons onto her. But she had the mandate to finally get rid of Game Pass. She had the mandate to pivot out of this failed strategy, and instead it looks like she's doubling down, and I think that's a huge mistake.

I'm going to defend her a little bit. I think she just needs to show that she's doing something. Like she has the reins, she has control. She's going to make changes. This is an easy, easy way for her to do that.
what Jen's book says from last week that you're going to make an impact in 60 days. But just doing [ __ ] I think is a waste of time. What they need is they need a pivot and a reboot.
It makes sense for her to do this now and then hopefully pivot into something extreme later. But I don't think she's in any position to to pivot now. She has to like sell this internally even, you know, to to the CEO and stuff.
I feel like from product perspective they just, you know, looked at the churn data and cut the prices. It wasn't anything about the consumer feedback. I think it's because of the COD users kind of coming in subbing for a month or two and then churning out. They realized that they're cannibalizing both the full price game sales and inflating the subscriber accounts with kind of like zero long-term value. And so they removed that day one COD access and dropped the price at a margin play

disguised in a way like a as a consumer win. And I think there's a credit where credit is due because they originally raised the prices by 50%. They got the backlash and they were dropped by 23% and they basically cover it as a discount even though the price increased 35% in 2-year period. So I think that's very smartly done. But overall, I agree with everything that you guys said and that is that this is an admission that the whole Netflix for games model has failed. It was the original pitch in 2018. We're going to put everything day one, subs grow, installs grow, we're going to monetize through engagement, we're going to put in some in-app purchases. Seven years later, it's just all chaos. Now, what I'm interested to see is like what is Uber for games cuz that's the other one. Like what does that look like? That's a new pitch.
I don't know too much time with VCs, buddy. Too much time with Yoki, buddy.
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Stop hanging with the tech bros, dude. Stop hanging with the tech bros and hanging with the gaming people.
My startup is Uber for games. Like

imagine it. I don't know what it is, but it sounds like something you could raise money on.
Jeez.
All right. So, let's go from console talk to mobile talk. So, Chris, I know you pulled a bunch of numbers.
Yeah. Let's go over Q1.
Yeah, bear with me. There's a lot of numbers ahead of you, but generally speaking, I used to do this all the time for Warner and Fortis and and just doing quarterly updates just to track what's happening in the western markets. Just to be clear, the western markets includes North America, can which is Canada and US, and includes all of Europe and Australia. So, this is what the market that I'm looking at just to be clear. All right. So, so far in the quarter of markets up 3% year over year, which is consistent with minimal growth. It's driven by a 19% 19% increase in puzzle games, for [ __ ] sake. I There's an insatiable need for puzzle games in this [ __ ] world, dude. These 55-year-old ladies got to get out of the goddamn house. Just kidding.
It's not just 55-year-old ladies. But,

fine. If you want to make a generalization.
A 7% increase in strategy. Casino's down 10%, simulations down 12, and RPG continues to deteriorate down seven. So, to delve into the puzzle category first. So, year over year, match swap is flat, right? Well, match merge two is up 91%. [laughter]
Gossip Harbor. Gossip Harbor.
Gossip Harbor primarily. Merge two is just doing it. Sort games are also up, but they are up 310%, but it's a very low base. So, it's not really all that interesting yet, but still that is up and coming. Overall, downloads are continuing to drag. We are down 13% year over year, and that is just not good news. That means that still the established players are driving most of the revenue. And new games are having a tougher time to gain downloads. So, the major releases so far in 2026 are Arknights Enfield, Last Asylum Plague, Coin Master Board Adventure.

And just to give a little bit of detail, Arknights Enfield's a Japanese RPG, really not replicable for western game developers, and it's doing extremely well in Japan, but doing well in US as well. Last Asylum Plague is a Chinese strategy game integrating gameplay from hyper-casual games into a core 4X game with unique theme. Does that sound familiar to anybody? In the strategy category? Wow, I wonder. Coin Master has made Board Adventure, which Sorry, Coin Master Board Adventure is from Moon Active, which is basically a [ __ ] copy of Monopoly Go.
[laughter]
My Garden Tale is a Chinese version of Township. Hollywood Merge is a puzzle game based by another Chinese company. So, you guys see some themes here, some ongoing themes. Anyway, by publisher, by country. Again, another theme we've been talking about for years now. Chinese, Hong Kong, and Singapore are up 18% year over year. Turkey is up 28% year over year. US

publishers are down 12% and Europe is probably very similar. And again, to see the scale of these companies, Chinese, Hong Kong, and Singapore represents 30% of the overall revenue in the West. 30%. This is up from 16% in the 2019. China represents 60% of the strategy revenue, the second largest genre in the business. This is up from 40% in 2020 and up from 11% in 2015. People, they are kicking our ass right now. Like, [laughter] this is bad news bears, man. The US and Europe is just not competing, right? And then finally, Turkey has grown from 2% in 2019 to over 10% of the market in 2026.
Oh my god, just I think we have the mass of data behind what we've been saying on the podcast for the last, I don't know, 6 months or so. Those numbers are crazy.

And they're going into new categories and genres that they haven't been in before.
Yeah.
It's just insane. All right, so that I wanted dive into a couple of games a little bit deeper in what you were talking about. So, we're looking at a slide I pulled from Sensor Tower. This is tier one, so staying on Chris's tier one topic. Top games by revenue of the last 90 days to see trends versus prior month. And so, a quick rundown of the top 10, you got, let's let me click in here, like Monopoly Go, Royal Match, Last War, Candy Crush, Gossip Harbor. So, what I'm really fascinated, again, like Gossip Harbor, Chris gave you some of those numbers. It's growing, so it's now ranked top five. It's up 16% revenue and 26% downloads versus the prior 90 days. And the only other game to really show like that level of growth, a little bit of Coin Master, but was also Pokémon Go. So, the next slide shows for Pokémon Go

that, "Hey Chris, all that brand marketing is really paying off because it's their 30th anniversary and during the the massive spike that they had in Pokémon Go, they were up 14% revenue, 52% in downloads, and downloads have actually continued coming in after the big anniversary event happened in March. So, the March event was from March 3rd to 9th, focusing on some region in Pokémon. The The Q1 event commemorates the '96 of the release of the first Pokémon games. So, that happened. So, Phil, I'll I'll love to get your comments there, but the one other thing I just wanted to say was I was surprised that Roblox wasn't in the top 10. When I was looking at 90 days, it was in the top 14 revenue, and then the last 30 days it's grown to the top 11 spot. So, it looks like Roblox mobile from an IP perspective is coming in hot. So, those were some things I just wanted to pull out I thought were interesting from a game perspective.

The Pokémon Go [ __ ] the brand stuff, I mean, like look, I want to give you your moment in the sun, but like at the end [laughter] of the day, Scopely did take over, and you imagine that they are probably juicing UA. But I'm looking at the downloads, and I'm not really seeing it a little bit in March, but like There's just better operators than Niantic. Of course, they're going to add value. Like, come on.
No, I know, but I'm just I I don't
That's an event.
You can't attribute all with brand. It's all about the event and driving UA, right?
I am not attributing all of it to one specific marketing activity. The sum is greater than the whole of the parts. And so, and this is the whole thing with transmedia versus like all of it has to happen at the same time to get results. So, it's in-game events. It is everything going on with the brand. It's everything surrounding it. And that looks like a revenue spike that you can't argue away that it's just Scopely being an operator. Like, I I don't see that being the the specific answer.

Let me show Let me show another graph. So, this is from the Reem Invest Game report based on Sensor Tower data. This is showing the annual gross in-app purchase revenue by publisher HQ. And then, the second graph is showing annual combined average monthly active user by publisher HQ. So, looking really at the countries where the games are coming from. China is absolutely crushing it. And the craziest thing is in my conversation with the the Chinese leadership, they were saying that their home market, so games launched on other platforms inside China, account for additional 30% of revenue. So, if we'd be seeing the real number, how much these top companies make a month, I would be crying. So, they are really, really dominating it both in the West and in their home markets. The other interesting part from the Chinese perspective, talking to some of the CEOs, they said like we don't want to be dominating in the West so much. Like, we want Western companies to be more competitive because

when they start dominating this badly, they know that there's going to be a some sort of a even governmental backlash. So, they want the competition. And unfortunately, we're not giving them much of that unless we're talking about Turks. And I also asked them like, what happens in match-three, the insatiable need for puzzle games? And I was like Chinese are going to probably, you know, make a next match three game what, this year, next year? They're going to rival the Turkish companies. Like, "No, no, no, no, no. They're way ahead of us. Give us like two to three years." Like, "Oh, lord." So, we'll see what happens on that. The other elements that comes in from this Arium graph is Pakistan and Vietnam. These are the new growth markets. Like, companies companies like Amanotes, Game District. Come on. Billions of installs, hundreds of developers, tens of millions in ad revenue. Most interestingly, they don't have VC money. They are bootstrapped, funded their own growth, funding their own profit. So, very interesting to see again this sort of old school model

functioning and
Dude, there's no ad revenue generating from [ __ ] Pakistan, dude.
No, no, no. The the HQ of a game, let's say Supermarket Simulator or any other type of a hybrid casual hyper-casual game that is made out of Pakistan or Vietnam is generating ad monetization worldwide. Of course, mainly in the US, but in the West it's like
develop
Dude, it's mice nuts, dude. Like, what we're not talking this is not material.
It's it's it's it's less than 100 million, for sure. But, it's not far away from from the top developers. Yeah, it's below 100 million. Which is it's it's below it's below 100 million. He is absolutely correct, but it's not far away.
Vietnam and Pakistan as markets, you're out of your goddamn mind, dude.
I'm talking about four four companies that are coming through there. Like, there's a lot of I I think they are the growth markets in terms of where the next companies
No, no, no. They're not making games. Like, Vietnam has become more of a hotbed for game development. Yes, for hyper-casual
Pakistan. Look, 43% up. 43% up.

43% of DAU and MAU. I mean, you were whatever. This is like a [ __ ] statistic. THAT'S WHY THEY DON'T HAVE revenue [ __ ] thing.
they're They're games. Cuz you don't see this is in a purchase. This is not ad revenue.
This is how people go down the wrong [ __ ] path and start investing in [ __ ] dude. Like I don't know what's happening in the market. China's killing us out there, right?
Hold on. Hold on. Hold on. Hold on, Eric. I think you've been fundamentally I think everyone, not just you, Eric, but tons of people have fundamentally misunderstood what's happening in the West. So, the argument that I would present is that the United States is still and not only still, but increasingly driving consumer demand. I don't think that's something that we should ignore. So, if you look at 4X strategy revenue as one example. So, you're mentioning that it's dominated by Chinese games and a couple in particular. Increasingly, the share of 4X revenue has come from the United States. So, if we just compare the United States and China when it comes to 4X, I I know. I'm getting there. Hold on. This

is not an irrelevant point is that 70% of 4X revenue is from US consumers and that has increased where it used to only be about 40% relative to China. China actually used to be majority share at least by 2018 in 4X revenue and the United States has increasingly dominated, right? Why is the United States increasingly dominating from a consumer perspective? Because now this positions China as making games for the US market. That's a new revelation. I think that's important. It's important when we talk about the geopolitics of the situation and why is that happening? Because the United States continues to have wages rise. Not only that, our wages are rising at a greater rate than China. And not only that, remember we're starting from a higher base. So, if you're growing at 3% real wages per year, the actual real spending power that is increasing is enormous. And so, what happens, right? When you have wages rise. We keep talking about US content being really expensive to develop, right? US developers are very expensive. Why are

US developers really expensive? Well, because we're extremely productive and we have competition from say ChatGPT, from cloud from anthropic all these different companies and so we're not making content anymore. This is what you're seeing. We are not the most profitable place to make content. So what are we doing instead? We're doing what we've always done. We're moving up the supply chain to higher margin opportunities. What are higher margin opportunities inside of games? It's owning the platform. Platform is the highest part of the supply chain. It's owning the engines. It's owning Roblox. It's owning steam Marketplace. These are all the highest possible margin things you can do. This is the best part of the supply chain to be a part of. Why do you want to compete in content anymore, Eric? Why do you want to do this? Why do you want to compete with a Chinese where there's no moat in mobile? There's zero moat. Anything you make in the west is instantly going to be copied by the Chinese. It's low margin. This is Andrew Wilson was right. Andrew Wilson was right. You cannot compete with the Chinese unless you have IP like we talked about Pokémon Go because everything is just going to be copied and reverse engineered. There's no way a US developer is going to be

able to go after merge. Instead, we should focus on again, the highest part of the supply chain, being a platform, being steam, being Unity, being unreal, being a Roblox. That is where the future of Western development lies. Not in content, but in platforms.
Ironically though, you're talking about the least profitable platforms like Roblox and UEFN, right? Like Steam, yes, obviously that's hugely profitable, but like you're not finding much profit on Roblox, right?
That's Come on. You You know that's not true. You know they're playing with the P&L. It's a It's a huge
no, but like a huge thing
front capital costs.
I know, but they're literally marginally not profitable, particularly in their expansion outside of the US, right? Like they're spending insane amounts of money to deliver this content. Whatever.
paying taxes.
What?
What? Yeah, because if they're unprofitable, they don't have to pay taxes. They're This is an accounting game. It's not true.
I'm not going to go over this again. Like
Yeah, let's let's let's not enter that domain. But a market cap of 40 billion,

Eric. A market cap of 40 billion. You're telling me you don't want to own Roblox instead of be a content factory? I'd much rather be sitting in Silicon Valley working for Roblox earning 1.5 million dollars a year as a mid-level employee. That seems like a pretty good situation.
tens of thousands of game developers out there trying to build games and like what, three companies that have platforms? There's not enough opportunity for these people.
up in the in the US, Phil? Th- This is our comparative advantage now. We have higher margin opportunities for the types of people that we normally use for game development. They should be building AI platforms, they should be working on Roblox, they should be working on Steam. This is their best place they should go. We are not going to be a content factory on mobile. HD I think is a different story because I think brand gives us a moat that the Chinese can't copy. But on mobile we're going to get destroyed. And you agree with this, Eric. What What do you
I agree with you. That's why I'm I'm trying to disagree with you, but I agree with you, but I'd like I'm hoping that's not the case because we got a lot of [ __ ] people in mobile in Europe and North America that are basically are cooked, right?
But but it's not like our wages are

declining either. Like that's the important point here, right? If demand was going down our wages would decrease.
No, but there will be no wages if there's no opportunity to develop games.
But But
Europeans are probably like cheaper than Chinese. Europeans are cheaper than Chinese at this point.
Well, that's Well, I mean it depends whether or not you're considering like the added payroll tax of a Swedish employee at 30%. I I'm not quite sure. They're not as productive. I don't think you're going to see a Swede doing 996.
Yeah, I think I think [laughter] that's a very interesting point. I have to think about this because Yeah, I have a project that I'm thinking about working on that really kind of is exactly [laughter] what you're talking
David Ricardo was right. This is comparative advantage at work. There is no response to this, Eric. There is no response to this except to move up the supply chain. There is no other solution. We will not be able to This is exactly why Naughty Dog shut down the Marvel Rivals studio in the United States.
We could regulate Chinese from bringing games to our market. Right? We're going to talk about that.
I think that's a very interesting geopolitical tool. I think the fact that the majority of 4X revenue is coming from the United States and the US consumer is now driving the Chinese

story because again Chinese growth is stalling. I think this is a very interesting bargaining chip.
Yeah, I think
I would agree with you on that.
I think that would be fair to be honest cuz like we can't enter that market.
I've been talking about that for a while. No more domestic publishers.
Yeah.
I think you're right about this one. I think this is a very interesting geopolitical tool.
Okay, what what about this solution? You know, the kind of the the co-dev solution. So you've got Call of Duty Mobile that, you know, has a US kind of arm with Timi or what Riot does with, you know, some of their games or Diablo Immortal with co-dev. So you've got kind of Western-led IP, Western-led concepting but Chinese kind of developers.
Again, [clears throat] but that hasn't worked out. I mean that's only worked out for two games, right? The rest of the games been cancelled.
out for Chinese.
Whoa, whoa, hold on. Hold on. Let's bring up the survival bias plane. We don't know how many times it's been tried. We don't know what the hit rate or the failure rate is.
Oh, come on, dude. a lot of data points that suggest
So Diablo Immortal Apex Legends

CoD Mobile CoD Mobile
Yeah, but Apex Legends as well.
of all, Apex Legends was a success. We know that that business shenanigans killed that. That increases the hit rate. That was a success story.
Yeah.
How is that a success story? The game is like cancelled after six months.
Yeah, yeah, but but there was a reason why it was cancelled. There was a Yeah, exactly. It was due to the relationships. We got multiple reports on that. I don't want to shower and Chinese walked away. They walked away. They're like, "Keep your [ __ ] game." And they walked away.
But hold on. Hold on. Hold on. Let's Let's go back to Jen's original point. Original point which I think holds holds true. And this is what I found again. I spent six days in China. [ __ ] do I know? But still the feedback I got from Chinese developers, very good at taking orders, but when it comes to the more innovative, free-thinking piece that I think the West is really good at, that's something they struggle with right now. So again, I think Western product management, Western IP combined with Chinese scale, which they're incredible at. They're machines. I think it's a very interesting combo.

Let's do more of this.
Yeah.
I think that's a fascinating way to just I think Blizzard's shipment of their IP to Korea is also interesting. I think that stuff is fascinating. And I think Western product managers should be involved though. I don't think you should dump this
Have you talked to Phil? Have you talked to for example people who worked on COD Mobile or any of these other titles? Um what it was like working
My loose worked for Scopely. Well,
And and they and they said and they said yes.
I don't think it was Kumbaya.
Yeah, exactly. That's what I mean.
[laughter]
But but the game was but
selling this as like this is a match made in heaven and it's not.
Well, I think it's always going to be a contentious relationship, but I would say look at at the end of the day they made magic. They made beautiful babies. So who cares if it was feisty to get there.
All right.
Well, good good good discussion. Thank you Phil. Good way [laughter] to way to bum out the entire mobile game industry and Tier One. Appreciate your analysis.
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