You shall not (Game) Pass | Opinion

01.12.2023 - 12:25 / gamesindustry.biz / Game Pass / Tim Stuart

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For a few decades, Microsoft occupied one of the most privileged and profitable positions any company, in any industry, has ever enjoyed. The company was synonymous with personal computers throughout the era when they went from being rare and expensive curiosities to being ubiquitous devices in every home and office – yet it did not manufacture any computers of its own.

The actual process of manufacturing, distributing, and selling computer hardware (which is risky, capital-intensive, and generally low-margin thanks to high logistical overheads and fierce market competition) was carried out by countless other companies, not by Microsoft itself. Instead, each time one of those companies sold a computer to a consumer, Microsoft was paid a handsome license fee for installing the Windows operating system.

PC manufacturing was and remains a cut-throat business, and many of the companies that were once huge players in that space have either sold off their PC divisions or folded entirely, but the impact on Microsoft was minimal; manufacturers came and went, but they all still needed to pay for their Windows licenses regardless.

Nowadays, Microsoft's business is much more diverse; Windows licenses are a relatively small part of it, and much of the company's future growth prospects are in areas like cloud services and AI. Still, the model that built the company to the giant it is today – selling a dominant, high-margin operating system for computers built by other companies, while staying well clear of the risky, low-margin hardware business – isn't easily forgotten. It's an enviable position, one that most companies would probably love to be in, with arguably the closest modern analogue being Google's Android operating system.

The idea of Game Pass running on Sony and Nintendo hardware is a hard sell, and the obstacles that stand in the way are not purely financial

It's always been quite clear that Game Pass – as the central pillar of Microsoft's broader strategy to make Xbox into a software and services offering rather than "just" a console – was an attempt to achieve something similar in the videogame market.

When Microsoft CFO Tim Stuart commented at the Wells Fargo TMT Summit earlier this week that the firm would like to see Game Pass available on all sorts of devices, including consoles from rivals like Sony and Nintendo, he wasn't saying anything new, per se. The idea of Game Pass being available on PlayStation or Switch has been floated repeatedly over the years. This idea, which would essentially position Xbox and Game Pass similarly to Windows' historic position on PC hardware, being reiterated by Microsoft's CFO is