Microsoft (MSFT) may be putting a billion dollars a year into Xbox Game Pass, but one veteran game developer believes the model is “unsustainable.” WolfEye Studios founder Raphaël Colantonio said as much in a post on X, formerly Twitter. Colantonio is also a founder and former president of Arkane Studios, which was acquired by Microsoft in its 2021 acquisition of Bethesda’s parent company, ZeniMax Media.
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Colantonio stressed that Xbox Game Pass has damaged the video game industry over the last decade and said it has done so due to Microsoft’s near-infinite money it can pump into the service. He said the model can’t “co-exist with other models, they’ll either kill everyone else, or give up.”
Colantonio’s post about Xbox Game Pass stirred up other developers who were critical of the model, including one from Larian Studios, the developer of Baldur’s Gate 3 and the Divinity series. Publishing Director Michael Douse said Microsoft’s infinite money plan never made sense.
Microsoft Stock Movement and Analyst Updates
Microsoft stock was down 0.55% on Tuesday, but is still up 17.89% year-to-date and 8.31% over the past 12 months. While criticism of Xbox Game Pass wasn’t welcomed by shareholders, it’s important to remember that Xbox is only a small part of Microsoft’s business. Even so, the company likely won’t want to lose money on Game Pass forever. If that happens for too long, it could turn investors against leadership.
Recent analyst coverage of MSFT stock is tepid. Four-star UBS analyst Michael Briest reiterated a Buy rating and $500 price target yesterday, only suggesting a 1% upside for the shares.
Is Microsoft Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Microsoft is Strong Buy, based on 30 Buy and four Hold ratings over the past three months. With that comes an average MSFT stock price target of $524.86, representing a potential 6.03% upside for the shares.
