The Federal Trade Commission (FTC) accuses Xbox Studios, Activision, and their parent company Microsoft of “consumer harm” and “product degradation” after the company jacked up prices for its Game Pass service and announced the discontinuation of Xbox Game Pass for Console.
A screenshot from Halo 2: Anniversary (2020), 343 Industries
Earlier this month, Microsoft announced its changes to Game Pass and revealed that in the United States the price for Game Pass Ultimate increased from $16.99 to $19.99 per month. That’s a 17% price hike per month.
The company also revealed the yearly subscription for Game Pass Core increased from $59.99 to $74.99. That’s a 25% increase. These prices changes go into effect for new members effective July 10, 2024. For those with a recurring subscription, the price will change beginning on September 12, 2024.
A screenshot from Call of Duty: Black Ops 6 (2024), Treyarch and Raven Software
READ: Xbox Jacks Up Price For Yearly Game Pass Subscription By 25%
On top of the increase in prices, Xbox appeared to be preparing to phase out Xbox Game Pass for Console. The company announced, “Starting on July 10, 2024, Xbox Game Pass for Console will not be available for new members.”
However, it also noted that currently subscribed members will still have access to the service and “will be able to continue to enjoy your membership.” This is contingent on members who stay subscribed to the membership. Xbox noted, “If at any time you turn off your automatic payment renewal and your membership lapses, you will no longer have access to Game Pass for Console and will need to join one of the other plans we offer for Game Pass.”
A screenshot of Joanna Dark from Perfect Dark (2024), The Initiative
Finally, the company announced a new Games Pass option that they are calling Xbox Game Pass Standard. This option is priced at $14.99. It grants players access to “hundreds of high-quality games on console,” allows players access to “online console multiplayer,” and gives them access to “member deals and discounts.”
You can see the three Game Pass options that Xbox has available below:
Xbox Game Pass Options for Xbox Console
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In a letter to the U.S. Court of Appeals for the Ninth Circuit, the FTC blasted Microsoft for these changes.
The letter states, “The Federal Trade Commission writes to alert the Court to Microsoft’s announced price increases in the multi-game-subscription and cloud-gaming markets, which the district court found relevant to the merger analysis. Microsoft is raising the price for its ‘Game Pass Ultimate’ product from $16.99/month to $19.99/month—a 17% increase year-over-year increase.”
It continues, “Additionally, Microsoft is discontinuing its $10.99/month ‘Console Game Pass’ product. Users of that product must pay 81% more to switch to ‘Game Pass Ultimate.’ For consumers unwilling to pay 81% more, Microsoft is introducing a degraded product, ‘Game Pass Standard,’ at $14.99/month. This product costs 36% more than Console Game Pass, and withholds day-one releases. Product degradation—removing the most valuable games from Microsoft’s new service—combined with price increases for existing users, is exactly the sort of consumer harm from the merger the FTC has alleged.”
A screenshot from South of Midnight (TBA), Compulsion Games
“Microsoft’s price increases and product degradation—combined with Microsoft’s reduced investments in output and product quality via employee layoffs—are the hallmarks of a firm exercising market power post-merger,” it states.
It then declares, “Importantly, Microsoft’s actions are inconsistent with Microsoft’s representations below. Microsoft’s price increases coincide with adding ‘Call of Duty’ (CoD) to Game Pass’s most expensive tier, and discontinuing the Console tier will happen shortly before releasing CoD’s newest game. Below, Microsoft promised that ‘the acquisition would benefit consumers by making [CoD] available on Microsoft’s Game Pass on the day it is released on console (with no price increase for the service based on the acquisition).'”
“Microsoft’s post-merger actions thus vindicate the congressional design of preliminary halting mergers to fully evaluate their likely competitive effects, and judicial skepticism of promises inconsistent with a firm’s economic incentives,’ the letter concludes.
A screenshot from Call of Duty: Black Ops 6 (2024), Treyarch and Raven Software
What do you make of the FTC’s letter blasting Microsoft, Xbox, and Activision for “consumer harm” and “product degradation?”
