Xbox Studio Leaders Detest Game Pass for Devaluing $40 Games

Several leaders of Xbox-owned studios detest Game Pass because it turned their $40 games into a monthly-fee extra, Jason Schreier said. The games industry reporter was speaking after Xbox began cutting about 3,200 jobs and moving four studios out.

He does not expect Microsoft to kill the service. He expects it to stop putting many of its biggest games on the Pass on day one, a shift that already started with Call of Duty.

Studio Leaders Say Game Pass Destroyed a $40 Price

The comments came in episode 313 of Triple Click, posted July 16, 2026, as Schreier, Kirk Hamilton, and Maddy Myers went through the Xbox reset. His example was Compulsion Games’ South of Midnight, a $40 game that people who loved it really loved, and that still sat in Game Pass for a monthly charge he remembered as $15 or $20 at launch.

There are a lot of people out there in studio leadership within Xbox who absolutely detest Game Pass and think it has destroyed the value of their games, think it has taken away from the value of all games in general just as a service, and just has contributed a lot of just… It’s been a detriment to the games industry and those people’s views because of how it devalues games.

Jason Schreier, games industry reporter, Triple Click episode 313

He compared that to Netflix, where a title such as Electric State cannot be bought separately. Xbox games can. Once a $40 campaign is in the catalog on day one, he said, a lot of players will not pay $40 for the same file.

Moon Studios CEO Thomas Mahler has made a related point from outside the first-party roster: a subscription still needs smash hits, and Xbox never delivered enough of them. Schreier’s version is bleaker. Hits that do ship, in this view, get their price broken on the way out the door.

Call of Duty Already Left the Day-One Slot

The first tentpole Xbox was willing to protect was Call of Duty. On April 21, 2026, Xbox CEO Asha Sharma dropped Ultimate from $29.99 to $22.99 and said future Call of Duty titles would join the following holiday season, about a year after launch. PC Game Pass moved from $16.49 to $13.99. Games already in the library stayed.

https://x.com/asha_shar/status/2046619416427950442

Black Ops 6 and Black Ops 7 had gone into Ultimate on day one. The April note ended that run. Sharma wrote that Ultimate had become too expensive for too many players, and that Xbox would keep changing Game Pass to match what players actually pay for.

The public argument on that post was not a defense of a $70 box. Replies treated the cheaper monthly bill as the win and treated a year without a new Call of Duty as a fair swap. That is the split inside Xbox in one scene. Studio heads want the old price of a game restored. A lot of Pass users will take $22.99 and wait.

Schreier said the next people in line to panic are studios still being asked to sell a full-price exclusive. If he were The Coalition with Gears of War: E-Day coming, he said, he would be freaking out about missing millions of copies by staying off PlayStation, on top of the Pass.

The Studio Behind South of Midnight Is Independent Again

South of Midnight is a nasty exhibit because of what Xbox did with Compulsion a few days before Schreier spoke. In her July 6, 2026 staff memo, Sharma said Compulsion Games and Double Fine Productions would return to their own management as independent studios, with their IP, catalog, and runway for the next games. Ninja Theory and Undead Labs were headed to new owners, with money to finish Senua and State of Decay 3. Arkane in France opened a works-council process.

About 1,600 roles went that day. The rest of the 3,200 run through fiscal 2027. Sharma called it the most significant restructure in Xbox history and said the business was not healthy. She also wrote that in a typical year Xbox lost 64 cents for every dollar it invested in that expanded studio slate.

Double Fine head Tim Schafer later told Schreier the original deal was simple. The studio would put its games on Game Pass, and Xbox would have that catalog. Then the mission changed. He said he could not imagine any amount of profit, short of a Minecraft-scale breakout that year, that would have kept Double Fine inside the company.

Compulsion had already shipped the $40 game Schreier used on the podcast. Spinning the studio out does not put a $40 sticker back on South of Midnight. It does show what the reckoning looks like for the mid-budget first-party slate that was supposed to make the Pass feel full.

30 Million Members Against a 77 Million Target

The Pass was supposed to pay for that slate with volume. It did not. Then-Xbox president Sarah Bond’s last official figure, in February 2024, was 34 million members. A person familiar with the 2026 books put the total at about 30 million, a drop of 4 million. Internal documents from the U.S. Federal Trade Commission’s Activision Blizzard review had set a 2026 goal of 77 million and a 2030 goal of 100 million paid members.

That leaves Game Pass 47 million members short of its target for this year. Thirty million is less than half of 77 million. Microsoft has not published a fresh official count since Bond’s 2024 number.

GAME PASS MEMBERSHIP VERSUS THE OLD TARGET

Sharma’s own July memo named the miss without a headcount. “To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content,” she wrote. “While those businesses have created meaningful value, they did not grow at the pace we expected.”

Spencer Would Not Take No for an Answer

That bet is Phil Spencer’s. He took over Xbox in 2014, announced Game Pass in February 2017 at $9.99 a month, and built the rest of the decade around it, including day-one first-party games. Former Xbox staffer Richard Irving, who spent 12 years at the division and left in 2016, said colleagues walked into meetings with reasons the idea would fail. Publishers might not join. It might eat profit. Irving said Spencer would not take no for an answer and kept looking for a way to make it work.

Sharma took the CEO job in February 2026 with none of that history to defend. On June 10 she and content chief Matt Booty told staff Xbox would end the fiscal year at a 3% accountability margin, down year-over-year. Excluding Activision Blizzard King, they wrote, Xbox had spent over $20 billion in five years on content, platform, and hardware subsidy, while annual revenue fell by nearly half a billion. “Going forward, this cannot continue.”

HOW DAY-ONE BECAME THE FIGHT

1. February 2017: Spencer announces Xbox Game Pass at $9.99 a month.
2. October 2025: Ultimate jumps 50%, from $19.99 to $29.99.
3. February 2026: Sharma becomes Xbox CEO.
4. April 21, 2026: Ultimate falls to $22.99; new Call of Duty titles wait about a year.
5. June 10, 2026: Sharma and Booty put the margin at about 3% and say Game Pass has started to grow again after 8+ months of decline.
6. July 6, 2026: Sharma starts the 3,200-job reset and moves four studios out.
7. July 16, 2026: Schreier says studio leaders detest Game Pass for wrecking game prices.
8. September 3, 2026: Xbox says Game Pass cloud play will be capped in November at 15, 10, or 5 hours by tier, a change it expects will hit 4% of members.

The June note is the hinge. After the price cut, Sharma said the Game Pass team had stopped an 8+ month slide. Growth returning is not the same thing as 77 million members, and it is not the same thing as a $40 game getting its price back.

A Race to Zero on $40 Games

A former Xbox studio lead, speaking after Schreier’s episode, put the cultural damage in one line. Giving games away for “free” on day one, that person said, tells players the games do not have inherent market value, and almost creates an assumption they could not sell on their own. “It felt like a race to zero.”

Another former lead described the original theory: as more players drifted into free-to-play or waited for Steam sales, Game Pass would give core games a steadier check. Xbox has an engagement formula that sends Pass money back to studios. People inside those studios have said the formula is opaque, and that bonuses still follow old retail sales more than hours played on the service.

WHAT STUDIO LEADERS ARE ACTUALLY MAD ABOUT

• The $40 tag: A South of Midnight-class game still asks $40 at retail while the same build is a line on a $22.99 month.
• The day-one signal: Launching on the Pass reads, to some leads, as a confession the game would not sell by itself.
• The bonus math: Studio pay still tracks copies sold more than engagement hours, so a Pass hit can look like a miss on the spreadsheet that matters to staff.
• The tentpole split: Call of Duty now gets a year of full-price sales; the $40 games that stocked the catalog do not.

Ryan T. Brown, who runs Lost In Cult, said publishers have been saying this quietly to each other for years, and that most industry people think it. Former PlayStation boss Shawn Layden has been blunter about the service itself, arguing Xbox keeps trying to will Game Pass into health after a grim prognosis.

None of that requires Xbox to unplug the servers. It requires Xbox to stop using first-party $40 games as the cheap proof that the catalog is generous.

Why Game Pass Still Ships Day-One Titles

It has not stopped. The April Xbox Wire note still promised “major day one releases” on Ultimate. Forza Horizon 6 and Subnautica 2 went out that way in May. In early September, Xbox was still dating day-one additions such as Once Human, and smaller games were still advertising a day-one Pass slot as a selling point. Schreier’s own January 2026 prediction, that Xbox would announce first-party games would no longer be day one on Game Pass, has come true only for Call of Duty.

The next cut is not a $40 price. It is time. On September 3, Xbox said that from November, Ultimate would include 15 hours of cloud play a month, Premium 10, and Essential 5, after which extra hours go on sale. Xbox said it expects that to affect 4% of subscribers. The Pass is being trimmed at the edges, not converted back into a shop window for South of Midnight.

WHAT WE KNOW

• CoD window: New Call of Duty games join Ultimate about a year after launch, starting with the 2026 entry.
• Price floor: Ultimate is $22.99 a month after the April cut from $29.99.
• Studio exits: Compulsion and Double Fine are independent; Ninja Theory and Undead Labs are leaving with their next games funded.
• The charge: Schreier said many Xbox studio leaders detest Game Pass for destroying the value of their games.

WHAT IS UNCONFIRMED

• A full day-one end: Xbox has not said Halo, Gears, Forza, or The Elder Scrolls VI will leave launch-day Game Pass.
• Named dissenters: Schreier did not identify the studio leaders, so the revolt is real as reporting and still anonymous as a list of names.
• The 30 million count: Microsoft has not confirmed the 2026 membership figure.

Xbox can keep Game Pass, and it is keeping it. The bill for using $40 first-party games as day-one bait is already on the ledger: a 3% margin, 3,200 jobs, four studios gone, and a catalog whose own makers say the price of their work is broken. Call of Duty gets a year to sell. South of Midnight already did its time on the Pass, and Compulsion is no longer there to argue about the next one.