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

Why would selling games on Sony and Nintendo platforms be a short term gain? The gain will be revenue for as long as any game sells and games like Elder Scrolls are IPs with long legs. If 25 million Sony and Nintendo console owners buy Elder Scrolls IV that's north of a billion dollars, and closer to two billion the more buy it at full price. The goal is bottom line profits and the value of Microsoft stock.

The risk in deciding not to release a particular IP on Nintendo and Sony platforms, or significantly delay it, is you end up with the situation like Rise of the Tomb Raider which sold poorly on PlayStation after a year delay despite solid PS4 Pro and PSVR support. Square Enix vowed never to do it again. If folks who only have non-Microsoft platforms can't access certain IPs then Microsoft change their mind about platform exclusivity, the impact may take a long time to reverse - if it can be fully reversed at all.

 

While I find it doubtful that MS keeps most of what the Zenimax acquired studios produces as multiplatform titles, I could see one avenue of reasoning where it might make sense.

Consider a scenario where all the titles are multiplatform across consoles (Xbox, PS4, and maybe Switch or whatever Nintendo's next console is). Now consider someone that's never owned anything other than a Playstation or Nintendo console in their lives.

If they really like the games those studios make, they "could" pay for and play it on their Playstation or Nintendo console, or there's this Game Pass thingy that people keep going on about. Perhaps they just try it on their phone through X-cloud. Then they discover these other games they like playing, but they want to play them on something better than a phone through the cloud. Perhaps they decide to get a Xbox or a PC, doesn't matter which. What matters is if MS can lure them into becoming a Game Pass subscriber.

So far it's working like a charm in South Korea which is typically PC centric. Game Pass has taken off there where console's haven't. And it's not even in the PC space as one might expect considering how popular PC is in S. Korea, it's on mobile devices. It's also finding success in Japan, but to a lesser extent than S. Korea.

Now I totally don't think something like this would happen, unless their data scientists and accountants determine that the potential revenue and operating profits are greater than the cost of porting the titles to a competing hardware platform. But, it's certainly something within the realm of possibility.

Regards,
SB

 

So why does/did sony have some exclusives to ps/psnow?

 

I wouldnt call it short term gain, but making people migrate to their ecosystem is going to create larger longer term gains.
MS isnt interested in just getting some extra revenue. They want to own the gaming scene. They have the budget and financial security to think much further into the future. The acquisition of Zenimax reflects what they wanted to do when they entererd the market with the XBOX. It is no myth they tried to purchase many big companies back then.
Making people choose XBOX instead of Playstation suits them much more than selling games on Playstation. Each customer that "jumps in" the XBOX gives them money for any game they buy for the platform, whereas a Playstation customer gives them revenue for only the MS owned games that may be released through Zenimax. Square Enix isn't a platform holder. They are just software developers and their financial security depends on their own games alone.
It may not be very clear now but Sony's position is getting very tight and pressured as we move further into the future.

 

As evident they are slowly releasing on pc/psnow aside from playstation. The old model of having everything/exclusives on a single fixed platform with a new sku every seven years is on its way out.

 

Technically, MS can treat its whole library similarly to how some films are treated today. It can sell its titles in a piecemeal fashion across all platforms while tying its content to a subscription on the xbox and PC. If MS is pumping out titles at quality and rate that make Game Pass compelling to xbox and PC users then it can readily sell $70 titles to users who want the games but don't want or don't have access to the service.

 

Releasing old catalogue into different eco systems creates more revenue from old assets and creates interest in newer properties which will be Playstation exclusive. Sells more playstations and creates money from old rope. Just good business logic, don't think anything that has happened so far indicates that the current business model hasn't still got lots of legs. It's whether stack 'em high sell 'em cheap models like Gamespass can support the creation of Triple A's without bleeding Microsoft dry or forcing the quality of the product down, that's yet to be proven.

 

That's a rubbish description Gamepass's business model.

And it's worth point out that the AAA market barely supports AAA development. Fallout 76 was a direct result of Bethesda looking for new business models.

 

Doom series are fully AAA to me in all ways.

 

Microsoft cannot make people migrate. They can hope they the allure of certain games being Microsoft-platform exclusives results in that, but for some people the investment will be too great to migrate. xCloud muddies the waters somewhat. For people with decent enough internet connections, an xCloud/GamePass sub for a month may let people play and complete a AAA game for far less than paying full price for the game were its released on PlayStation of Nintendo. Is that a win?

The hook of subscription systems, hence why free trials are commonplace, is to get people in and hook them well enough that they stay, which is where long-term profits comes in.

 

Sure they can, once people get any Covid19 vaccine, then Bill Gates activates the nanobots...

 

Don't see what the big deal is. I just found someone with covid , extracted their blood put it into a cow with cow pox and then take the puss and inject it into me. I am now Immortal and have no nanobots tracking me

 

The current size of Bethesda must be predicated on the number of sales they're making across all platforms they make games for. If their sales drop by a particular percentage, then the team and project sizes would have to drop proportionally.

It makes me wonder how Microsoft are planning on financing something that had grown due to their game sales and attempt to make a similar profit by reducing the platforms the games are available on.

I can't make the economics of it fit. Does GamePass give them a higher profit when compared to disc/digital sales?

 

MS has so much cash, they can get creative.

 

That is their play. Where monthly subscriptions outnumber individual game sales.

 

Not to mention that this gets around Sony's hardware dominance over time, especially when Xcloud matures.

20 years from now when tons of people have super fast Internet, they won't even have to make new hardware anymore. Just upgrade the blades.

People laugh at this, but even just from a gaming division standpoint right now, I'd rather be MS than Sony or Nintendo. GP is the future IMO. I'm not even sure Sony and Nintendo are going to be able to stop it from being on their hardware even.

 

Hopefully they're still able to knock out blockbuster sized games. Looks like they are in the short term with Halo Infinite.

Future blockbusters would presumably rely on increased GamePass membership. Looks like it's increasing nicely at the moment and I can only see Microsoft being able to take these types of risks and be able to finance slow or lower than expected GamePass subsciptions.

It's an amazingly bold proposition. I hope it works out, even if gaming subscriptions don't work for me personally, they probably would my children.

 

I kinda think they need to sell significant amounts to non-Xbox One players. They need to appeal to a wider audience than their usual buyers/players.

I'm a prospective owner that would like to see games that are more internationally themed. From my perspective the games are targeted to a more North American audience.