All purpose Sales and Sales Rumours and Anecdotes [2021 Edition]
- Thread starter BRiT
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I feel like you're not actually listening to what I say.
You just repeated the same statement I just said you couldn't possibly have the information necessary to make, but expanded it to cover all streaming services. This does not make it more convincing.
Here I'll just do what you did but in reverse and it'll be just as valid: There are no indicators that increasing revenue from more subscribers won't bring net profit increases relative to the increased cost of paying licensees.
And then you state that double the users means double the license costs for MS, (I'm going to be charitable and assume you meant twice as much playing not twice as large a library, because... Well think it through) again proposing no mechanism for how that's supposed to work given that even the article you linked me talks about licensing agreements that definitely do not scale like that. So why are we assuming a doubling of costs with a doubling of usage? Because you said so?
Only MS knows what their mix of residuals vs lump sums looks like, and how the residuals scale. Only MS knows how much more publishers are looking for as Game Pass rapidly increases its subscriber numbers. There is no way for anyone that is not MS to even remotely guess at the rate of license cost increases as subs increase. There is no way for you to get to twice as many players twice as many games twice as much cost. This just does not follow. It can't even be inferred from the publically available information around other streaming services. What little information we have around Netflix and Spotify contracts suggest otherwise even. There's really nothing to support the idea that it's one to one like that.
And then you say there's no evidence games are different (though myself and others have pointed out all sorts of ways in which they're different that would absolutely affect contract negotiations) so I'll just ask you what evidence you have that they're the same?
And if you had actually read the full context of the post you extracted that bit from it would be pretty clear that I was dismissing the legitimacy of what you did quote. That there's no way to reach that conclusion from publically available information. There's no reason to accept it as being true or likely. There are reasons to not do so.
You do understand that people buying the disk version have the option not to buy digital on all the big games? Over the course of the lifetime Sony will lose more money on the physical edition in my opinion.
Yes, outlandish data like you maybe? I produced a whole month of sales data and sanitised it to prove that there was more demand for the PS5 than the XSX, but if you chose to ignore it that's up to you. I guess the fact you keep switching arguments and not reading my posts properly or understanding that the world doesn't follow your life experience and thought process doesn't help.
And this is part of your problem, I have never once even implied this would be the case...feel free to prove me wrong.
In your opinion...or do you have insider knowledge or facts to back that up?
So your own evidence shows that demand is higher for the disk version...there may be a slight % bigger markup on the digital version, but there is significantly more stock of the disk version so it makes sense. Think of it this way, there is more stock of the disk version so it is easier to find, therefore the prices will be lower.
Here's another way to look at the data.
Currently on US eBay there are 280 digital PS5s available...so there's no shortage if people are prepared to pay over RRP.
The last 20 PS5 sold in the US were sold 14:6 in favour of the disk version.
So, in summary - in a market that has stock of both versions the disk version is selling faster.
So in short, no, you have zero data to backup your outlandish claims. (and I reiterate that you love putting words into my mouth that I never say - eg digital sales improving)
At the end of the day you think your way, I don't agree I see the data how I see it and that's my right. We'll find out in a few months where the true demand is, but I'm happy with my thought process.
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Deleted member 11852
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Yes, there are. Can I state from the outset that I managed a server farm for the best part of a decade so have a good understanding the economics of served-content business. Based on this, can we make some basic assumptions about Microsoft's costs to run GamePass. As as I see there is three branches of costs: Infrastructure (Azure), Admin (personnel/building) and Licensing (paying devs/publishers).
Unless Microsoft are doing something really weird, increase the popularity of GamePass should not have a proportionate impact on infrastructure and admin costs. They may rise a little, but these cost increases would be negligible - after four years they likely are now.
This leaves licensing as by far the greatest cost. As we've heard in interviews and read in articles like the Eurogamer one I linked above, all of the devs are taking the up-front-payment-with-bonus (license-costs by volume) option. Kind of obvious really, it likely represents the most risk-free of cost revenue should you game become am unexpected run-away hit.
No, not because I said so, it's in the article but even before this I've referenced podcasts where devs have said the same thing. From the Eurogamer article:
Anonymous Dev said:
What hasn't been disclosed, even anonymously, is the proportionate cost of up-front licensees fee versus bonuses. Because Microsoft aren't stupid I would expect if you want a 'volume bonuses' then you're up-front fee is going to be less. Will the net cost to Microsoft be double? I don't know, probably not. Will the bonuses be double if a game is downloaded/played twice as much, yes I presume it would because that's what devs are saying is happening and I've seen many (again anonymously) say they are really happy with the rate.
I've seen no indication that devs and publishers value their game creations any less than TV or movie distributors. Many games often take lot longer to produce than many TV shows and movies and the audience for games is generally much smaller on a per-title bass. But what reinforces this is looking at how few AA/AAA games from publishers other than Microsoft make it to GamePass. They either even don't appear day one, appear for short spurts of time, or never come at all.
That suggests that a lot of publishers value their games more than Microsoft can afford to pay them to include in GamePass - which is the only parallel I see with the business models of Netflix and Amazon Prime. Their inability to get the content they want and be profitable and having to produce their own. Can I remind that Phil Spencer said the Zenimax acquisition was all about GamePass.
What do you mean nearly the same?- in the UK? I would suggest that the disk is more desirable to buy and keep whereas the digital is great to sell on. Also some (like I did) might get a digital if it's that or nothing and then sell the digital on when the snag a disk version.Here is a very good site
https://stockx.com/electronics/
Sony PS5 PlayStation 5 (US Plug) # of Sales 88405 Average Sale Price $656
Sony PS5 PlayStation 5 (US Plug) Digital Edition # of Sales 59095 Average Sale Price $607
Microsoft Xbox Series X (US Plug) # of Sales 50255 Average Sale Price $575
Microsoft Xbox Series S (US Plug) # of Sales 20353 Average Sale Price $329
Sony PS5 PlayStation 5 (UK Plug) # of Sales 2894 Average Sale Price $736
Sony PS5 PlayStation 5 (UK Plug) Digital Edition# of Sales 2456 Average Sale Price $648
Microsoft Xbox Series X Console (UK Plug) # of Sales 1158 Average Sale Price $648
Microsoft Xbox Series S Console (UK Plug) # of Sales 601 Average Sale Price $336
Based on 10s of thousands of sales, you can say a few things
the ps5 is valued higher
The series S is unwanted (this will pick up during xmas because um you know, xmas, even the wii U picked up during xmas)
I find surprising the PS5 DE is nearly the same number as the normal edition, I would of thought it would be closer to 4:1
The prices though (as I posted earlier) whilst the % markup is not as big (in your examples) for the disk, the fact there is more available would likely be the reason for that.
Interestingly there's a real shorted in the UK at the moment, only 124 consoles in total available - ouch.
cheapchips
Veteran
I found this graph in their financial report interesting.
Compare TW3 to CP2077. And then compare TW3 to TW2.
Regards,
SB
They're doomed! CP is a different colour.
(am I reading the chart correctly?)
It's a flat up front fee with a bonus structure.
MS will likely put a clause here on volume, it's not likely to be linear, and most likely bucketed. No product manager will continually give out larger and larger bonuses as the numbers increase. There is going to be a set limit to ensure that MS doesn't bankrupt itself here.
Games downloaded and hours played is the bonus not the main form of payment, as you said earlier there will be contract negotiations here. Each game is different so some will naturally target one or the other. Some may target hours played and downloads as that is to their benefit. Others will target the flat fee, because that is to their benefit. It is unlikely that MS will provide a huge upfront cost and a huge bonus on downloads and playtime. That isn't to their benefit.
For a dev to be happy about a payout isn't necessarily what you think either. Most developers will make diddly squat. I think you need to consider how often games fail here for smaller developers, so even the table scraps are a massive win for some developers. I spent a year porting and only made 4K. If I was given like anywhere greater than 50K that itself would have been a win for me. A huge win. Enough for me to want to do it again.
For MS to be profitable, they need subscribers, and they need a draw of titles for those subscribers to subscribe. Whether the players play or not is not entirely necessary to them except that playing often results in subscribing again.
None of this discussion is evidence to the service being unprofitable in the long term.
This discussion has gone in circles a great deal of many times.
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do they ever tell you the actual stock level that arrives before they run out of stock so we get an idea? of how much is being delivered before they OOS?
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Deleted member 11852
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And if you listen to the developers who are talking, they like the current arrangement. Putting a limit on volume, reducing the profitability for developers will have an impact.
Other developers have said they leaned towards lower upfront fees with higher bonuses if they expect their games to be played a lot. Microsoft has said its wants to be flexible (Phil Spencer: "our deals are all over the place"). If Microsoft change that arrangement, or remove some of the flexibility, some of the appeal of Game Pass compensation to developers and publishers will disappear with it.
It will still come down to what was negotiated. You seem to be wanting to burn the candle at both ends here. The article states that the majority of developers prefers the up-front cash.
This is obvious because most games that are released on Game Pass are not often day 1 titles. They are already at the trail end of sales, getting guaranteed payments is ideal if no one wants to play your title anyway.
Game Pass is not a mechanism of which developers are banking on to bankroll them billions in sales.
Only some games in which having long engagement is profitable to them will look for better volume/hour licensing. Not all games do this, and honestly only a small fragment do.
Microsoft are not required to take bad deals, and neither are developers. I don't know why you're making it seem like one side has to lose here. They will come to agreement if it's profitable for them both. There is currently a _waiting list_ to get onto Game Pass. That should already tell you that MS limits the amount of spend they are willing to allow on the service. They won't let all the titles on, they want continuous constant engagement, but they also need to control costs. It's not a service where MS is just throwing money out the window.
I should be clear there are a variety of ways to do this.
You can tier the volume brackets like taxes. This is the simplest method.
You can straight up just limit the payout at a maximum per month when looking at combined sales etc.
There are tons of methods to do this. There's no reason at all to assume developers wouldn't sign a dotted line on maximums. I don't know many publishers that feel their titles are going to fly to the moon unless your name is Rockstar.
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Deleted member 11852
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I think you have mis-read the article. If you look all the individual devs who are talking, they are making money from popularity (bonus). The article quotes Microsoft as clarifying that "for Game Pass Microsoft's costs are predominantly up front - like, say, the "over $100 million". This is overall costs, not on an individual title basis.
This is probably because some of the signature non-Microsoft games included in GamePass are more expensive to licence in the first place, particularly anything Microsoft want included day one (launch). You see this kind of market skew elsewhere, like on Steam and the iOS App Store, where a disproportionately small number of titles collect a disproportionate amount of revenue - I think for iOS it's 1% of the top apps collecting 70% of all revenue. Something insane like that.
Huh? I'm I'm saying is Microsoft need to change something. You seem to agree. ¯\_(ツ)_/¯
I may have can you link me?
All I read are Jim Ryan's thoughts on the costs. I don't see anything on MS fronting 100Million.
None of this is MS stating their up-front costs except for in this case, a reference to purchasing first party studios. Which clearly is not entirely absorbed by game pass. The games clearly sell outside of game pass.
This is the only scenario here I see:
But that doesn't mean they are fully funding AAA titles.
When Sony was building PSN@Home the game I was working on was fully commissioned by Sony. The deal was 20K. The publisher took 10K, we had to split the remaining amount. I don't think the game ever really sold any units to be honest. I wouldn't necessarily mix this with the cost of AAA titles. It is in MS interests to develop their library to meet a variety of players and to ensure they have a full library of titles to try. It's not that expensive to bankroll a couple of smaller titles to perform this. There are quite a few indies that have done well in this type of setup.
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Deleted member 11852
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Here. I don't know that Sony's comments are relevant to what Microsoft are doing with GamePass.
Of course they do, only about 20-25% of Xbox owners subscribe to Game Pass and many of the games included in Game Pass are also available on platforms that do not have Game Pass.
The Game Pass situation is reminiscent of the early days of PS+ (PlayStation Plus) on PS3. The quality of 'free' (*not free) games included as part of PS+ was great at the beginning and deteriorated over time. Most industry observers attributed this to Sony being able to afford such games when the PS+ subscriber base was small but once it exploded, this was no longer affordable. Somebody actually tracked the Metacritic scores over time.
oh so you're saying it's not that the service is not sustainable, but the quality will drop therefore over time the service is less sustainable, because dropping quality will lead to dropping users. That's a reasonable perspective.
I'm not sure this is the same thing as PS+ for instance. PS+ gives you free titles for life so as long as you are subscribed to the service.
Game Pass does not provide any title in perpetuity. All games must be played in the time frame it's available on game pass and not necessarily on your own time. This is an important dynamic, because with Gold and PS+, each month people will click to purchase the game but not play it. That's just a direct loss of profits for them for each user that downloads it. MS is paying a flat fee here for their titles, limiting their loss, especially from players not playing it.
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Deleted member 11852
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To be clear, despite Microsoft saying Game Pass is sustainable, it's not profitable. Microsoft can afford to sustain it but I'm principally interested in how Microsoft eek profitability from it.
PS+ does not give you titles for life. A handful of titles were included on this basis but the vast majority are not. You get to keep playing titles as long as you keen paying for PS+. If your subscription lapses, you lose access to the titles you had prior to your subscription lapse.
As for Game Pass not providing any title for life, aren't all of Microsoft's titles available for life? I thought that was the point.
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There's a small difference I think here and it likely comes down to rates. PS+ and Gold must pay the license as soon as you download it. They pay the full amount agreed upon. You can only play the game as you are subscribed, sure, but whether you play or not makes no difference; Sony/MS had to pay. There are many people out there just looking to collect/build libraries, so this could be a large loss to them.
With gamepass if MS fronted fees for it, then the license fee per download would be significantly less. Some people may not download it at all unless they have intention of playing it. If you are giving away bonus fees for hours played, that's still better than paying for the whole game and someone not play it. In this sense, Game Pass should be more efficient than Gold/PS+ with respect to wasted dollars.
All of Microsoft's titles are for life sure, but they own those titles, that's different than the discussion around licensing for 3rd parties.
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Deleted member 11852
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PS+ is really nothing like GamePass and the ease with which PS+ subscribers can lose access to PS+ endowed titles will be reflected in what Sony pay for game's inclusion. If you want to liken Game Pass to a Sony service, then its closer to PS Now where has offered downloading for native/compatible games for a while. ¯\_(ツ)_/¯
But in regard to your comments, maybe depending what the dev/publisher opts for. What I've been saying for the past few posts is that whenever I see devs anonymously (obviously) talking about their GamePass contact, they're all opting for the mild bang-up front and the larger revenue if its popular. Now this is to a degree a bit of a gamble. You might expect your game to be popular and it may not be but devs can market their games when they are in Game Pass and help their chances.
What do you think Microsoft needs to do to make Game Pass profitable?
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