Microsoft is launching PC Game Pass in 40 new countries, raising the total to 86 globally. This is the company’s latest initiative to increase the scale of its PC-focused multi-game subscription service. PC Game Pass remains an important pillar of Microsoft’s Game Pass strategy as it can be launched in markets where there is no streaming offer and where console penetration is low. It is also a way for Microsoft to compete in the PC gaming space and is clearly differentiated from download storefronts such as Steam. However, Ampere estimates that this geographical expansion only adds exposure to around 10 million more enthusiast PC gamers across those territories. Microsoft will be hoping it can convert more mainstream PC gamers to its subscription service.

Initially, the service will be exclusively available to Xbox Insiders, a program that offers Xbox gamers an opportunity to provide feedback on products prior to their full commercial launch. To incentivise early uptake, those previewing PC Game Pass will get access to the service for a lower price for the first month.

Filling in gaps in the Western market, the expanded coverage focuses primarily on Eastern European territories, including Lithuania, Ukraine, and Slovenia, but also covers the Middle East (e.g., Qatar and Egypt) and South America (e.g., El Salvador and Costa Rica).

Whilst PC gaming is popular in these territories, Steam has long been the dominant platform for buying premium PC games and its presence is well-entrenched. Steam therefore represents a key competitor for Microsoft, although the curated library and subscription model inherent to PC Game Pass offer a different experience. The subscription model is largely untested in these markets and will depend largely on local pricing strategies.

Microsoft has a chance to dominate the PC-based multi-subscription opportunity

The PC game subscription space has several key players, but PC Game Pass has a strong and unique position on the platform. Microsoft’s main competitor on console, Sony, does not offer a directly comparable service on PC. It has a very limited presence, providing a selection of PS4 and classic titles to stream to PC as part of its highest subscription tier.

More direct competition originates from Ubisoft+, which operates as a direct-to-consumer service: all content included in Ubisoft+ is published by Ubisoft itself. Though the content is typically AAA and higher-quality, first-party-only catalogues are inherently restrictive. Utomik, an independent PC games subscription service, is another more direct competitor, and it exclusively offers third-party content. The service boasts a huge catalogue of over 1,400 titles, but many of which are indie, or catalogue titles from mid-sized publishers – in fact, Ampere Games Consumer data from Q4 2022 indicates that a quarter of churned Utomik subscribers did not enjoy the games available.

PC Game Pass is unique in that it offers a selection of first- and third-party content – a strategy previously adopted by EA via EA Play PC and EA Play Pro until mid-2022, when the services were adjusted to offer first-party content only. In January 2023, just 20% of the 428 titles included in the US PC Game Pass catalogue were developed internally; the remaining content was published by around 130 third-party publishers. The service also secures AAA third-party titles from EA Play PC, which is bundled into PC Game Pass at no extra cost. Despite having a standalone offering of its own, EA Play PC does not represent direct competition as, like Ubisoft+, the library is now first-party only, and users in many cases secure more value for money by subscribing directly to PC Game Pass as the bundled offering. Through other perks, including day one releases (both first and third-party) and premium content in free-to-play titles, PC Game Pass has a clear competitive advantage in the PC space, and thus has the potential to dominate the subscription opportunity on the platform.

Expansion may not balance out loss of audience in Russia

In early 2022, in a response to the war in Ukraine, Microsoft suspended all sales of products and services in Russia – an important market for PC Game Pass. In fact, this latest expansion into 40 new territories is unlikely to make up for the loss of addressable audience from Russia over the past year. This underlines the significance of Russia in the global games market and, given numerous other games companies took similar action, the effects will be relatively conspicuous.