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

It may surprise you to know that the type of hardware Microsoft would be using to deliver gaming is not that expensive. Whether it's just a storage dump for fasciliating downloading of games, or server blades for running and streaming games, it's not exotic. The costs with servers farms is always the never-ending running costs and the vast majority of these are electricity for the servers and environment systems and the engineering staff to keep it running. These are the costs that scale grossly disproportionately.

 

It doesn't surprise me. MS is taking a lot of steps to get costs on that side down. They just raised a test from the bottom of the ocean .

 

I know, I posted the link. It was only 117 feet down by the way and close to shore. It also comes with a bunch of caveats on what can be deployed underwater, in limited size and power usage, near to decent comms in what is only a partially-pressured container that requires no hands-on engineering for as long as it's deployed. Your average nuclear-powered submarine has more computing capacity and engineering expertise on board but they're a bit pricey when you throw in the cost of the reactor.

 

sorry didn't see that you posted the link MS had it up on yammer for days

 

Spencer was also asked about Xbox Game Pass price hikes. "Game Pass is completely sustainable as it is, and I really mean it."​

 

I can see why Spencer see it that way. Game Pass would have to hike prices significantly to completely replace standalone sales. It would also require way more investment by casual users than they are use to investing.

At least presently it’s a better revenue stream as an ancillary service versus as the dominant revenue stream.

 

This is the genius of Phil Spencer. He didn't say that price hikes aren't coming but people are seemingly interpreting it that way. No shareholder wants you to sustain profits, they want you to grow profits.

But Microsoft are on cautious ground. They're built a lot of a goodwill and platform satisfaction with Xbox One S, One X, GamePass and Series X. Now is not the time to starting shaking people down for more profit. They need more people in their ecosystem first. But they're doing something right, while I've bought a few Microsoft games Series X will be my first Xbox console.

 

If anybody wants to see & hear Phil when he was asked the question about Game Pass go here...



It was asked as it relates to developers wondering about the long term goal of Game Pass. He said there are some that are really concerned about it.

Felt like it was a genuine answer, but haters going to hate.

Highly recommend the whole interview. That was like the 3rd question...

Start here...


He's on there for 25 minutes.

Tommy McClain

 

It's not hate, it's uncertainty. It's ridiculous to call developers questioning the long-term viability of Game Pass as hate.

Microsoft are trying to build a brand new business model and few business models are successful in all scales or when circumstances on which they depend, but which are outside of their control, change. Vastly more new business models fail than succeed and developers and publishers obviously don't want to put themselves in a position of reliance of a model that is just a few years old. Nobody who's house and livelihood is on the line is will have blind faith.

 

I wasn't talking about the developers questioning.

Tommy McClain

 

Then where is the hate? I don't see it.

 

At some point the service will go up in cost. Everything does. However they are still at the starting growth phase so don't expect the price to go up for a few more years . Right now bringing in subscribers is more important than squeezing each subscriber. as they hit a critical mass and growth slows the prices will slowly inch up.

Just look at netflix and the costs involved. Prices were stable for a while

https://www.statista.com/chart/16684/netflix-subscription-prices-in-the-united-states/

Basic went up 13% in 5ish years. Standard went 4 years before the first price hike of 13% then a year and a half later another 11% increase , 2 years later another 10% and then 2 years later another 18 %. In total standard went up $4 in 9 years. Premium 3 years it went up 17% and then another 3ish years it went up 14% here you see it go up $4 in total again.

I suspect we will see similar with Microsoft. I also think they will do what netflix did and start to offer different plans

 

Maybe separate tiers by release date for games. A lower tier gets games a month later.

 

They could easily adjust the yearly price by 16% ($20) for Game Pass and still be at or cheaper than 2 Next-Gen PS5 games of $140.

 

x amount of credit for mmo or gas games also

there is a lot they can do and most likely will. But i think we are in the intial phase of them trying to get customers in

 

https://www.theverge.com/2020/10/29...tes-standard-premium-content-product-features

darn it , just after i posted the historic prices lol. Standard is now 14 and premium is $18 $1/$2 increases

 

And if Microsoft only increase subscription costs to cover actuals (as in the real increasing running costs) that's fine. But when these tend to be .60 of the dollar pound, the inclination is raise it a whole dollar-pound and increase profitability as well.

But on the issue of increasing profitability, my point is that because their service has such a small user base, to significantly increase profitability they've need to significantly increase the subscription. I think their goal is the increase user base and have a lot of people may a little bit more, rather than have a smaller number of people pay a lot more.

The rumours about a premium GamePass offering won't quite so the other way to do it more acceptable, is introduce that and let the existing service take a bit of a back seat. Perhaps it won't get AAA games as quickly as the premium service etc.

 

Maybe just copy how EA does its tiers? It'll be interesting once they've got an actual monthly stream of new content from their 1st party studios just going non-stop. The higher tier would get all the day 1 releases while the lower tier would get the back catalogue although I'm not sure what would be a reasonable delay because it still has to be somewhat attractive.

 

One way I thought they could do it is to have both tiers get all first-party games day one, but the lower tier would get them for 3 months, then after that, the games would go into a rotating catalogue of first party titles that the lower tier would also have access to. The higher tier would stay as it is now. One reason I think they are still keeping xbox live gold around is because it makes it a no brainer to get gamepass ultimate, and all the additions they are making to the ultimate tier are imo, in preparation for the removal of xbox live gold. they need to make getting gamepass ultimate as big of a no brainer for the average console customer as it currently is, even with the removal of xbox live gold.