Microsoft to double down on Game Pass at Xbox showcase with 'Call of Duty' title

[June 07, 2024]  By Zaheer Kachwala

(Reuters) - Microsoft's Xbox Game Pass will take center stage at its annual video-game showcase on Sunday, as the software giant prepares to roll out the latest installment in its best-selling "Call of Duty" franchise on the subscription service.

Putting the title on Game Pass would mark a major bet by Microsoft on the nascent service at a time when its videogame business has been grappling with tough competition from Sony's PlayStation consoles and a broader slowdown in the industry.

The move will likely boost growth of the subscription service that had 34 million subscribers as of February. But it might also eat into sales of most coveted franchise of Activision Blizzard, which Microsoft bought for $69 billion in October last year.

"It creates a lot of momentum for Game Pass as a subscription service," said Joost Van Dreunen, a lecturer at NYU's Stern School of Business.

He added that it offered good value to customers in a soft gaming market, which has forced layoffs at companies including Activision.

Xbox President Sarah Bond said last month that players can expect all first-party Xbox games on the service from the day of launch as well as some "big games" across the other franchises it owns.

A source familiar with the matter told Reuters in May that the company plans to release the next "Call of Duty" title on Game Pass at the Xbox showcase.

Some analysts have also taken Bond's comments as a sign the company could over time put the entire "Call of Duty" franchise of more than 20 games onto Game Pass, though such a move is expected to only materialize next year or 2026.

The Microsoft Xbox Game Pass logo is seen at the Paris Games Week (PGW), a trade fair for video games in Paris, France, November 5, 2023. REUTERS/Claudia Greco/File Photo

The franchise's addition would also boost adoption of Xbox's cloud gaming service, which allows people to play and stream games on any devices such as televisions and mobile phones.

"If you just want to play on your television and you never bother to buy a console or you don't have a good PC, but you have a TV and a fast internet connection, Game Pass is actually quite attractive," said Wedbush Securities analyst Michael Pachter.

Gaming experts also believe Xbox could introduce a cheaper, ad-based subscription tier for Game Pass, much like Netflix to boost adoption of its service among lower-income households. Game Pass's ultimate tier costs around $17 per month in the United States.

"They will find a lower price alternative, which I suspect much like Netflix will be an ad-supported and will work for people who don't have a console," Pachter said.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Maju Samuel)

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