Analyst Declares New Xbox Console Dead Amid Game Pass Price Hike

Michael Pachter, the veteran Wedbush Securities analyst who once predicted Microsoft would exceed Xbox Game Pass growth forecasts, has performed a dramatic about-face. Following the steep price hike for the Ultimate tier of Game Pass, Pachter now sees an uncertain future for Microsoft's subscription service—and by extension, the upcoming Xbox console that relies heavily on it.

The Shift in Game Pass Strategy

The recent price increase for Xbox Game Pass Ultimate, jumping to $30 monthly from $21.99, represents a 36% increase that has raised eyebrows across the gaming community. For dedicated subscribers, this means the annual cost has risen from approximately $264 to $360—a significant jump that many gamers are questioning.

"The problem with Game Pass was it was all or nothing," Pachter stated in a recent interview with GamesBeat. This binary approach, he argues, fails to capture the market of gamers who purchase select titles individually rather than subscribing to a comprehensive service. Some consumers, particularly those who buy only a few major releases each year, find the new Game Pass pricing less attractive than simply purchasing games outright.

Consider this comparison: A gamer who purchases three $70 titles annually spends $210, which remains less than the new $360 annual Game Pass cost. For these consumers, the value proposition has deteriorated despite Microsoft's expanded library of titles.

The Hybrid Approach and Market Concerns

Pachter's skepticism extends to Microsoft's rumored hybrid PC/console codenamed "Magnus." While the device could theoretically bridge the gap between console and PC gaming by supporting Steam alongside Xbox titles, the analyst doubts it will succeed without exclusive compelling content.

"Without exclusive games, Pachter doubts that these users will make the transition," the article notes. This represents a fundamental challenge for Microsoft as it attempts to position its next hardware as a versatile gaming solution that can compete with both traditional consoles and dedicated gaming PCs.

The analyst's provocative declaration—"I think the console is dead. I think they've already blown it with the console by embracing Game Pass"—suggests a fundamental misalignment between Microsoft's subscription-first strategy and hardware expectations. For a console to succeed, it needs to offer clear advantages over existing platforms, which Pachter believes Game Pass alone cannot provide.

Leadership Changes and Corporate Direction

Microsoft's recent leadership shakeup adds another layer of uncertainty. The company appointed Asha Sharma as the new CEO of Microsoft Gaming, replacing Sarah Bond who had previously labeled the next Xbox as a "high-end" device. Pachter questioned Sharma's qualifications for the position while acknowledging that failed efforts to expand subscriber counts likely prompted Microsoft's strategic pivot.

Despite these concerns, Microsoft appears committed to hardware development. AMD CEO Lisa Su recently confirmed the console remains on track for a 2027 release date, and Sharma has publicly stated that hardware remains a priority for the division.

Pricing Challenges in a Competitive Market

The next Xbox faces significant pricing challenges beyond just the Game Pass subscription cost. Rising storage and memory components have made high-end hardware development more expensive across the industry. When combined with the subscription price increase, Microsoft is asking consumers to make a substantial investment in both hardware and ongoing services.

Competing platforms are not standing still. Sony continues to refine its PlayStation ecosystem, while Nintendo maintains its stronghold with first-party titles that drive hardware sales. PC gaming, meanwhile, offers more flexibility and often better performance at comparable price points, especially as graphics card prices have stabilized following the crypto-mining boom.

Alternative Approaches and Market Realities

Pachter's suggestion of an "a la carte" alternative for Game Pass reflects a broader industry trend toward more flexible purchasing models. Services like EA Play Pro and Ubisoft+ offer tiered subscription options, while platforms like Steam and GOG maintain strong digital storefronts without mandatory subscriptions.

Microsoft's challenge lies in balancing its subscription ambitions with traditional hardware sales. The company has historically used exclusive titles to drive console adoption, but the shift toward a service-first model may have undermined this strategy. Without the promise of must-play exclusives that justify hardware purchases, consumers may increasingly opt for alternative platforms.

Consumer Implications

For potential Xbox buyers, Pachter's analysis raises important questions about the value proposition of Microsoft's next console. The combination of potentially high hardware costs and increased subscription fees creates a significant barrier to entry, especially when compared to more affordable options like the Nintendo Switch or mid-range gaming PCs.

Gamers who have invested in Xbox ecosystems must now consider whether the increased costs justify the benefits. Those who primarily play Game Pass titles may find the service still offers value despite the price hike, but hardware buyers seeking traditional console experiences may feel increasingly alienated by Microsoft's direction.

The Road Ahead for Microsoft

Despite Pachter's pessimistic assessment, Microsoft retains several advantages in the gaming market. Its deep pockets, established Xbox ecosystem, and growing first-party development capabilities position it to weather current criticism. The company may yet refine its strategy to address concerns about pricing and value proposition.

The coming years will be crucial for Microsoft's gaming division. As the 2027 release date approaches, we can expect more details about the next Xbox's specifications, pricing, and exclusive content lineup. These announcements will help determine whether Pachter's "dead console" prediction proves prescient or overly pessimistic.

For now, Microsoft faces the challenging task of convincing consumers that its vision for gaming—centered on Game Pass and potentially hybrid hardware—offers compelling value in an increasingly crowded market. The company's ability to balance subscription ambitions with traditional hardware sales may ultimately determine the success or failure of its next console generation.