Business aspects of Subscription Game Libraries [Xbox GamePass, PSNow]

[Nesh]

I'm in the camp that thinks it's sustainable and highly profitable if they scale it large enough. We might get to find out.

I believe It will under the conditions that it becomes a hugely adopted service with scaled down content and most people abandon the current super costly AAA gaming experience.

Or if it in some way, achieves huge adoption with a significantly larger fee if you want to access AAA games

 

[Nisaaru]

I believe It will under the conditions that it becomes a hugely adopted service with scaled down content and most people abandon the current super costly AAA gaming experience.

Or if it in some way, achieves huge adoption with a significantly larger fee if you want to access AAA games

Why? The higher the adoption rate the less the cost factor for an AAA production pipeline which can satisfy most genres and people's limited time budget. At some point a surplus of games to play means nothing when you don't have the time to do so.

 

[Nesh]

Why? The higher the adoption rate the less the cost factor for an AAA production pipeline which can satisfy most genres and people's limited time budget. At some point a surplus of games to play means nothing when you don't have the time to do so.

The issue here is that the fixed fee is shared and the content will be growing at the same time while costs to produce a AAA title will always be high and probably even increase as they become more sophisticated. It is not just users that will increase. To sustain such huge projects that need more revenue per user than your average indie game, the userbase must be constantly increasing significantly much more, probably exponentially, than the rate of content.

Its one of the reasons some big third party devs are relactunt to go the Gamepass route on day 1, whereas smaller devs are eager to get there day 1

 

[stu11]

The way I see it, the only way Microsoft can get more AAA titles on GamePass day one is by actually BUYING the companies behind them, just like they are doing with ABK. Its already been reported that ABK is unwilling to release the latest COD game directly on to GamePass because of the drop in revenue such a move would make, the only way the latest COD appears day one on GamePass is with MS owning it. So the more investment in to Gamepass that MS makes, the more shareholders are going to want that investment to translate in to profits, which will mean larger price rises for Gamepass.
Of course the more companies MS gobbles up and makes exclusive the business for Sony (and to a lesser extent) Nintendo becomes more and more unviable and Microsoft slowly becomes a monopoly, one that can charge what ever it likes.

 

[iroboto]

The issue here is that the fixed fee is shared and the content will be growing at the same time while costs to produce a AAA title will always be high and probably even increase as they become more sophisticated. It is not just users that will increase. To sustain such huge projects that need more revenue per user than your average indie game, the userbase must be constantly increasing significantly much more, probably exponentially, than the rate of content.

Its one of the reasons some big third party devs are relactunt to go the Gamepass route on day 1, whereas smaller devs are eager to get there day 1

I do see this line of thought that to grow more customers or keep them more content has to be made. This is in line with what we see with Spotify or Netflix but I don’t think this counts for game pass.

Typically games in themselves are a service that when built correctly can provide infinitely more hours of replay ability than the other two mediums. So much so that you could easily pour thousands of hours into a single title.

The reason this is important is because the curation of the library of gamepass or services like it, only needs to provide the games that will eat your time, having more games doesn’t necessarily imply you would play more. So instead of this exponential spend to keep increasing your library and therefore to keep increasing your spend, you can and will likely cycle gsmes in and out of gamepass. And we see this today, the service doesn’t exceed 100 games or so. That would give us a pretty strong idea of how much that caps the service in terms of spend.

Secondly, unlike Netflix or Spotify, there is significant, crazy significant, upsell opportunities in the form of DLC and MTX that doesn’t exist in those industries. And that becomes a secondary revenue stream as well.

Most importantly, games don’t need to be increasingly more expensive to draw an audience. Once again, games are perfectly capable of drawing massive audiences without the need to have insane visuals or even story telling and we see this with the most played games today, almost none of them have ever been industry leading in the graphics department, one could actually argue graphics are typically what limits the size of the install base and therefore a limiter to revenue.

The idea that game pass can’t be profitable today seems reasonable, the idea that it could never be profitable seems wrong. The spend can be capped. With the right game like imagine MS made something like GTAV online, you would have a permanent group of subscribers. A game like COD will draw a permanent group of subscribers. Have massive enough payers that exceed your expenses and the service should naturally be profitable.

Unlocking the mobile base will be important to real profitability of course.

 

[Nisaaru]

The issue here is that the fixed fee is shared and the content will be growing at the same time while costs to produce a AAA title will always be high and probably even increase as they become more sophisticated. It is not just users that will increase. To sustain such huge projects that need more revenue per user than your average indie game, the userbase must be constantly increasing significantly much more, probably exponentially, than the rate of content.

Its one of the reasons some big third party devs are relactunt to go the Gamepass route on day 1, whereas smaller devs are eager to get there day 1

The later is obviously the case for 3rd party AAA companies which want to maximise their profits where GP is just the last stage of monetisation.

But I talk about MS itself. If they manage to get the basic AAA portfolio which satisfies people and occupies their *limited* time at some point they will print money.

 

[Johnny Awesome]

I'm already at the point where if MS gets a few quality story games like TLOU on there I can basically live without the non-GP games out there.

 

[Shifty Geezer]

I do see this line of thought that to grow more customers or keep them more content has to be made. This is in line with what we see with Spotify or Netflix but I don’t think this counts for game pass.

Typically games in themselves are a service that when built correctly can provide infinitely more hours of replay ability than the other two mediums. So much so that you could easily pour thousands of hours into a single title.

The reason this is important is because the curation of the library of gamepass or services like it, only needs to provide the games that will eat your time, having more games doesn’t necessarily imply you would play more.

If you are only playing a couple of games for thousands of hours, you'd be better off buying them outright than spending $15pm * 12, $180 on GamePass (excluding future price rises and various giveaways and discounts). GP only makes sense for a consumer if they are consuming more games than they'd otherwise pay for, so more than $180 a year in content, which immediately means either the service takes less per player per title or consumers are poor economists and choose to spend more than they would need to.

The idea that game pass can’t be profitable today seems reasonable, the idea that it could never be profitable seems wrong.

How do you interpret Spencer's comment on the matter, that GP is expected to remain a small slice of XB revenue? Downplaying their long-term goals?

 

[BRiT]

How do you interpret Spencer's comment on the matter, that GP is expected to remain a small slice of XB revenue?

Marketing for GamePass needs work and people will always be stupid to the point of passing up the deal.

 

[iroboto]

If you are only playing a couple of games for thousands of hours, you'd be better off buying them outright than spending $15pm * 12, $180 on GamePass (excluding future price rises and various giveaways and discounts). GP only makes sense for a consumer if they are consuming more games than they'd otherwise pay for, so more than $180 a year in content, which immediately means either the service takes less per player per title or consumers are poor economists and choose to spend more than they would need to.


How do you interpret Spencer's comment on the matter, that GP is expected to remain a small slice of XB revenue? Downplaying their long-term goals?

* when you want to play a few other marquee games combined with the games you actually want to play, or really to just try games you normally wouldn’t play or purchase, introduce yourself to new genres and titles, general game discovery
* you have a family or other people that play on your Xbox and you play a vast variety of titles
* when you have guests come over and want to try new things
* when your friends want you to play this game with them that you normally wouldn’t buy.
* when you want to play AAA games streamed on to the mobile platform or PC of your choice

I think there is a lot of reasons to have game pass, very few people have enough time to actually maximize it, to play all the titles to the end. Most of the time people have a 1-2 core games they are playing, the rest of their gaming time is tasting or playing tentpole can’t miss titles before
Returning to their main games.

Why Spencer’s comments:
They were slightly taken out of context. His context was with respect to console market as it is today and the amount of market that they owned in the console space. Thus saturated.

The PC game pass market continues to grow and he did not indicate that growth there has stop. His comments also did not include the much greater potential markets that exist in mobile globally.

Specifically, all the regions Xbox markets poorly to (tier 2 and tier 3), they can grow rapidly there without distributing hardware there.

 

[Nisaaru]

If you are only playing a couple of games for thousands of hours, you'd be better off buying them outright than spending $15pm * 12, $180 on GamePass (excluding future price rises and various giveaways and discounts). GP only makes sense for a consumer if they are consuming more games than they'd otherwise pay for, so more than $180 a year in content, which immediately means either the service takes less per player per title or consumers are poor economists and choose to spend more than they would need to.

The real price is still around 60 for 12 months if you convert your Life abo to GP Ultimate. I got 3 years for 180Euro

 

[BRiT]

If you are only playing a couple of games for thousands of hours, you'd be better off buying them outright than spending $15pm * 12, $180 on GamePass

You're math is a little off unless you're talking about GamePass Ultimate. If you're wanting to play any retail multiplayer games you're going to be spending $60 a year for Xbox Live Gold anyways. So the break-even point is $120, which is less than the cost of 2 games when looking at $70 games.

GamePass Ultimate bundles all of the following into a single $180 a year:

GamePass Xbox = $120 a Year
Xbox Live Gold = $60 a year
EA Play = $30 a year
GamePass PC = $120 a year

 

[Shifty Geezer]

You're math is a little off unless you're talking about GamePass Ultimate. If you're wanting to play any retail multiplayer games you're going to be spending $60 a year for Xbox Live Gold anyways. So the break-even point is $120, which is less than the cost of 2 games when looking at $70 games.

Okay, I was going of Jonny's $15 figure, but that was a predicted figure off the current $10. Although we will need to factor in a higher price at some point.

 

[Deleted member 11852]

Marketing for GamePass needs work and people will always be stupid to the point of passing up the deal.

Marketing for all things Xbox needs work, if you don't live in North America or a few select European countries then Xbox may as well not exist, the only people seeing marketing as those already in the fold because that's how online ads work.

You can't not be aware of GamePass if you own an Xbox Series, I didn't trigger my free month of Game Pass when I got my Series X for a couple of months and when you don't have a Game Pass subscriptions attached to your account, Game Pass promotion is almost obnoxious on the Xbox Series dashboard, but at least it deprioritises the other ads!

 

[pharma]

Microsoft makes it easier for indies to publish physical games on Xbox - KitGuru

With each passing year we have seen physical media decrease in popularity, with both Sony and Micros

www.kitguru.net

With each passing year we have seen physical media decrease in popularity, with both Sony and Microsoft leaning into it by creating discless versions of their current-gen systems. That said, there is still very much a market for physical game discs – though on Xbox in particular this has been somewhat of an issue with minimum order requirements being relatively high. Fortunately, Microsoft is now making it much easier for indies to print Xbox discs.
...
Speaking on the future of ID@Xbox, they continued, “Ironically, we've even enabled retail disc publishing for developers in ID@Xbox, Xbox's digitalself-publishing program. This retail program is still in the pilot phase with a limited number of partners, but developers can make physical versions of their games with only a low ‘minimum order quantity’ of physical units from Xbox. We look forward to rolling this out to more broad participation in the near future.”

No concrete details on the minimum order quantity was shared, but Microsoft claimed that more information will be offered next month. In the past, Microsoft has reportedly had the highest minimum order requirements out of the big 3 console manufacturers. When accounting for the fact that Xbox is resting at 3rd place when compared to PlayStation and Nintendo, the disparity was notable.

 

[chris1515]

https://twitter.com/i/web/status/1640032358471483392

 

[BRiT]

That seemed to be one of those on and off again deal, at least I remember not always seeing that available in the US. I'm surprised it was available for more than 3 months out of an entire year.

 

[SmooTh]

https://twitter.com/i/web/status/1640143877897166849

 

[mrcorbo]

If you are only playing a couple of games for thousands of hours, you'd be better off buying them outright than spending $15pm * 12, $180 on GamePass (excluding future price rises and various giveaways and discounts).GP only makes sense for a consumer if they are consuming more games than they'd otherwise pay for, so more than $180 a year in content, which immediately means either the service takes less per player per title or consumers are poor economists and choose to spend more than they would need to.

That's less than 3 games a year purchased at full retail price. That doesn't seem like a very high bar to me. And I don't mean that theoretically. I invested heavily in GamePass, maxing out the Xbox Live to GamePass conversion and getting an Xbox Series X through All-Access such that I am currently subbed through 2024. This was a no-brainer decision for me despite the significantly reduced time I have for gaming in general and has saved me a lot of money over the time I have been subbed over what it would have cost me to buy the games I played outright.

 

[Lurkmass]

That's less than 3 games a year purchased at full retail price. That doesn't seem like a very high bar to me. And I don't mean that theoretically. I invested heavily in GamePass, maxing out the Xbox Live to GamePass conversion and getting an Xbox Series X through All-Access such that I am currently subbed through 2024. This was a no-brainer decision for me despite the significantly reduced time I have for gaming in general and has saved me a lot of money over the time I have been subbed over what it would have cost me to buy the games I played outright.

The most popular home console last generation which spanned over a period of 7 years had reached an attach ratio of ~11.5 games per unit just before it's successor launched ...

That's easily an average of less than 2 games per year and considering how trivial it is to see discounts on software just after several months on customers of that system and it's main competitor the only ones who truly stand to benefit from a subscription service are the outliers not the standard consumer ...