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

[iroboto]

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.

Right. The little business deals.

MS wants your game playing data or it’s desirable enough for them to pay for the behaviour.

They use the GamePass rewards system or quest system to get players to try new genres or do new things. Basically it’s a method to get you out of your comfort zone and try new things. That spreads their game pass time around for developers looking in on how many people will try new titles etc.

Some developers or studios may not be interested in heavy marketing so perhaps they will request MS create a small quest reward. If you get an achievement playing their game etc you get some points. It’s basically just scratching each other’s back.

vouchers are probably handled through a typical rewards like program. In terms of cost to MS vs profit made. If you’re making points playing games, MS is making profit from it by signing better deals and more deals.

there is currently a wait list to get onto game pass at this moment from what I understand.

 

[goonergaz]

Right. The little business deals.

MS wants your game playing data or it’s desirable enough for them to pay for the behaviour.

They use the GamePass rewards system or quest system to get players to try new genres or do new things. Basically it’s a method to get you out of your comfort zone and try new things. That spreads their game pass time around for developers looking in on how many people will try new titles etc.

Some developers or studios may not be interested in heavy marketing so perhaps they will request MS create a small quest reward. If you get an achievement playing their game etc you get some points. It’s basically just scratching each other’s back.

vouchers are probably handled through a typical rewards like program. In terms of cost to MS vs profit made. If you’re making points playing games, MS is making profit from it by signing better deals and more deals.

there is currently a wait list to get onto game pass at this moment from what I understand.

Thanks, that's really interesting and I hadn't looked at it from that perspective

I still rarely find a game on GP that makes me play any more than just for the rewards...I did play a bit of Minecraft Dungeons but that was because it was quite a light fun game and had regular achievements so I spent 5-10mins just casually playing.

 

[goonergaz]

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.

Not me Free means free!

 

[see colon]

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.

How did you get the game you play to get points? If it's an Xbox game, presumably you would have purchased it, or it's on Gamepass, so they get money there.

 

[iroboto]

Thanks, that's really interesting and I hadn't looked at it from that perspective

I still rarely find a game on GP that makes me play any more than just for the rewards...I did play a bit of Minecraft Dungeons but that was because it was quite a light fun game and had regular achievements so I spent 5-10mins just casually playing.

Yea it's a 2 fold type of system.
The most important aspect that Game Pass is trying to do, is to get players to discover new games. I think the overall goal here for them is to expose you to more games you typically wouldn't play so that you have just 'more' and more titles you are interested in playing and this leads to overall spending. The whole goal with giving out games like Horizon Zero Dawn, or Gears, or halo is to get you to buy the next one in the series, or to get the next one in from the first party line up, etc. In general awareness and excitement leads to more sales later on. It is very much about discovery and getting more involved with the work of studios and developers to try to get players ultimately to spend more time and money in games.

And the flip side is that if the numbers are good, because engagement is high, MS can actually lower the signing deals (cost to bring a game onto game pass), or even put games on Game Pass for free, just because they know by the numbers how much engagement that game will get, (and ideally they get paid from another platform for instance).

It's not perfect, but at the same time, this is the model they are working with. What it sounds like to me, in general, as we separate the profitability of the model, whether the model is good as a whole, and whether the model works for you - all of theses are probably different answers. Just reading what you wrote here, you have very particular method of picking the games you like, or you know already which games you like, so Game Pass model doesn't work for you, and the reward model that tries to incentivize you to play other games isn't working either to catch you onto game pass.

So I would say, Game Pass don't work for you. But I've had some incredible experiences with game pass, a lot of games I would have missed I played because of it, and also a lot of games I thought were going to be great I ended up glad I didn't buy them. But even then, when I have no time to play at all, or I want to focus my attention on only 1 title, it makes sense to shut it off. Signing back up at 17 dollars or whatever isn't an issue for me, still much cheaper than the 89.99 for games here. 5 months of game pass for me = 1 new regular title after taxes. And typically I get access to better rates than the default, so I'm generally doing about a year of game pass for 90USD. That's hard to ignore that price point for me, as 1 single game makes up for it. And so as long as MS has just 1 new title I want to play in the year, it makes sense for me to sign up.

 

[Silent_Buddha]

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.

If you spent points for a voucher for another store (like Amazon, for example) then MS potentially just made some money or at the worst didn't lose nearly as much money as you would imagine. Think of those vouchers like advertising deals for the relevant companies.

Just like you can earn MS points by buying products on the MS store. Relevant companies will spend money to drive business to their storefronts in hopes that the person will spend even more money there.

At a pizza restaurant that I used to work for, the owner would regularly give people his business card that they could bring back and turn in for a free pizza. This served to drive up revenue even though he was giving away product for free. Hell, he used to give other business owners cards for free pizzas so they could give them to their customers. He treated his customers so well that after they moved out of the delivery area of one of the restaurants, they'd get their neighbors (who never had the pizza from this place) to help them petition him to open a restaurant that would deliver in their area. He started with one store when I worked for him, now he's got a chain of stores around the city.

Basically, advertising. You spend money in order to make money.

So, in the case of Bing, sure, MS is giving you money. But they recoup that money in multiple ways. From advertising deals (gift vouchers as well as companies paying for advertising on Bing), incentivizing you to spend money in the MS store (spend X dollars and get Y points or play this game that you don't own and you can buy and get Z points), incentivizing you to get Game Pass and more importantly to stay a Game Pass subscriber (use points for GP, get points for X game you don't own, etc.).

Sure, savvy people can game the system to never spend a dime of their own money. That'll reduce the revenue that MS gets from these people, but they're still getting some money from these people's actions. Perhaps they're even taking a loss from these people, but it's not as large a loss as you might think.

However, they're making money on plenty of other people that go on and continue to buy things from the MS store, or start to use Bing more as a search engine than as a way to earn points (I earn all the points I can make from searching everyday now without even trying since Bing is my main search engine), or from advertisers wanting more product placement on the Bings reward page, or ...

Practically everything in the MS rewards program is designed to drive revenue in some way. The cost of doing business is that they don't make a profit off of everyone that uses it, but they make enough of a profit from all of the people using it that it's worth it for them.

And even if they are taking a loss on it currently, it's with an eye towards driving profit in the future. For example, it's possible that redeeming points for Game Pass subscription months is a loss generator right now, but it's a cost that is used to try to generate future profit from getting people to try the service, and if they like it, to continue subscribing to the service if they can't earn enough points each month to get a free month every month (many don't) or just want to use their points for something else (like me, I'd rather use my points for product purchases).

Regards,
SB

 

[Jay]

Specifically regarding rewards quests.

What was the figure that came out of the apple vs epic case for the Sony and capcom marketing part of the deal, $5m or something.

Different quests:
1. Click on it and go to the store page.
You've read title, you go to store page, no way to ignore it if you think of it as an add.

2. Load the game.
You have to install it or play via xcloud. This is a whole another level of marketing. Good chance of at least going past menu for some people.

3. Achieve something in game. (kill 10 monsters etc)
Here your actually trying out the game, may actually continue playing after achieving the quest. Could be a game you had no interest in or never got around to trying.

Then you get into the engagement side of things.
Rewards definitely isn't just throwing money away, and has a lot of vectors to be of financial value to MS.

The fact that people see it as "free" really works in their favor even more.

Regarding gamepass:
It will be interesting what their at in 2 years time.
At that point they will start to have a steady 1P stream of games, so will not have to pay as high for 3P titles.
May get to the point where 3P are begging to get in.

 

[goonergaz]

How did you get the game you play to get points? If it's an Xbox game, presumably you would have purchased it, or it's on Gamepass, so they get money there.

Well if I paid via rewards then not a penny from my pocket

 

[see colon]

Well if I paid via rewards then not a penny from my pocket

Doesn't matter if you did things they want you to do. Those actions are designed to drive their business in a certain way, either through sales, market share, or engagement.

Also, I don't give money to my boss, he gives me money and I spend it at other stores. LOL, what a sucker. Except, I do a bunch of stuff for him for the money he gives me. And all the stuff I do for him makes him more money than he pays me.

 

[goonergaz]

Doesn't matter if you did things they want you to do. Those actions are designed to drive their business in a certain way, either through sales, market share, or engagement.

Also, I don't give money to my boss, he gives me money and I spend it at other stores. LOL, what a sucker. Except, I do a bunch of stuff for him for the money he gives me. And all the stuff I do for him makes him more money than he pays me.

Whilst I can see what you’re saying (thanks to @iroboto great explanation) - the bottom line is it doesn’t cost me anything (a few mins during meetings) and that’s all that matters to me

 

[Deleted member 11852]

Doesn't matter if you did things they want you to do. Those actions are designed to drive their business in a certain way, either through sales, market share, or engagement.

I think where some people are coming from is, yes this is true if the engagement is genuine. I.e. clicking on links through Bing that you are genuinely interested in is valuable to Microsoft because these clicks are more likely to eventually become sales. When clicks = sales, Microsoft can charge more for ads and promoted links. When people are just clicking links for "Microsoft points" with no intention of buying or engaging then this dilutes the value of clicks to Microsoft.

 

[iroboto]

I think where some people are coming from is, yes this is true if the engagement is genuine. I.e. clicking on links through Bing that you are genuinely interested in is valuable to Microsoft because these clicks are more likely to eventually become sales. When clicks = sales, Microsoft can charge more for ads and promoted links. When people are just clicking links for "Microsoft points" with no intention of buying or engaging then this dilutes the value of clicks to Microsoft.

I'm sure they've got countermeasures for that. The rewards handed out should take into account the yield of useful results vs human botting.

 

[BRiT]

They are very aggressive against VPN and Bot/Scripting for the rewards program.

 

[Deleted member 11852]

I'm sure they've got countermeasures for that. The rewards handed out should take into account the yield of useful results vs human botting.

I'm not talking about scripts I am talking about people just clicking any old links because they need to get x clicks per day. If the clicks aren't relevant to what interests that individual then it won't lead to engagement or sales - which is how the monetisation works. Everything is about the CTR rate. A high CTR rate is how Microsoft make money but a high CTR rate requires meaningful engagement, not blind engagement. That'll lower the CTR and make Microsoft less money.

 

[eastmen]

I'm sure they've got countermeasures for that. The rewards handed out should take into account the yield of useful results vs human botting.

there are , go look at the subreddit about microsoft rewards to see how often people get banned. They also keep figuring out the bots and banning accounts that use them

 

[iroboto]

human botting folks not script botting. Maybe I should have called it auto-pilot, where's your' just cruising through bad answers.

Yea I think they would figure out script botting, but they have to have a yield for people putting in shit values just to get it over with.

 

[AlphaWolf]

They don't need every user to engage for it to be profitable. And a lot of advertising works without the subject being aware of it.

 

[BRiT]

They don't need every user to engage for it to be profitable. And a lot of advertising works without the subject being aware of it.

Would you kindly click the following link...

 

[tuna]

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

How much profit does it make every year?

 

[Jay]

How much profit does it make every year?

https://arstechnica.com/information...-down-12-percent-as-shift-to-cloud-continues/

Looks like it took until 2015 to start to make a profit. Bing / Search is tied up in so many different things, not just what we see when you go to the web seach page.

I'm sure there's ofter reports out there on their financial reports.