In FY23, Microsoft CEO Satya Nadella’s compensation goals are no longer tied to Game Pass growth, unlike the previous three fiscal years.
As reported by Axios, Microsoft recently filed the 2023 Proxy Statement (a document designed for lenders) with the US Securities and Exchange Commission. For fiscal 2023 (ended June 30, 2023), Satya Nadella’s performance indicators included only one metric related to the gaming side of the company: “Xbox Content and Services Revenue Growth.” , while previously we were specifically talking about Game Pass subscriber growth.
The revenue growth target from Xbox content and services over 12 months was 4.4%, but the division ended up growing just 0.7% compared to the previous year. This represents 10% of Nadella’s total performance goals, following Teams monthly active user growth (20%), Microsoft Cloud subscriber growth (20%), and Microsoft Cloud revenue (30%).
Overall, Nadella’s cash and stock compensation for fiscal year 23 was 48.5 million dollarsdown from $54.9 million in 2022.
Game Pass growth data in recent years
In fiscal year 20 (ended June 30, 2020), subscriber numbers grew 85.75% compared to the previous year, exceeding the target of 71%. In fiscal year 21 (ended June 30, 2021), the target was 47.8%, but Game Pass subscribers only grew 37.5% over the previous year. Even in FY22 (ending June 30, 2022), Game Pass missed its target by 72.88%, growing only 28% from the previous year.
So the Game Pass subscriber growth did not reach Nadella’s goal in two of those three fiscal years, which led to the move to a new metric tied to the Xbox division as a whole in fiscal year 23. This doesn’t mean Microsoft is 100% disappointed with the performance of its subscription service, as the company may have different internal objectives. However, these numbers are usually not made up at random, which leaves room for speculation that Game Pass is growing slower than expected.
The latest official data communicated by Microsoft regarding Game Pass speak of 25 million subscribersalthough unofficial data points to over 40 million.
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