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

[Xbat]

I think that's the best think about Gamepass. One and done AAA titles kill risk and innovation.

I don't follow?

 

[mrcorbo]

The individuals that present the vast majority of the 200m (Sony, Xbox, Nintendo) owning public are not playing games every day or even every week. I've posed before that people like us in these forums, who not only play games but are interested in it enough to register an account and spend time discussing games and the industry on a forum, are a tiny, tiny outlier of the greater gaming market. The vast majority of commercially successful games typically sell to around 5-10% of that combined gaming audience.

When you are not playing games a lot, of which data suggests is a lot of people, GamePass isn't worth it. This is probably why, at best, only 1 in 5 Xbox owners has a subscription.

addendum: on the "I'm really struggling to find a situation where it wouldn't end up saving almost anyone some amount of money at some point", if you play few games it's not cost economical, likewise if the games you want to play are not in GamePass (and you don't know if there will be headed there) then you have to buy those on top of your GamePass subscription. I wonder how many GamePass subscribers bought Red Dead Redemption 2 because there was no guarantee that was going to the service.

I showed my math. Gamepass is $10.00 per month, $120.00 per year, the same as two full-priced games. If you sub for entire year and play two games via GamePass that you would have otherwise had to pay $60.00 each to play you break even. That's the bar you have to clear. I really don't understand where your assertion that you have to be playing games a lot for it to be worth it is coming from. And the above is worst case. GamePass is month to month. Those two games could just as easily cost $20 to play.

 

[goonergaz]

I showed my math. Gamepass is $10.00 per month, $120.00 per year, the same as two full-priced games. If you sub for entire year and play two games via GamePass that you would have otherwise had to pay $60.00 each to play you break even. That's the bar you have to clear. I really don't understand where your assertion that you have to be playing games a lot for it to be worth it is coming from. And the above is worst case. GamePass is month to month. Those two games could just as easily cost $20 to play.

Caveats;
If you buy games for $60 and don’t sell them on. And if the games on GP are better than what you would have spent your $120 on.

 

[mrcorbo]

Caveats;
If you buy games for $60 and don’t sell them on. And if the games on GP are better than what you would have spent your $120 on.

Can't sell digital, and that is becoming the preferred purchasing route independent of subscriptions. And if you can't find content worth $10 on the service in any one month over the course of the year, that's a content problem, not a problem with the model.

 

[Deleted member 11852]

That's the bar you have to clear. I really don't understand where your assertion that you have to be playing games a lot for it to be worth it is coming from. And the above is worst case. GamePass is month to month. Those two games could just as easily cost $20 to play.

Maybe that's why GamePass is 10m. Maybe it's not the same 10m month to month. If you don't nave $120 to spend on games, then GamePass is hard to justify throughout the year. Maybe you're buying AA/AAA games not in GamePass in sales.

I think there's a whole assumption here that people have money for GamePass and that the games they want to play are in GamePass when they want to play. I can't say it any other way but if GamePass is such great value, why is at most 20% of Xbox owners subscribed?

 

[smithg]

Maybe that's why GamePass is 10m. Maybe it's not the same 10m month to month. If you don't nave $120 to spend on games, then GamePass is hard to justify throughout the year. Maybe you're buying AA/AAA games not in GamePass in sales.

I think there's a whole assumption here that people have money for GamePass and that the games they want to play are in GamePass when they want to play. I can't say it any other way but if GamePass is such great value, why is at most 20% of Xbox owners subscribed?

Because that number is growing? So is the library.

While it’s useful to compare the service cost to buying full games, the small monthly fee changes things. Most people weren’t spending $120 a year on DVDs when they jumped on Netflix.

 

[mrcorbo]

Maybe that's why GamePass is 10m. Maybe it's not the same 10m month to month. If you don't nave $120 to spend on games, then GamePass is hard to justify throughout the year. Maybe you're buying AA/AAA games not in GamePass in sales.

I think there's a whole assumption here that people have money for GamePass and that the games they want to play are in GamePass when they want to play. I can't say it any other way but if GamePass is such great value, why is at most 20% of Xbox owners subscribed?

Then don't. That's what solidifies the value proposition. It's not going to be an uncommon occurrence for the $ comparison to be $10 vs $60 or $10 * x games vs. $60 * x games.

 

[Deleted member 11852]

Because that number is growing? So is the library.

Yeah, could be. If the library grows significantly maybe the base will grow. But how are Microsoft going to grow the number of games to the degree that GamePass is getting 20m subscribers a month? Why isn't it 20m now? How do they get even 15m interested? ¯\_(ツ)_/¯

 

[Remij]

Yeah, could be. If the library grows significantly maybe the base will grow. But how are Microsoft going to grow the number of games to the degree that GamePass is getting 20m subscribers a month? Why isn't it 20m now? How do they get even 15m interested? ¯\_(ツ)_/¯

By doing what they are doing?

Literally every game announced at that show will be on Gamepass day 1. They really just need to keep marketing it... put it out there every way you can that Gamepass exists and is the best deal in gaming.

 

[mrcorbo]

 

[AzBat]

Yeah, could be. If the library grows significantly maybe the base will grow. But how are Microsoft going to grow the number of games to the degree that GamePass is getting 20m subscribers a month? Why isn't it 20m now? How do they get even 15m interested? ¯\_(ツ)_/¯

Sell Game Pass & digital console(Lockhart) for a low monthly fee(All Access)? That might be the only way to get Lockhart. If you want to buy a console outright, then XB1S & XBSX are your only options?

BTW, wouldn't 10million Game Pass subscribers equate to 40% of digital purchases, or is that a wrong way to look at it?

Tommy McClain

 

[Deleted member 11852]

@mrcorbo Movies and TV shows exist in a different economic model to games both in terms of production and distribution costs and attachment/engagement (sales) costs, not to mention the market for TV and movies being vastly wider than that of video games. I think the Netflix graph demonstrates how different they are so it make be a relatable basis upon which to anticipate GamePass growth.

Don't forget that Netflix have re-invented their service a couple of times, it used to be a DVD rental by post service before streaming kicked in and Netflix's more recent growth came following Netflix Originals - starting with House of Cards. Netflix put out new TV shows constantly and have such a large audience that it's easy for them to entice content into the service.

I'm not sure how Microsoft could entice more non-Microsoft AA/AAA games into GamePass, they'd need to subsidise the outright sales losses.

 

[mpg1]

I'd say the model is similar to movies in that after a certain point a game has made most of the money it's going to make through outright sales so they are not really giving up anything by going into a subscription service a year or so after release..potentially making more if the game is being rediscovered by a bunch of new players...

But I think this applies to single player focused games more than multiplayer focused games because the later can almost become a service itself if it becomes popular enough...

 

[goonergaz]

Can't sell digital, and that is becoming the preferred purchasing route independent of subscriptions. And if you can't find content worth $10 on the service in any one month over the course of the year, that's a content problem, not a problem with the model.

No one is forced to buy digital only, and it’s not as cut and dry as you suggest regarding digital popularity vs physical. Either way though, the point still stands.

 

[manux]

The problem with money math is that let's say some first party title sells 10 million units. Healthy doze of sales is digital and average the platform owner makes is 30$ per sale. If the monthly price of subscription service is 10$ it would be difficult to equal traditional sales profit of 300M$.

This is especially true as subscription titles are not rented in isolation. There is more than 1 title wanting their cut of that monthly 10$. Even having 3x time people paying for subscription versus traditional sales doesn't make this equation work in favor of subscription service. What makes it even more difficult is that 10M sales is surpassed by many big games and perhaps the first party like sony makes more than 30$ per sale(sony owns their 1st party studios, sony would in essence want to get the money for publisher(sony) and studio(who made the game).

What I suspect is that either the games have to become cheaper to make or the subscription price cannot keep being 10$/month. Or there has to be a lot more users or the games don't come to subscription service on day 1. Or someone will keep not making money and subscription service is a loss leader to pull people into the platform.

edit. Another way to say this is that short(ish) expensive to make play once single player story driven triple a titles are not subscription friendly. Subscription friendly is micro transactions and keep playing for long periods of time type of titles(destiny?)

 

[mpg1]

The problem with money math is that let's say some first party title sells 10 million units. Healthy doze of sales is digital and average the platform owner makes is 30$ per sale. If the monthly price of subscription service is 10$ it would be difficult to equal traditional sales profit of 300M$.

This is especially true as subscription titles are not rented in isolation. There is more than 1 title wanting their cut of that monthly 10$. Even having 3x time people paying for subscription versus traditional sales doesn't make this equation work in favor of subscription service. What makes it even more difficult is that 10M sales is surpassed by many big games and perhaps the first party like sony makes more than 30$ per sale(sony owns their 1st party studios, sony would in essence want to get the money for publisher(sony) and studio(who made the game).

What I suspect is that either the games have to become cheaper to make or the subscription price cannot keep being 10$/month. Or there has to be a lot more users or the games don't come to subscription service on day 1. Or someone will keep not making money and subscription service is a loss leader to pull people into the platform.

edit. Another way to say this is that short(ish) expensive to make play once single player story driven triple a titles are not subscription friendly. Subscription friendly is micro transactions and keep playing for long periods of time type of titles(destiny?)

A lot of movies go through the box office and then release on a subscription service a year or so later. Why can't it work for games? Most of the sales revenue happens early on when the game is first releases and then keeps dropping over time. At some point in that live cycle the subscription service becomes a better way to keep monetizing the game.

Also I'm pretty sure Origin Access has two tiers. A lower cost service in which games come to the vault a year later and a premier service in which the games are available on day one. Maybe Sony could do that.

 

[manux]

A lot of movies go through the box office and then release on a subscription service a year or so later. Why can't it work for games? Most of the sales revenue happens early on and then keeps dropping. At some point the subscription service becomes a better way to monetize.

Also I'm pretty sure Origin Access has two tiers. A lower cost service in which games come to the vault a year later and a premier service in which the games are available on day one. Maybe Sony could do that.

I made a not of that in my post. It can work if the titles are not coming to subscription service in day 1. On the other hand downside is that people can wait. This is something pc game developers suffer from as it's just plain stupid to buy something with full price and many and more people wait for (steam) sales. If this waiting trend comes typical also on consoles that will diminish profits and make it more difficult to keep making triple a titles(or micro transactions appear)

 

[Deleted member 11852]

I'd say the model is similar to movies in that after a certain point a game has made most of the money it's going to make through outright sales so they are not really giving up anything by going into a subscription service a year or so after release..potentially making more if the game is being rediscovered by a bunch of new players...

The economic model for TV and movie production is quite different to games. Many AA/AAA games take far longer to produce than movies and certainly more than TV shows which are typically turned around in under a year. And we're not talking low effort TV shows either but ones with heavy effects budgets like Game of Thrones, The Witcher, Jack Ryan and The Mandalorian. TV shows have also shown a tremendous long tail with interest in them lasting decades which isn't the case for most games. Friends and Sienfeld are still popular viewing and they're from the 1980s and 1990s.

 

[goonergaz]

The problem with money math is that let's say some first party title sells 10 million units. Healthy doze of sales is digital and average the platform owner makes is 30$ per sale. If the monthly price of subscription service is 10$ it would be difficult to equal traditional sales profit of 300M$.

This is especially true as subscription titles are not rented in isolation. There is more than 1 title wanting their cut of that monthly 10$. Even having 3x time people paying for subscription versus traditional sales doesn't make this equation work in favor of subscription service. What makes it even more difficult is that 10M sales is surpassed by many big games and perhaps the first party like sony makes more than 30$ per sale(sony owns their 1st party studios, sony would in essence want to get the money for publisher(sony) and studio(who made the game).

What I suspect is that either the games have to become cheaper to make or the subscription price cannot keep being 10$/month. Or there has to be a lot more users or the games don't come to subscription service on day 1. Or someone will keep not making money and subscription service is a loss leader to pull people into the platform.

edit. Another way to say this is that short(ish) expensive to make play once single player story driven triple a titles are not subscription friendly. Subscription friendly is micro transactions and keep playing for long periods of time type of titles(destiny?)

This is what I don’t get and why I said what I said - essentially unless they get something like 50% buy in then something has to give, either quality or price...by the very logic people are explaining how good the value is then they should realise how bad a business model this is, unless they’re happy with a change in the quality of the product.

Maybe the goal this gen would be to do away gold and just had ultimate?

 

[cheapchips]

I don't follow?

Blockbuster games (and movies) have to make their money. Having to find their audience limits the risks they can take. I'm not saying that as a comment on how good or entertaining they are.

Given the talent that's in Sony's teams, why not have them deliver something like PT? Short, very different experiences, with high production values. Surely it'd be good for those teams to have a pallet cleanser, try out new ideas, with failure being less of an issue. "Sony Studios Shorts". It'd be great! They just have to work out how to sell them if they don't do their own version of Gamepass.