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

[Deleted member 11852]

I wonder at what point will the number of subscribers make it fiscally viable for devs to use it as the sole point of income? If MS are paying per game then there must be a finite amount of cash to spread between the games in the subscription. How do they work out who gets what? Or are MS taking a huge hit on financing the whole thing so that devs are comfortable with the exposure?

These are questions for which there are only a few answers. It's the economics of GamePass that most interest me. When it comes to third party titles, Microsoft need to compensate publishers but also take a slice for themselves. Where is this money channeling into this new inserted slice coming from? If Microsoft pay publishers more than what they projected they would have got in terms of sales, the publisher is more than compensated but how are Microsoft generating money to compensate the publisher? How are they trying to account the value that a title adds?

Folks always look at the GamePass subscriber base and the monthly revenue generated, but stop there and look at the number of personnel (and their benefits), buildings, IT support, middleware and other technology licensing that the all of the individual Xbox Studio developers require every month. Last month they bought Zenimax for $7.5bn which included 2,300 additional personnel on top of their existing studios. It's just a mind boggling array of costs every month.

 

[BoardBonobo]

These are questions for which there are only a few answers. It's the economics of GamePass that most interest me. When it comes to third party titles, Microsoft need to compensate publishers but also take a slice for themselves. Where is this money channeling into this new inserted slice coming from? If Microsoft pay publishers more than what they projected they would have got in terms of sales, the publisher is more than compensated but how are Microsoft generating money to compensate the publisher? How are they trying to account the value that a title adds?

Folks always look at the GamePass subscriber base and the monthly revenue generated, but stop there and look at the number of personnel (and their benefits), buildings, IT support, middleware and other technology licensing that the all of the individual Xbox Studio developers require every month. Last month they bought Zenimax for $7.5bn which included 2,300 additional personnel on top of their existing studios. It's just a mind boggling array of costs every month.

That's the bit I really don't get with the subscription model for games. They cost gazillions to make with more staff than most other media productions. If they are putting their game on a subscription service then they must be confident that they are going to get the same fiscal reward as they would had they been selling on the open market at 50-70 dollars a pop.

I can't see MS paying them that, which is probably why they are pushing so hard for game prices to remain lower this generation. They don't want devs getting the idea that they can ask for a larger slice of the pie. I mean I like the idea of a subscription service for games, but whilst there is an open market and the devs can sell there as well they are always going to take that route if it makes more fiscal sense. The number of subscribers you'll need to make this work would be equal or greater than the userbase for consoles and PCs combined. Basically you would need everyone on the subscription service and no one buying games on the free market.

 

[goonergaz]

It's all about engagement. It doesn't matter if you're actually enjoying it.

But the implication is that it encourages people to play more games - but the reality is it's just expanding my ability to earn free gamepass.

 

[iroboto]

But the implication is that it encourages people to play more games - but the reality is it's just expanding my ability to earn free gamepass.

Indeed; it’s certainly there to reward the behaviour to trying new titles.
Eventually it will just get you playing so many different titles you expand your tastes.

 

[Deleted member 11852]

Even if Microsoft were transparent about Xbox finances I suspect they wouldn't be about GamePass because it's a business model they are trying to build into something profitable over time and I think there will be inevitable business adjustments and course corrections for some years.

I don't think the repeated comparisons to Netflix are useful. TV shows are much quicker to produce and have a much wider potential audience that isn't gated by a particular technology decision (e.g. a hardware platform like a particular console, or PC). xCloud may overcome this but streaming games is a very different cost proposition, i.e. cheap to allow somebody to download a 5gb to 100Gb game na play it for 80 hours, compared to running a game on their servers for 80 hours and streaming it to the customer.

Contrary to some people's assertions, I'm not pessimistic about GamePass, I'm confused. I believe Microsoft when Aaron Greenberg said GamePass is "not a big profit play" but that statement itself lacks context. Are Microsoft saying in absolute terms there is little profit, or is this relative to something like Officer 365 or Azure? I don't think it's the latter because Microsoft do get very detailed with high profit parts of the business because this is what investors need and want detailed info on. This is reason Microsoft don't report how many MS-branded mouse and keyboards they sold!

 

[Deleted member 11852]

It's all about engagement. It doesn't matter if you're actually enjoying it.

I've seen so many metrics built on engagement like this. I assume Microsoft are using game ratings to monitor actual enjoyment!

 

[goonergaz]

Indeed; it’s certainly there to reward the behaviour to trying new titles.
Eventually it will just get you playing so many different titles you expand your tastes.

I'll let you know if there's anything I don't instantly delete...so far it's 6-0.

 

[goonergaz]

I've seen so many metrics built on engagement like this. I assume Microsoft are using game ratings to monitor actual enjoyment!

Well this is it isn't it, what I've been saying all along regarding PR fluff "a million hours playing" "play more with GP" "buy more through GP" - it all means jack without context.

Of the games downloaded, how long were they played? Well that won't work because at least one of the games I tried was that I had to stay online for an hour - I also had to wait a age for it to download whilst it sat in the menu, so that likely registered 3 hours! What % of game was completed? maybe that's a good a fairer measure.

 

[iroboto]

I'll let you know if there's anything I don't instantly delete...so far it's 6-0.

It honestly does take a while. But given enough time you’ll find something interesting. Everyone seems to be giving descenders a go. I haven’t tried it yet. But looking into it

 

[BRiT]

I absolutely enjoyed playing Carrion, a title I wouldn't have known to try were it not for some of those gamepass quests.

 

[iroboto]

I absolutely enjoyed playing Carrion, a title I wouldn't have known to try were it not for some of those gamepass quests.

Going to try this next. Not sure how stable wasteland 3 is on Xbox, but I also recommend.

 

[AzBat]

So, it seems I just found out possibly why people play more games when the have GP compared to previously (or rather another reason outside those I already said).

I get forever pestered to play x game - on my phone, on the console - suggested games which I would never even look at. This combined with a little thing called reward quests. So, I generally almost never play any games, now I spend some time just playing a game to get points which all add up to getting free game pass...I've subjected myself to 10 minutes playing this awful game just to get 25 points!

Now, if that's not skewing the figures I don't know what is!

You saw this as a negative. I saw it as a positive. I love Microsoft Rewards & Game Pass Quests. I've been playing all kinds of games I wouldn't normally play. Games that I can sneak in during the week & not have to wait until the weekend when I can dedicate more time or play with close friends. Bonus is it helps pay for itself.

I'll let you know if there's anything I don't instantly delete...so far it's 6-0.

At first glance I thought you meant all 6 games were great. So I think you wrote that backwards. It should be 0-6(read as O for 6). 6-0 implies 6 wins & 0 losses, not 6 losses & 0 wins.

Maybe you need to find another hobby that won't aggravate you so much? LOL

Tommy McClain

 

[eastmen]

You saw this as a negative. I saw it as a positive. I love Microsoft Rewards & Game Pass Quests. I've been playing all kinds of games I wouldn't normally play. Games that I can sneak in during the week & not have to wait until the weekend when I can dedicate more time or play with close friends. Bonus is it helps pay for itself.



At first glance I thought you meant all 6 games were great. So I think you wrote that backwards. It should be 0-6(read as O for 6). 6-0 implies 6 wins & 0 losses, not 6 losses & 0 wins.

Maybe you need to find another hobby that won't aggravate you so much? LOL

Tommy McClain

Its funny he sees it as a negative , I currently have enough points to get an xbox series x for $128 bucks .....

 

[Silenti]

Its funny he sees it as a negative , I currently have enough points to get an xbox series x for $128 bucks .....

I half wish I didn't know about this now. Now I have quests and the Game Pass app on my phone. Until a month ago I didn't even have a smart phone. Then I find out about quests from you guys. Find I already have a bunch to turn in just from playing Wasteland 3. Bing is now getting used for searches. I have always hated Bing. I now have EDGE open to remind me to use it and Bing for any search. I mean, if I just run something like 30 searches a day (to the max points allowed per day) I end up with enough points every 3 months for a free month of GP Ultimate with a bit to spare. I feel like a whore. And a cheap one at that.

 

[goonergaz]

You saw this as a negative. I saw it as a positive. I love Microsoft Rewards & Game Pass Quests. I've been playing all kinds of games I wouldn't normally play. Games that I can sneak in during the week & not have to wait until the weekend when I can dedicate more time or play with close friends. Bonus is it helps pay for itself.



At first glance I thought you meant all 6 games were great. So I think you wrote that backwards. It should be 0-6(read as O for 6). 6-0 implies 6 wins & 0 losses, not 6 losses & 0 wins.

Maybe you need to find another hobby that won't aggravate you so much? LOL

Tommy McClain

Depends which team you’re on

Its funny he sees it as a negative , I currently have enough points to get an xbox series x for $128 bucks .....

The rewards is not a negative, all I’m saying is MS are stating that having GP increases the number of games people play, and whilst that’s true, the devil is in the detail.

 

[eastmen]

Depends which team you’re on


The rewards is not a negative, all I’m saying is MS are stating that having GP increases the number of games people play, and whilst that’s true, the devil is in the detail.

Don't know why you think its a devil. Engagement is big in getting people to play games. Microsoft isn't giving points out from the kindness of their hearts. They are marketing agreements. So when you get 500 points for playing to certain points in x game both the developer/ publisher and Microsoft is covering that 50 cents and its to give incentive for a player to go further into the game and see more of it so they get a better idea of the game.

Because an hour timer or 3 hour timer sometimes isn't enough for a person to enjoy a game.

 

[goonergaz]

Don't know why you think its a devil. Engagement is big in getting people to play games. Microsoft isn't giving points out from the kindness of their hearts. They are marketing agreements. So when you get 500 points for playing to certain points in x game both the developer/ publisher and Microsoft is covering that 50 cents and its to give incentive for a player to go further into the game and see more of it so they get a better idea of the game.

Because an hour timer or 3 hour timer sometimes isn't enough for a person to enjoy a game.

I didn't say it was a devil, I said the devils in the detail...it's a saying. The point is MS are just releasing bit's of info and no detail/context.

 

[Johnny Awesome]

I think the way GamePass is going to evolve in the end is that it will be mostly 1st party titles (35+ dev teams) and indie titles on day one release, followed by 3rd party releases further from their release dates depending on how mega they sold. You might not see Cyberpunk 2077 on it until 2023 or something, but you might see an Assassin's Creed game a year down the road for instance, but less 3rd party will be even needed over time IMO.

 

[eastmen]

I didn't say it was a devil, I said the devils in the detail...it's a saying. The point is MS are just releasing bit's of info and no detail/context.

I know the saying. The thing is everyone gives that information. No one is going to give information that negatively shows something off. Gamepass is still new . Its a year and a half old I believe and they just added xcloud to it. PC game pass is just exiting beta.

The service is only going to continue growing and we've already seem developers reporting great success with it.

My personal experience with it is that I have found a bunch of hidden gems and there are games i've sunk dozens of hours into that i wouldn't have even thought to look at before it. I've even bought additional content for some of the games.

One of my favs on it was Streets of Rage , i loved the original series and the new one runs flawlessly on my surface pro 6. So I played a lot of it down the shore at my friends house this summer when we worked weekends putting a new roof on and replacing the bathroom. Down there the internet he has kinda sucks since he typically rents it out during the majority of summer. I also played wasteland 2 on my surface pro and have been enjoying that a lot

 

[goonergaz]

I know the saying. The thing is everyone gives that information. No one is going to give information that negatively shows something off. Gamepass is still new . Its a year and a half old I believe and they just added xcloud to it. PC game pass is just exiting beta.

The service is only going to continue growing and we've already seem developers reporting great success with it.

My personal experience with it is that I have found a bunch of hidden gems and there are games i've sunk dozens of hours into that i wouldn't have even thought to look at before it. I've even bought additional content for some of the games.

One of my favs on it was Streets of Rage , i loved the original series and the new one runs flawlessly on my surface pro 6. So I played a lot of it down the shore at my friends house this summer when we worked weekends putting a new roof on and replacing the bathroom. Down there the internet he has kinda sucks since he typically rents it out during the majority of summer. I also played wasteland 2 on my surface pro and have been enjoying that a lot

I’m not asking for negative, I’m asking for content. For example (totally made up) ‘I just sold my console for £50’ - can you tell if that’s good, bad or fair? Probably not a great example- but context is important when people are talking about something and how it’s performing.