One of the biggest things tech giant Microsoft (MSFT) has brought out in some time is the Xbox Game Pass. A kind of cloud-based gaming service that offers access to a range of titles for a monthly fee, Xbox Game Pass has met with almost as much controversy as praise. A recent report noted that this controversy is even happening internally. Shareholders lacked concern here, and sent Microsoft shares up fractionally in Monday afternoon’s trading.
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Shannon Loftis, former Xbox Game Studios vice president, noted that the Game Pass platform created “weird inner tensions,” and that “…the majority of game adoption on (Game Pass) comes at the expense of retail revenue, unless the game is engineered from the ground up for post-release monetization.” This is a point backed up by Pete Hines, the former senior vice president of global marketing and communications at Bethesda Softworks, who asserted that “Subscriptions have become the new four letter word….”
But with Game Pass representing a major source of revenue for Microsoft—it recently hit a new annual record of around $5 billion—it is a safe bet that Microsoft will not be making any changes to a program that is clearly doing well for Microsoft.
Plus All The Missing Games
It gets worse. A separate report took a look at the list of games from a range of publishers, including Microsoft itself, that are not available on Game Pass. The list is enormous in scope, and forces one to wonder about word from Phil Spencer back in 2022 that noted “We intend to make Activision Blizzard’s much-loved library of games—including Overwatch, Diablo and Call of Duty—available in Game Pass and to grow those gaming communities.”
While Microsoft has certainly brought several of these titles forward, there are plenty more that have yet to see the light of day. Some of these are strictly business issues. Others, like the older MechAssault game, are more a matter of murky rights structures. Anyone familiar with the concept of abandonware in software knows about this point.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 32 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 22.01% rally in its share price over the past year, the average MSFT price target of $625.98 per share implies 25.58% upside potential.
