Prepare for a major transformation in Xbox Game Pass.

We’re entering a pivotal phase in the transformation of Microsoft’s gaming division under new Xbox CEO Asha Sharma, with potential layoffs and studio closures on the horizon. It appears that Sharma is also reevaluating the Game Pass offerings.

Consultant Fernando Rizo, who advises indie studios on self-publishing, has indicated that Xbox is halting negotiations with third-party developers for Game Pass deals. On a recent podcast, Rizo mentioned that several developers he spoke with felt blindsided as their discussions were abruptly paused. He believes these deals are merely on hold while Xbox reassesses its Game Pass strategy.

“I don’t want to overstate what I know,” Rizo later clarified. “But I’ve talked to several developers at various stages of negotiation who were informed that their deals are on hold. I don’t think this spells the end for Game Pass; it seems more like a new CEO wanting to establish a clear strategy before the Game Pass team resumes signing contracts.”

While a few developers having their Game Pass deals paused doesn’t necessarily indicate a broader trend, Rizo’s perspective seems reasonable given the sweeping changes Sharma is implementing across Xbox. It’s also possible that after a thorough review, the Game Pass strategy will return to normal.

This situation is noteworthy for a couple of reasons. Firstly, Sharma has already made adjustments to the Game Pass strategy, including price cuts and the removal of new Call of Duty titles from the service. This move was seen as a way to stabilize both Game Pass and the Call of Duty franchise. However, it raises larger questions about the purpose of Game Pass and the rationale behind Xbox’s studio acquisitions, especially in light of the anticipated layoffs and studio closures.

While much attention has been on Microsoft’s overarching strategy and the future of its first-party studios, this latest development suggests potential ripple effects on a smaller scale. Game Pass is marketed for its major “day one” first-party releases, but its lineup also relies heavily on numerous smaller deals with indie developers. These agreements provide essential funding for studios, a steady stream of new games for subscribers, and bolster Xbox’s reputation within the indie community. They’ve been crucial for many developers, helping to bring forth beloved titles like Unpacking and Clair Obscur: Expedition 33.

If Sharma’s team determines that these indie partnerships aren’t significantly benefiting Game Pass—or if they decide the volume of new games needs to be reduced—then the landscape could change dramatically for both Xbox subscribers and indie developers seeking a reliable platform during uncertain times.