Xbox has quietly paused Game Pass deals with third-party developers
Xbox is freezing new Game Pass content deals with third-party developers while its new CEO restructures the subscription business — and some studios had agreements pulled out from under them at the last minute.
The disclosure came from Fernando Rizo, a marketing specialist and partner at Kaboodle Games, speaking on The Business of Video Game podcast. Rizo co-hosts the show with Shams Jorjani, CEO of Arrowhead Game Studios (the team behind Helldivers 2). According to GAMES.GG, Rizo described deals that were essentially done — not yet signed, but fully negotiated — being abruptly cancelled: "Everyone who was in negotiations for Game Pass... all of a sudden the negotiations were cut off, and everything fell through."
The money problem
Microsoft spends roughly $1 billion a year licensing third-party games for Game Pass. That's a significant line item, and incoming CEO Asha Sharma — who took the role in February 2026 — has made cutting costs the centerpiece of her 100-day reset plan. Her internal assessment found that Xbox had invested over $20 billion across five years while revenue actually fell by $500 million over the same period.
The timing lines up with a botched pricing experiment. Game Pass Ultimate jumped 50% in October 2025, from $20 to $30 a month in the US (£14.99 to £22.99 in the UK). Subscriber numbers dropped, and Microsoft reversed course with price cuts in April 2026. The subscription model, as Notebookcheck reports, is now under full review — meaning the catalog could thin out in 2026 and into 2027.
What it means for developers
The freeze hits smaller studios hardest. Indie publishers like No More Robots had built 2026 release plans around guaranteed Game Pass advance payments. Those upfront deals provided financial cover for games that might otherwise struggle at retail. With negotiations on hold, that safety net is gone — and studios are left without clarity on new terms or timelines.
The structural flaw runs deeper. As TechTimes covered, Luna Abyss developer Binary Star shut down just 26 days after its Game Pass launch — despite positive reviews. A flat one-time licensing fee combined with suppressed retail sales left the studio with no ongoing revenue stream.
Jorjani, for his part, expects the pause to be temporary. Once Sharma's reorganization stabilizes, he believes Xbox will return to the table. But the scale of the restructuring — including major layoffs expected in July 2026 — suggests that whatever deal structure emerges will look very different from what developers were expecting.