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

Discussion in 'Console Industry' started by iroboto, Feb 3, 2020.

  1. Vega86

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    Such a fantastic move by Microsoft. I can imagine them easily overtaking the ps ecosystem this gen if Sony isn't able to pull off even half the significance of buying the entirety of Zenimax.
     
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  2. DSoup

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    This is the trick. I think Microsoft will be evolving GamePass over the next few years in a bid to make the economics more profitable. They have a lot of balls in the air at the moment, it's a - ha! - ballsy move to try to do so much at once.
     
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  3. iroboto

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    Yea I'm fairly positive that will be the goal eventually. But I can see them making the progress slowly. While they are the leaders here in this space, they also stand to lose it all if they expand too quickly.
    So it's best to reinforce the xbox service first ensure that their base is adequately satisfied with the offering and improve the service based upon what their base is saying; and expand the expenditures to more titles to draw more players in.

    There's a lot of tuition happening right now, we saw how they made a hail mary move to purchase streamers for mixer and that failed. This move to purchase Bethseda for 7.5B, is a pretty big move, so they need to focus on making Bethseda work in game pass and MS as a whole and then once the community is satisfied there, with their output, with MS output, with the technology sharing, and the whatever else type of IP is in motion, it makes more sense to continually make more in-roads to other communities.

    But in large, I think Bethseda purchase is pretty big reach to grab non-xbox players as well. We talk daily on the forums, but business seldom move as fast as we can idea generate. Like very few companies of a certain size and interia can mobilize at the speed that the Disney+ service is. Many have tried, and it took the ownership of Star Wars and Marvel to have compelling enough content for it to justify it's growth rate.

    So MS will need to monitor their IP space and grow it so that they are releasing titles every month or every other month to keep that new game feeling happening.
     
  4. DSoup

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    It's a good job none of Microsoft's games every get delayed. Oh wait. And it's not just Microsoft, let's ignore Halo Infinite, Flight Simulator and others. Cyberpunk was delayed. GTA IV, GTA V and RDR2 were delayed. Every damn Naughty Dog game since Uncharted 2 has been delayed. It does not matter how amazing your devs might be or if you're budgeting on an annual or multi-year basis, you have a budget.

    Look at how many games were delayed before COVID. It's not a new phenomenon, or even a declining phenomenon. Writing it off as a "non issue" is living in a fantasy world. :-|
     
  5. Inuhanyou

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    I cant say i wont miss all those bethesda games but business is business. Dont have the money to invest in two ecosystems these days. Everyone invests in exclusivity as a means to drive investment in their own platform and thats how its always been. MS just has the cash to drive the crazy buyouts i suppose
     
  6. iroboto

    iroboto Daft Funk
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    yea that's sort of their biggest challenge that they will need to resolve. Which is why I think they have bigger issues to sort out first before trying to grab more users into the system.

    They need to be better at scoping, design, efficient and budgeting at making games stick their landing dates.

    I suspect some of the larger titles will get exemptions from the 'deliver by X' date. They do need to make a big title here and there to generate buzz and excitement. But not all of the studios need to be working on AAA style games.

    It's only a non-issue if subscriber revenues stick around much higher than monthly expenses. If it doesn't, they really need to get serious. But to be honest, they need to get serious regardless if sub revenue is greater or less than monthly expenses. This is pretty much going to make or break their service.
     
  7. Vega86

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    Unless there's a drastic price increase, it's more accessible if you do not hoard games for the sake of hoarding.

    You now have the ability to play a high production value game just by paying $ 15. Maybe you'll be able to finish it in just a few days. Proceed to drop subscription after.
     
  8. Inuhanyou

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    Is that what owning games is considered to be these days? "Hoarding"? I dont really get it

    I dont have a pc or an Xbox to play those games. Nor do I think investing in yet another subscription to play a handful of AAA games on my phone is appealing..even if i had a reliable wifi connection which i dont.

    My issue with all these subscription services be they psnow gamepass or stadia is that on top of the reality of my situation not jiving with them in general, they are asking to invest in a platform that requires you to play a lot of games at once to get maximum benefit.

    I dont one and done blitz through games like that. I buy games on steep discount sales and go through them at my leisure coming back to games i play on occasion.

    Maybe if i never went back to games i marathoned once after buying them for full price id see some of the value, but i dont
     
    #628 Inuhanyou, Mar 12, 2021
    Last edited: Mar 12, 2021
  9. Jay

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    I would disagree with this sentiment.
    You only need to play about 3 or so games a year to get benefit. Not including ones you play that may not have thought was worth buying etc.
    Anything above that is just added value.
    Guess it really depends on what maximum means to you, but it makes it sound like unless your playing lots concurrently all the time your not getting benefit from it.
     
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  10. Eolirin

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    Eh? Studio budgets are relatively fixed, delays just delay the return from having a new product out. Which is a problem if you only make money when you have product to sell but matters a lot less if you've got ongoing revenue that doesn't require that specific title to release. Obviously it still matters that titles be released on something approaching a regular schedule, but these are pretty established professional studios they're gonna be doing that anyway.

    The revenue is front loaded instead of back loaded, and that matters a lot for cash flow. They have a lot of studios working on a lot of products so they're able to spread risk because volume of content matters more than specific content for sub revenue.

    The model is different and is less impacted by slippage in releases.
     
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  11. Inuhanyou

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    For me paying for a yearly sub for 3 games is not all that practical. In my terms i would buy 3 games for 15 bucks or less and play them whenever i feel like it. As it is i already only occasionally buy ps+. If the whole service was reliant on getting access to a library fully dependent on my ability to keep paying id be pretty mad.

    Not arguing against the value anyone else sees in these sorts of things, but my personal view is rather negative.
     
  12. Jay

    Jay
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    Hopefully didn't sound like I was saying your own opinion in general for you was wrong. Not what I meant.
    Just when you said that to get maximum benefit, which sounded like a general statement.
     
  13. Ronaldo8

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    I will preface this post by saying that I am NOT cheerleading for MS ( I actually think that all US tech giants need to be broken up asap). This is just me calling it as I see it..

    First of all, if there is one company who knows how to run a service business through a subscription model, it is definitely MS. It's nearly decade long stock price rally was kickstarted and has been largely sustained by an embrace of a subscription model for its enterprise solutions before azure took off. So people doubting the capacity of MS to work out and finesse the right model have got it backwards.
    And what exactly is that business model? Some will try to liken it to Netflix. I say that's far from the case. Consumption of videogames differs from that of TV shows in two fundamental ways: replayability and pacing of consumption.
    Completing a game does not mean moving on from said game and vice versa : games can and are almost always being replayed. Another issue is that games require one's active participation; they call for progression and mastery (fundamental goals of gameplay): the pacing of consumption is much more protracted compared to TV watching. The upshot of it all is that a service like gamepass seems to provide an abundance of games for a low price but the gamer is left with a knapsack-like problem: how to fit the most games in their limited gaming time under the additional constraints of enticement to replay and protracted pacing of consumption. The implacable endgame is that the pace of consumption of the gamer will seldom outstrip the pace at which games are going to be added to the service such that the gamer will be faced with a backlog and the bigger this backlog will grow, the larger the games to dollar ratio will get and the greater the apparent value to the gamer. Interestingly, MS has been studying gaming behaviours at its Cambridge campus for the last 4 years, including the propensity to replay and the pace of game comsumption. Make of that what you will...
    The goal of gamepass is obviously to reach a critical mass of subscriptions whereby there will be a steady stream of revenue regardless of whether any one particular game is a success or a dud. The potential is simply enormous: 50 millions of subscriptions at 20 bucks per subscriptions will net them a billion dollar a month. And that's at a lower end estimate for the number of subscribers MS can capture considering that gamepass will be on virtually all devices except a Playstation: MS has been cozying up with Samsung for a while and gamepass launchable from a smart tv can seriously disrupt the console market.
    However this means that MS is operating on a timescale that's significantly longer than usual for games industry. All arguments about recouping the 7.5 bn in the short term does not fit the long game being played by MS: the company has already invested billions in developing xcloud worldwide to support gamepass with no immediate prospect of success let alone recovering the cost of deployment. There is a method to MS' spending madness and all those who paid attention ever since the day Phil Spencer step up at E3 to announce the BC program (which they stumbled into through sheer luck) can clearly see the very patient build-up to another subscription led stock rally. And the travails of Google and Amazon to has only emboldened MS.
     
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  14. DSoup

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    I'm sure there are some smaller teams where the whole team are just on the payroll, but most big projects have a budget set up front - this is based on the predicted complexity and assets (individuals paid monthly, creative tools, technical, equipment, e.g. mo-cap, music licensing etc) required. You know you're not going to need a big software engineering team for the first six months because most of the work is concept and art design. At the back-end there is less of that and more grinding out code. The costs are not the same. You will have people joining in X months and expecting to leave the project in Z months. The games software industry is hugely migratory and a lot of people move around from studio to studio for individual projects. You see this is a lot of you look at folk's resumes and you can they joined company X to work on title Y but left before it was finished because it was delayed, but they had contracted to be at another studio so had to leave.

    This is absolutely the norm in the game software development, including first party development studios. The senior folks are generally fairly static but the greater workforce churn.

    Nope. The revenue comes after the project has shopped. Only then do you know if - and at what point - what you profit from the revenue has exceeded all of the costs sunk into the project from inception to release and ongoing costs resulting of having some of the team still working on bug fixes and other maintenance. The 'front loading' you are referring too is the investment usually from the previous game into the new game.
     
  15. Silent_Buddha

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    I believe he's contrasting the 2 different revenue streams. For traditional game development, revenue is backloaded. For Game Pass, as long as there is a relatively constant number of subscribers than it is possible to consider revenue as being front loaded, although that's still a bit of a weird way of thinking about it.

    Rather, it's be more accurate, IMO to think of revenue being relatively static with development not as effected by future projections based on previous successes and failures. In this case, all that matters is whether or not a title can pull in new subscribers or maintain existing subscriber numbers.

    In such an environment a good mix of AAA, AA and small budget indie-like titles is the best way forwards, as opposed to traditional publisher financials being hugely reliant on a large AAA blockbuster to cover the losses from large AAA titles not selling to projections.

    Regards,
    SB
     
  16. Arwin

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    I would guess if and when GamePass becomes Xbox divisions main revenue stream, then some form of it will support Sony and Nintendo platforms if they let them.
     
  17. eastmen

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    I think for MS they want to try and bypass as many app store payments as they can. The browser launcher isn't just a work around for apple
     
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  18. DSoup

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    This isn't front-loaded revenue because the revenue comes in monthly, not all at the start of development. GamePass revenue is high but it is now funding 23 first party studios.

    Having a diverse portfolio of indie, AA and AAA games really has no bearing with how development is funded. Publishers have made solid profits by just charging for titles on an individual basis. At GameLab in 2014 Sony Worldwide Studios President Shuhei Yoshida confirmed that most Sony first party titles aren't profitable but the hits subside the losses.

    The economic model Microsoft is building will take time to shake out because it's fundamentally different. I.e in a sell-by-title scenario you know the exact market value of all titles by sales and revenue because this is exactly how much people would pay to play the game. In a subscription smörgåsbord, people will play games that would not have bought so the exact market value of individual titles is unknown. Does it matter? It's a good question, arguably if Microsoft are making good profits from GamePass that's a win? Maybe, maybe not. If Microsoft want to compare GamePass revenue to profits and revenue from sales in the established model - so as to validate this approach to investors - they can't. It's impossible to demonstrate success or failure.

    GamePass isn't for me given how little time I get to play videogames but I am fascinated by this new economic model. My only concern is if it proves very successful there'll end up being a handful of game subscription services and to play all the games you want you'll have to be subscribing to a bunch and it'll become expensive real fast. This is kind of where we are with TV subscriptions.

    This last few posts really need to be in the other thread.
     
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  19. zed

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    Yes they've gotta have a lot of games, I pay for spotify because most music is there, it has nofx but if the beatles was only over on apple music and sonic youth was only on amazon music. I could either subscribe to all 3, but in my case I would go no, I'll subscribe to zero, so no one wins.
    Disclaimer - I'm not the target audience for this since I dont play games, hell I have 100s of titles on steam which I havent even tried once, prolly about 5% of my library have gone through the effort of downloading and trying. But I am for music and I wont subscribe to multiple services.
     
  20. Vega86

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    I'd say it's hoarding if you have a lot of backlog. If you like hoarding, more power to you. I'd say hoarding tendencies isn't even generally a bad thing.

    No, you don't have "max out" the value by playing a lot of games just as I already described by playing a new, high budget title and finishing it in a short amount of time and not paying the standard full price.
     
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