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

[AzBat]

How many games are on gamepass? looks to be about 200

Currently 372 for Console & PC. Console has 237 & PC has 191. There is an overlap of 56 games.

https://www.xbox.com/en-US/xbox-game-pass/games

Tommy McClain

 

[zed]

People here seem to have a bad understanding of why subscription models are making huge money in all businesses it's been applied

Oh so like in the video game world the subscription model of Google stadia is making money, hand over fist? :smile:

Currently 372 for Console & PC. Console has 237 & PC has 191. There is an overlap of 56 games.

Thanks so my point is even stronger theres more titles that this money has to be divided up into, i.e. the higher the number of titles the greater the costs.
I just can't see it making more money than the normal way.
gamepass = $120 dollars a year == the same as buying 2 games, attach rate of 2 games per year

lets look at the ps4 & xbox one launches

The PS4 has already launched with massive numbers and the Xbox One launch is just 3 days away (this friday). A senior analyst from Cowen and Company did some number crunching and came up with the Next Gen attach rate. That is to say how many Launch Titles people will buy along with their Next Gen console of choice. The Answer is 3.25, ie 3 Games.

So already day one, gamepass has earnt less money, and theres still another 11 months of the year ago for the traditional way to increases its lead
Gamepass is good for the consumer, but for the business, it just doesnt add up

 

[Deleted member 11852]

Is there a financial breakdown for game studios with how much they cost to operate and how much revenue they earned? About the only time I see financial numbers tied to studios is when they fail or close down.

I don't think there is. If you want a feel how much AAA development costs Sony, ex-PlayStation exec Shawn Layden touched on this when talking about game pricing.

People here seem to have a bad understanding of why subscription models are making huge money in all businesses it's been applied. People look at Netflix and Spotify but at the end of the day, MS makes huge money selling subscriptions to MS office and most software has moved towards a SaaS model because of how profitable it is.

Perhaps it would help if some clear attributable figures for these "huge money" subscription models could be provided, remembering that revenue =/= profit. Services are better for companies like modern Microsoft, I'm sure most people here who have/did work in an office will be familiar with seeing PCs running ten-year versions of Office and, until recently, Windows 7. There is a good reason for this, these older versions of Microsoft's software are good enough for most people and IT departments often won't spend on OS/Office upgrades for marginal productivity improvements. Office 365 is a smart move, even if the web-interface absolutely awful. It often used to take Microsoft cutting off Windows security updates to get some companies to upgrade Windows.

 

[goonergaz]

People here seem to have a bad understanding of why subscription models are making huge money in all businesses it's been applied. People look at Netflix and Spotify but at the end of the day, MS makes huge money selling subscriptions to MS office and most software has moved towards a SaaS model because of how profitable it is. The reason is that people are willing to pay small reoccurring fees because to people it's not as much as a commitment when you go in but it's actually very hard to stop paying for it comparatively. From the other side, the money people pay on subscription is a lot easier to account for and you can really target your marketing to grow 1 metric, the subscriber count. It's why paying for PS+ and XBL is even so successful. People are willing to do it but most people won't stop paying for it even if they aren't actively using it unless they stop for months. Even if you use the service like once a month, you won't want to stop using it completely because the perceived value of the whole platform.

On the business side for what MS has to pay for it, it will take some getting there but there is no reason to expect them to fail since they are probably the first to really drive this. So long as they can scale this to a big enough subscription base, it will be profitable as long as there isn't much competition in the space and even if competition comes out, they are in a good spot to compete from their size and their first party studios they been buying up.

The amount they'd have to pay for licensing is negotiable with the number of user they currently have. The counter party isn't going to ask for $100M for licensing if they know the platform is likely going to only lower sales by 0.1% because the number of users there. Licensing actually works very well for MS as long as they are the only game in town since they can dictate what they are willing to pay and give all the metrics to third parties and give them just enough incentive to be on the platform. Also this system is very good for smaller indie games as they can get a flat payment for their game at launch instead of never knowing how much they would be able to sell. I think people here are focusing too much on the big AAA games and not looking at where the value and money will come from. It's really a change of business of game production from the top down. While Sony is offering their games for $60 on their console and focusing on selling a console so their games can get to the consumer, MS is looking to put their subscription service on all platforms. This by itself will be revolutionary because people who don't even own a console can still pay a subscription and play some of the games they can on PC, xbox, maybe even mobile and when streaming gets fully underway, they can even play AAA games without a console. This opens up a much larger user base that can not be matched by just selling consoles and games to those consoles. Families can buy a subscription without even buying a console and not worry about buying many games, this is a pretty big thing. In the mean time they offer the traditional experience of the console as well. It all will come down to perceived value and they are probably working to increase subscribers even if it costs a lot of money initially.

Netflix doesn't really make money from licensing blockbuster movies. People pay for Netflix to get access to some blockbusters but a lot look at what Netflix offers in the shows they do watch on there made by Netflix. MS doesn't really have to offer all the AAA games on release on the platform for it to succeed. Just need a couple to make the value proposition be worth it to grow the platform. The power of subscription is, the user gets a lot of content which they pay for the option of having but they will only use a small segment of it anyways so it's just more efficient to give user access to what they want while still getting money even if they don't want everything, at some point, you capture enough casual users that spend more on subscriptions than they would on the old system. The number of AAA games people own on averaged per console is probably low single digits, all that has to make business sense is if MS can convince people to pay more than the cost of a couple AAA games for a whole console generation while on their service to make business sense. Once the platform grows large enough, even indie games become a huge draw because if your friends all play some games, it's easier if you were all on the same service and have access to the same games.

Apples to Oranges.

I have a budget. It hasn't hindered me. In fact, with my low budget I'm able to play way more games then I ever did before. Again, an additive service should not hinder anyone from purchasing their games individually. BTW, the 20% discount on purchasing games while in Game Pass is only for titles that have been available for longer than 90 days. Games available 31 to 90 days from launch are eligible for a 10% discount. No discount for titles less than 31 days old. I don't know of any third party games that launched day 1 that were not on the service than 30 days, maybe even 60 days.

BTW, I will echo @Eolirin comments Micrsoft has stated multiple times, people in Game Pass play more games & game sales have INCREASED. In fact, there are a lot of games that I played in Game Pass that I purchased too. You don't have those titles forever. So it's nice to be able to buy them at a discount before they leave the service. I really hope we get the ability in the future to select a Game Pass game & make it "Gold" where you get to keep it even after it leaves the service. I think that would be a great way to evolve the Games with Gold service where you don't get a choice.

Tommy McClain

Of course it hinder people, it means they have £120 less to spend how they want to...just because you were not hindered means nothing.

Oh so like in the video game world the subscription model of Google stadia is making money, hand over fist? :smile:

Thanks so my point is even stronger theres more titles that this money has to be divided up into, i.e. the higher the number of titles the greater the costs.
I just can't see it making more money than the normal way.
gamepass = $120 dollars a year == the same as buying 2 games, attach rate of 2 games per year

lets look at the ps4 & xbox one launches
So already day one, gamepass has earnt less money, and theres still another 11 months of the year ago for the traditional way to increases its lead
Gamepass is good for the consumer, but for the business, it just doesnt add up

Yeah, again the one sided way to look at things is mind-boggling.

The very fact this is such good value to people should ring bells as to how it’s funded - there are potentially people out there that will buy this and nothing else, all they are putting in is not enough to sustain a quality product IMHO.

 

[London Geezer]

I have to agree with some of these points.

I will be spending money on big games anyway as I will want to play them at launch or close enough. A bit like me going to the cinema and spending money on big movies.

So to me, a subscription is an extra cost (and not a low cost at that!) that doesn't really fix the problem of me spending money on games that I actually want to play anyway.

And once I buy them, I have them, so the 're-playability' factor I get with Netflix, where I can re-watch a movie I've already seen quite happily, does not apply at all.

 

[BRiT]

You're not comparing quite right. You have to factor in the main driver, like what if all the First Party titles for the platform of your choice were guaranteed to be on the service from day one? Then that wouldn't be an extra cost, not if you were already going to spend the money on all those games that are included.

 

[London Geezer]

You're not comparing quite right. You have to factor in the main driver, like what if all the First Party titles for the platform of your choice were guaranteed to be on the service from day one? Then that wouldn't be an extra cost, not if you were already going to spend the money on all those games that are included.

If that were the case, then of course that sounds better. But again, as mentioned, I don't see how all these $100-200M+ budget games would make it on there on launch day, financially speaking. I feel like we're going round in circles Also, that only covers first parties, what about third parties?

 

[BRiT]

Third parties is a bit more of a randomness to them hitting the service. Unless we're talking about something like a 3rd party subscription service like EA Access, but then that's more like their Origin Premiere tier that includes day one titles. I dont recall the cost of that service as its PC only for now.

 

[London Geezer]

Third parties is a bit more of a randomness to them hitting the service. Unless we're talking about something like a 3rd party subscription service like EA Access, but then that's more like their Origin Premiere tier that includes day one titles. I dont recall the cost of that service as its PC only for now.

Well you just know what that would mean. Multiple subscriptions for games, on top of the multiple subscriptions we already have. It's a great deal for some, but a really shit deal for many others.

 

[iroboto]

If that were the case, then of course that sounds better. But again, as mentioned, I don't see how all these $100-200M+ budget games would make it on there on launch day, financially speaking. I feel like we're going round in circles Also, that only covers first parties, what about third parties?

That's why I made a spreadsheet, everyone is just going around in circles about what they think things cost.
The discussion should just be around the numbers, let the spreadsheet do the rest.
Obviously MS wouldn't create a project that is negative in perpetuity. So there has to be some logic behind these numbers

 

[Deleted member 11852]

The discussion should just be around the numbers, let the spreadsheet do the rest.

But we don't have the important numbers, hence the speculation and debate.

 

[goonergaz]

You're not comparing quite right. You have to factor in the main driver, like what if all the First Party titles for the platform of your choice were guaranteed to be on the service from day one? Then that wouldn't be an extra cost, not if you were already going to spend the money on all those games that are included.

Yes but...

If that were the case, then of course that sounds better. But again, as mentioned, I don't see how all these $100-200M+ budget games would make it on there on launch day, financially speaking. I feel like we're going round in circles Also, that only covers first parties, what about third parties?

Well you just know what that would mean. Multiple subscriptions for games, on top of the multiple subscriptions we already have. It's a great deal for some, but a really shit deal for many others.

Yep, again I repeat when Xbox live came out I was very vocal about it being the thin end of the wedge - I hate being right about the bad things

 

[AzBat]

Thanks so my point is even stronger theres more titles that this money has to be divided up into, i.e. the higher the number of titles the greater the costs.
I just can't see it making more money than the normal way.
gamepass = $120 dollars a year == the same as buying 2 games, attach rate of 2 games per year

PSNow has 826 games, with "300" available for download. I would have been more exact, but their website sucks. Either I'm not seeing things right, but you can't click on any game in their list & the Store game listings doesn't seem to say if a game on PSNow(stream or download).

Of course it hinder people, it means they have £120 less to spend how they want to...just because you were not hindered means nothing.

Explain to me why Microsoft keeps saying people in Game Pass buy MORE games. I know I am an edge case, but this has freed me up to buy more games because I don't have to guess or take a risk on whether I will like it. Especially if I find a game I like & it leaves the service before I finish it. Or it's a title that can be played over & over(Lego or other sandbox games). Plus, with the Gold upgrade to Ultimate program and Microsoft Rewards I haven't spent anything on Ultimate. My budget completely goes to purchased games that I want to keep forever.

Tommy McClain

 

[AzBat]

I hate being right about the bad things

You're point of view. In my opinion, I'm in the Golden Age of gaming with Game Pass.

Tommy McClain

 

[goonergaz]

PSNow has 826 games, with "300" available for download. I would have been more exact, but their website sucks. Either I'm not seeing things right, but you can't click on any game in their list & the Store game listings doesn't seem to say if a game on PSNow(stream or download).



Explain to me why Microsoft keeps saying people in Game Pass buy MORE games. I know I am an edge case, but this has freed me up to buy more games because I don't have to guess or take a risk on whether I will like it. Especially if I find a game I like & it leaves the service before I finish it. Or it's a title that can be played over & over(Lego or other sandbox games). Plus, with the Gold upgrade to Ultimate program and Microsoft Rewards I haven't spent anything on Ultimate. My budget completely goes to purchased games that I want to keep forever.

Tommy McClain

I don’t want to see PR, you can make stats say anything you want - I want to see the hard figures and how they can measure such things.

Also you (like me ) are not paying full price - how many are? Would you if push came to shove? How long can this go on?

 

[goonergaz]

You're point of view. In my opinion, I'm in the Golden Age of gaming with Game Pass.

Tommy McClain

Not just mine or there would be no discussion

 

[Deleted member 11852]

Explain to me why Microsoft keeps saying people in Game Pass buy MORE games. I know I am an edge case, but this has freed me up to buy more games because I don't have to guess or take a risk on whether I will like it.

This supports my view that GamePass appeals most to people who spend a lot of time gaming. We know that is not the majority of the video gaming public because the biggest segment is far more casual, which may explain why GamePass doesn't have more subscriptions. It appeals less to that big casual market.

 

[AzBat]

I don’t want to see PR, you can make stats say anything you want - I want to see the hard figures and how they can measure such things.

Yet, you want to dismiss everything they have said on it. Microsoft is in business. If it's not making money they have shown they are not adverse to dropping it(see Mixer, Kinet, Windows Phone, Zune, etc).

Tommy McClain

 

[goonergaz]

Yet, you want to dismiss everything they have said on it. Microsoft is in business. If it's not making money they have shown they are not adverse to dropping it(see Mixer, Kinet, Windows Phone, Zune, etc).

Tommy McClain

No, but they will obviously say it’s good - that’s a given. Let me see someone independent explain how it’s good (by the way I added more to the other reply )

 

[AzBat]

This supports my view that GamePass appeals most to people who spend a lot of time gaming. We know that is not the majority of the video gaming public because the biggest segment is far more casual, which may explain why GamePass doesn't have more subscriptions. It appeals less to that big casual market.

So PSNow is more niche? Game Pass is more casual?

With over 10 million Game Pass subscribers to PlayStation Now's 2.2 million, Microsoft is still a long way from 7 billion — but it's got a critical lead over the competition.

https://www.businessinsider.com/xbo...llion Game,critical lead over the competition.

Tommy McClain