Microsoft Could “Exit the Gaming Business” Without Enough Growth for Game Pass by 2027, as Per Phil Spencer

Microsoft has recently suffered perhaps its biggest ever leak in the games industry, having accidentally uploaded unredacted documents as part of its legal proceedings with the FTC. In the process, several new details have emerged, including the company’s plans to release a cloud hybrid next-gen Xbox console in 2028, a mid-gen Xbox Series X refresh that’s apparently in the works, a new Xbox controller that will have haptic feedback, Bethesda’s whole slate of upcoming titles, and more.

Something else that’s emerged courtesy of the leaks are statements from Phil Spencer suggesting that without sufficient growth for Game Pass, Microsoft might exit the gaming business entirely. As spotted and reported by Wccftech, during an investigational hearing, when shown an internal Microsoft slide projecting Game Pass growth for the coming years by the FTC (which you can view below), Spencer said that Microsoft was actually expecting much better and much faster growth than what’s shown in the chart, especially when it comes to Game Pass subscriber numbers on cloud and PC, and that if by 2027 the company hasn’t hit its internal projections, it may very well exit the gaming business.

“I do not believe that that is what the future Xbox business would look like,” Spencer said of the slide. “This is a presentation from our devices organization to the gaming leadership team, so this is the view from the team that is chartered with building our hardware on what the future business would look like.

“I can fairly safely say that if we do not make more progress than this off of console, we would exit the gaming business. If this were the outcome, we would — I don’t believe we’d still be in the business.

“A majority of our customers are found off of our own hardware, I would hope by earlier than 2030. So, when you asked me if I agreed with this chart that the light green and blue depending on what colors you see there would have to be much larger much earlier. I would say by FY26, ’27 that we should be in that position, or we’d have to make a different decision with the business.”

Game Pass has, of course, become central to Microsoft’s strategy in the gaming space ever since its introduction a few years ago, and has only grown in importance as time has gone on, so it goes without saying that growth for the service is what the company is going to be prioritizing over most (if not all) things.

Whether or not it will be able to achieve that growth remains to be seen, but there’s little doubt that there’s a lot of room for the same where Microsoft’s PC and cloud ambitions are concerned, especially with the boost the company would surely receive once the acquisition of Activision Blizzard goes through.

Earlier this year, Microsoft announced that Game Pass had surpassed 25 million subscribers across all platforms.