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

[Zaphod]

Still a minor amount of people

I'd be curious to know how large a share of their subscriber base pay full sticker price.

I mean, even discounting people doing repeats of the intro offer, at least around here, you can make the price $60/year using EA code cards readily available at retail.

There's also the factor that it may be a long time before Microsoft can substantially increase the monthly spend for an unknown portion of their subscriber base. (Not counting any additional spending that may come from playing more games and spending more time in the Xbox ecosystem.) How many are like me, pretty much locked for another four years or so, at a cost (granted, an upfront cost) of less than $3/month (or less should I go after any points during those years).

 

[Johnny Awesome]

It's all speculation. Only MS knows.

 

[goonergaz]

your wrong, as said for MS a reward point has a financial value.
Just because you see your time as free, and you aren't able to see that they have value for MS doesn't make it true.

They could actuality be getting more financially out of you with rewards than you paying by cash.

Actually I think you're wrong, unless you can evidence where MS make money from the following scenario;
I play a game I already own and get reward points.
Please explain where MS get money from that.
Or another one, how about getting points just for opening their app, or clicking a link that says '100 points treasure', or (etc etc)
To be clear, I understand they could make a little bit from the quiz or searches - so let's not muddy the water...but if I wanted to go for a model where MS don't make a dime from me but I get to play their games for 'free' I think I could.

Never said it didn't happen, but if you think a subreddit equates to what the general public is doing your mistaken. Especially as the service user base expands.

You said "I don't see anyone saying people are getting elite controllers, software, media etc for free because they used reward points to purchase them." If that's not saying 'I don't think it happens' I'm not quite sure what is"
And I certainly never said that it was a massive amount of people doing it, please feel free to quote me wrong. But what might happen when the deals end, will people pay full price? That's the question here.

Again you aren't attributing a value to a reward point when for MS there is.

As above, not always

There's plenty of money saving websites out there.
Whether someone is willing to be dedicated and put in the time and effort to maximize the available points every day is another matter.

There's plenty of people out there doing it - or there wouldn't be dedicated websites with dedicated posters answering endless questions and helping people maximise the rewards.

actually no I wouldn't be surprised as someone who does it.

I wasn't even talking to you.

The point is (as I have already said) - there are loads of people that did the original £1 trick and got 3 years of GPU for very little cost. Those people are still in the system being counted, then you have loads more who just do the £1 trick an accounts and rotate which account they use. Then you have the rewards folk.

Don't you think it's just a tad odd that MS mention numbers but not value? And even if they did add the value what % of that is real money and free money?

Anyway I'm done with this - it's an ongoing debate and until MS start showing figures with context it will continue to rumble on.

 

[goonergaz]

I'd be curious to know how large a share of their subscriber base pay full sticker price.

I mean, even discounting people doing repeats of the intro offer, at least around here, you can make the price $60/year using EA code cards readily available at retail.

There's also the factor that it may be a long time before Microsoft can substantially increase the monthly spend for an unknown portion of their subscriber base. (Not counting any additional spending that may come from playing more games and spending more time in the Xbox ecosystem.) How many are like me, pretty much locked for another four years or so, at a cost (granted, an upfront cost) of less than $3/month (or less should I go after any points during those years).

Yep, there's loads of ways to get GP without giving money directly to MS or getting it extremely cheaply. 'I have 50M' means nothing without context.

You also have to wonder, when the deals dry up how many will stick around at full price...I certainly wouldn't - I get very little value from GPU, that may change at some point but I think I have played one game messed about with a couple others and plan to play one or 2 others (but even then they may be removed before I get chance).

 

[eastmen]

Yep, there's loads of ways to get GP without giving money directly to MS or getting it extremely cheaply. 'I have 50M' means nothing without context.

You also have to wonder, when the deals dry up how many will stick around at full price...I certainly wouldn't - I get very little value from GPU, that may change at some point but I think I have played one game messed about with a couple others and plan to play one or 2 others (but even then they may be removed before I get chance).

Sorry to hear that . I got to play Gears at launch , tactics , wasteland 3 , flight simulator as all day one titles. I've also been going through passed games that I missed. Just finished titan fall 2 and starting dead space 1 . I will continue going through a catalog of games I wanted to play but didn't due to budget.

 

[see colon]

Yep, there's loads of ways to get GP without giving money directly to MS or getting it extremely cheaply. 'I have 50M' means nothing without context.

You also have to wonder, when the deals dry up how many will stick around at full price...I certainly wouldn't - I get very little value from GPU, that may change at some point but I think I have played one game messed about with a couple others and plan to play one or 2 others (but even then they may be removed before I get chance).

Well, I used to pay for gamepass. I only do the rewards thing because it's available (and why wouldn't I want everything to be cheaper), but also, I LOVE gamepass quests. This is a me thing, and I don't expect everyone else to feel the same way about it, but I love games that are grindy, and give you plenty of tasks to do. And gamepass quests are like that, but in real life, and you play games to complete them.

Also, I may be a a person pre-disposed to video game subscriptions. I had a Gametap sub for 4 or 5 years I think. I had to force myself to unsub because they switched from being an app to a browser plug in, and it was terrible after that. But Gametap was great in a conceptual way, because I got to try games I wouldn't want to gamble money on because I felt they might now live up to my expectations. But that's where I played my first Telltale game (Sam and Max), played The Witcher which I probably would have never played otherwise, and a few others. I think I may have also discovered Gothic through there, but I can't remember. I played my first Gothic game around the same time. I feel pretty mush the same way about Gamepass. Discovery and the first party games are worth it to me, and I would (and have) paid full price if it wasn't available cheaper/free via rewards.

 

[goonergaz]

Sorry to hear that . I got to play Gears at launch , tactics , wasteland 3 , flight simulator as all day one titles. I've also been going through passed games that I missed. Just finished titan fall 2 and starting dead space 1 . I will continue going through a catalog of games I wanted to play but didn't due to budget.

I just don't get the time to get the value is all, if I had more spare free time I would get the value. As it is due to my backlog and limited (decent length) play time I concentrate on games I really want to play - and I don't want a situation where a game is removed half-way through hence i tend to not get too pulled into the GP games. To put it another way (and to add some context around why I wouldn't subscribe) if I were paying full price I would have spent over £200 and I most certainly have not had value from that...but I totally get why many see (and get) value.

Well, I used to pay for gamepass. I only do the rewards thing because it's available (and why wouldn't I want everything to be cheaper), but also, I LOVE gamepass quests. This is a me thing, and I don't expect everyone else to feel the same way about it, but I love games that are grindy, and give you plenty of tasks to do. And gamepass quests are like that, but in real life, and you play games to complete them.

100% on this. Why would you turn your nose up at free money? I use Quidco for everything...all those pennies add up, I've earnt over £800 for nothing more than buying this way. I'm also 100% addicted to the quests, I spend ~5-10 mins most days 'grinding', I can take a break from work or while I'm waiting for something - maybe an ad-break or something. Maybe I do get value out of GP after all...it's certainly saving me money lol

 

[Jay]

I'd be curious to know how large a share of their subscriber base pay full sticker price.

That's always a question.
Even with Xbox live gold.
The amount of people that paid full price, when you could get deals, use rewards, etc. Who knows, but most joe public aren't reading up on forums etc.
Either way they was making reasonable amount from it.

Actually I think you're wrong, unless you can evidence where MS make money from the following scenario;
I play a game I already own and get reward points.
Please explain where MS get money from that.
Or another one, how about getting points just for opening their app, or clicking a link that says '100 points treasure', or (etc etc)
To be clear, I understand they could make a little bit from the quiz or searches - so let's not muddy the water...but if I wanted to go for a model where MS don't make a dime from me but I get to play their games for 'free' I think I could.

You can use rewards to buy gift cards.
So unless you think their just giving away gift cards to supermarkets, ms store, and all the other ones you can buy with it, then I can't see how you think that a reward point has no financial value to them.

Rewards was about before GP.
You can literally work out how much a reward point is worth.

The funny thing is its easier to see what they get out of it when buying GP with it i.e. Subscriptions, tesco gift card?

I would say forget about GP, and say how does it make financial sense to buy supermarket gift cards to them. Or is rewards just MS charity to everyone?

 

[Zaphod]

I would say forget about GP, and say how does it make financial sense to buy supermarket gift cards to them. Or is rewards just MS charity to everyone?

Obviously not. Any rewards program is, at best, diverting money from some group customers to the benefit of some other group. On average, everyone pay more.

As for the supermarket cards, I'm guessing that Tesco (or whomever) gets a discount on their long term, big money, deal to buy MS product and services by way of MS buying some gift cards (below face value) in return. Or some such.

Even MS experimenting with their Skinner box to drive subscriber engagement and cross-promote their other services (with some apparent success, according to posts above) can probably be given an expected average monetary value by MS internally (though, we'll probably never know).

 

[goonergaz]

That's always a question.
Even with Xbox live gold.
The amount of people that paid full price, when you could get deals, use rewards, etc. Who knows, but most joe public aren't reading up on forums etc.
Either way they was making reasonable amount from it.

You can use rewards to buy gift cards.
So unless you think their just giving away gift cards to supermarkets, ms store, and all the other ones you can buy with it, then I can't see how you think that a reward point has no financial value to them.

Rewards was about before GP.
You can literally work out how much a reward point is worth.

The funny thing is its easier to see what they get out of it when buying GP with it i.e. Subscriptions, tesco gift card?

I would say forget about GP, and say how does it make financial sense to buy supermarket gift cards to them. Or is rewards just MS charity to everyone?

I think you’re misunderstanding me.

I can earn points that MS can’t earn money from.

I can then use those points for anything I want, regardless what I convert my points to MS will have to fund that.

so here goes;
1) play games and earn points
2) convert points to company X voucher
3) spend company X voucher

Company X will want the value of the voucher back - even if it’s a reduced deal (eg 50% cheaper).

So if I spend £5 at Tesco then they will want money for that (even if it’s half the true value) and MS will be funding it and I can’t see how not.

 

[iroboto]

I think you’re misunderstanding me.

I can earn points that MS can’t earn money from.

I can then use those points for anything I want, regardless what I convert my points to MS will have to fund that.

so here goes;
1) play games and earn points
2) convert points to company X voucher
3) spend company X voucher

Company X will want the value of the voucher back - even if it’s a reduced deal (eg 50% cheaper).

So if I spend £5 at Tesco then they will want money for that (even if it’s half the true value) and MS will be funding it and I can’t see how not.

I think looking at some simpler models may make more sense to begin with.

Firstly is understanding search engine economics; you are the product if you are doing the search, the people paying are the advertisers.
Secondly, all rewards systems never provide a 1 to 1 ratio; if you think of any rebate/rewards system, the rewards are often 1% back of your spend. So just consider that for a moment, Air Miles, Gas Rewards, Credit Card rewards etc, company 'loyalty points' for a job well done (even these you pay significantly more in point conversion than buying it retail). You just flash your Air Miles, and you are given miles, and yet Air Miles is extremely profitable until they found no one was spending them, so they made some adjustments there.

If you are spending 10 minutes a day searching every single day and some for other things, you need to consider the amount of money MS is profiting from advertisers just based upon what you are 'seeing' not even counting on what may be clicked. I should be clear, most people are not likely spending 10 minutes a day searching Google. We use Google when it's necessary, you are voluntarily using Bing 10 minutes a day, the search engine looking at random stuff!

You have no insight into how much profit is being made, so you think you're walking away with a steal, but 10 minutes a day every day is likely worth much more to them than you are getting back in rewards to MS. Quite frankly, you are likely not receiving a favourable ratio; if you think you are gaming the system after years of many folks doing this, you are wrong.

They know when the system is being gamed, they make changes. I had access to lucrative employee discounts for Xbox products and they fixed that up within 3 years. Believe me, MS ain't dumb. They didn't become the largest market cap in the world letting people 'game' the system. They let the world pirate their OS and software for years and they are still on top.

 

[Jay]

Quite frankly, you are likely not receiving a favourable ratio;

This is why I wouldn't be surprised if they actually get more in the end from the rewards than cash. Not saying I think that's a fact, I just don't think it's zero or them loosing lot more per se.
Regardless of me as the consumer feeling like I'm getting a good deal because I'm doing the rewards.

 

[iroboto]

This is why I wouldn't be surprised if they actually get more in the end from the rewards than cash. Not saying I think that's a fact, I just don't think it's zero or them loosing lot more per se.
Regardless of me as the consumer feeling like I'm getting a good deal because I'm doing the rewards.

right, because you are forced to spend it on MS related/partner products. They're laughing really. Bing is #2 I think in search engine usage. A complete fraction of Google but it's still hauling cash.
Consider this search engine:
https://www.ecosia.org/?c=en

It is a non-for profit based on Bing engine. The searches on this engine the profits are directly aimed at planting trees. In my typical research, it costs about 3-4 USD to get a tree from sapling to planted when you consider all the labour and other associated.
Look at how many trees they are planting per second as a result of the advertising spend (this is a fraction of what Bing does, which is 1.9 % of what Google does). Just from using this search engine, which is a far cry from spending 10 minutes a day.
So there are about 1 tree planted every 2 seconds. That's 4 * 30 = 120 USD per minute in spend. You spend 10 minutes per day pumping rewards every single day... you'd be lucky to get back 25 USD per month on Bing rewards.

 

[tuna]

They know when the system is being gamed, they make changes. I had access to lucrative employee discounts for Xbox products and they fixed that up within 3 years. Believe me, MS ain't dumb. They didn't become the largest market cap in the world letting people 'game' the system. They let the world pirate their OS and software for years and they are still on top.

It was really beneficial for MS to let people pirate Windows (and Office) in order to gain market and mind share. It is unclear if pouring money into Bing and Gamepass will have the same effect.

 

[Jay]

It was really beneficial for MS to let people pirate Windows (and Office) in order to gain market and mind share. It is unclear if pouring money into Bing and Gamepass will have the same effect.

Isn't that already academic in regards to Bing?
As it now makes money.

 

[iroboto]

It was really beneficial for MS to let people pirate Windows (and Office) in order to gain market and mind share. It is unclear if pouring money into Bing and Gamepass will have the same effect.

I'm sure they've done a much more thorough cost/benefit analysis over 10 years than we have. As a shareholder, I see this as moving into the right direction for them. They are solving all the major problems of breaking down the barriers to getting more people to play more games. A big part of that is game pass, reducing that cost barrier to let people enjoy titles.

 

[Silent_Buddha]

They let the world pirate their OS and software for years and they are still on top.

That's a bit of a misconception. I worked for MS supporting Windows 98 through Windows 2000 as well as some of their other products.

Piracy was always a problem that we were fighting. A lot of expense went into fighting piracy of the OS both in terms of legal challenges, lobbying with foreign governments, corporations, etc. Starting with Win2k and especially WinXP, much more effort was put into antipiracy measures in the OS itself now that the internet made distribution of pirated copies infinitely easier than it had been in the past. That was ramped up significantly with Vista, Win7 and Win8.

What we didn't do was outright punish the consumer if we suspected they were using a pirated version of Windows. The negative hit in terms of publicity, word mouth, etc. if we wrongly accused someone of piracy was not worth the cost of actually prosecuting individual piraters, as opposed to organized distribution rings.

That said, since most of the money came from corporations in the form of support contracts, it was manageable if some consumer didn't pay for their installation of Windows. However, if they were using a known pirated key, they'd lose access to free product support much sooner than people using non-pirated copies. But even there, there was a bit of leeway. Suspecting someone might be using a pirated copy wasn't enough to put restrictions on support of that copy of Windows. The serial number had to be one that was internally flagged as being pirated.

Obviously, this was more difficult for corporate versions of Windows that used universal keys. But again, for those, the money came from expensive service contracts for volume licenses.

Things have obviously changed since then, most Windows 10 installations don't have their own serial number anymore (although you can still get one for your copy of Windows if you want ... I've done that) and are instead tied to your account. They also don't seem to be fighting piracy as much as they previously have, but they are still putting in effort to discourage people from pirating.

Regards,
SB

 

[see colon]

Looks like Microsoft need to slow shipping to the EU and increase proportionally in the US. It's definitely been available in the UK for a while.

They don't need to, scalpers are doing it for them. 449 Euro is more than 499 USD, so as long as shipping a console to the EU is less than the difference, it's a net positive for Microsoft.

Obviously not. Any rewards program is, at best, diverting money from some group customers to the benefit of some other group.

What? No, rewards programs are about building brand loyalty and frequent buying habits. Not about diverting money from one grout to another, unless you mean from the consumer to the producer. The reason why Gamestop so famously pushed it's buy in rewards card was that rewards members spent something like 30% more over the year than non-rewards members. Charging people for a discount was simply a way to make even more. But most grocery stores and plenty of other retailers have free rewards programs because they can track individual purchases and build a shopper profile used to target marketing to that customer. That's why my wife gets constant emails from the craft stores in town telling her how cheap the yarn is usually, but lately it's been all about cloth. She knits in her spare time usually, but for the last year she's been sewing masks. They know what she's buying and they want to sell her more of it.

 

[goonergaz]

I think looking at some simpler models may make more sense to begin with.

Firstly is understanding search engine economics; you are the product if you are doing the search, the people paying are the advertisers.
Secondly, all rewards systems never provide a 1 to 1 ratio; if you think of any rebate/rewards system, the rewards are often 1% back of your spend. So just consider that for a moment, Air Miles, Gas Rewards, Credit Card rewards etc, company 'loyalty points' for a job well done (even these you pay significantly more in point conversion than buying it retail). You just flash your Air Miles, and you are given miles, and yet Air Miles is extremely profitable until they found no one was spending them, so they made some adjustments there.

If you are spending 10 minutes a day searching every single day and some for other things, you need to consider the amount of money MS is profiting from advertisers just based upon what you are 'seeing' not even counting on what may be clicked. I should be clear, most people are not likely spending 10 minutes a day searching Google. We use Google when it's necessary, you are voluntarily using Bing 10 minutes a day, the search engine looking at random stuff!

You have no insight into how much profit is being made, so you think you're walking away with a steal, but 10 minutes a day every day is likely worth much more to them than you are getting back in rewards to MS. Quite frankly, you are likely not receiving a favourable ratio; if you think you are gaming the system after years of many folks doing this, you are wrong.

They know when the system is being gamed, they make changes. I had access to lucrative employee discounts for Xbox products and they fixed that up within 3 years. Believe me, MS ain't dumb. They didn't become the largest market cap in the world letting people 'game' the system. They let the world pirate their OS and software for years and they are still on top.

It's like you read my post, ignored it and replied anyway. lol

I have said several times I understand how MS make money from the browsing & quizzes (which BTW takes all of 2-3 mins)...but my point was that I could earn points which I don't see how MS can earn money from them;

1) play games and earn points
2) convert points to company X voucher
3) spend company X voucher

Can anyone explain how MS make money from this? I could (if I wanted) revert to a model which MS make nothing from and I earn free money from.

 

[Jay]

It's like you read my post, ignored it and replied anyway. lol

I have said several times I understand how MS make money from the browsing & quizzes (which BTW takes all of 2-3 mins)...but my point was that I could earn points which I don't see how MS can earn money from them;

1) play games and earn points
2) convert points to company X voucher
3) spend company X voucher

Can anyone explain how MS make money from this? I could (if I wanted) revert to a model which MS make nothing from and I earn free money from.

1 point = 1 pence to customer.

So on their spreadsheet they'll have things like
Based on additional engagement from people doing rewards(quests)

• MTX increases by x amount
• DLC bought increases by x amount
• Games bought
• Likely to resubscribe (possibly using some points to offset some cost) increases by x amount

Those are just some of the obvious ones.

Total get back 1.15p for every 1 point, profit 0.15p. Although may not need to make money, may be ok to come out even as they want to drive up engagement more.

The FTP market at first doesn't seem to make sense.
You always hear people say, I'll play the games without buying anything. Sure, but they obviously make enough from everyone else who does buy something due to engagement.

People who do the rewards quest engage with the service more.
Roll those types of things into game type mechanics and feeling like you getting something for free, and people are even more likely to spend additional money.