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

[see colon]

The most popular home console last generation which spanned over a period of 7 years had reached an attach ratio of ~11.5 games per unit just before it's successor launched ...

That's easily an average of less than 2 games per year and considering how trivial it is to see discounts on software just after several months on customers of that system and it's main competitor the only ones who truly stand to benefit from a subscription service are the outliers not the standard consumer ...

What about the cost of Live/PS+. Assuming the consumer who buys 11+ games over 7 years is also playing games online, the cost of Live/PS+ would be in addition to those games. With that in consideration, $15 a month Gamepass Ultimate (which includes Live) is $5 more monthly than Live, or $60 a year. If you pay for Live annually, it's $60, while Gamepass Ultimate is $120 ($60 for 6 months is the largest prepaid amount I could find from a normal retailer), so again, $5 a month more than Live.

So $60 a year for Gamepass over 7 years is $420. Divided by 11 games is about $38.

I'm not contesting the value of Gamepass just adding numbers for context. If a person spends less than $38 a game and buys less than 11 games over a console's lifetime it's likely not a good deal. Unless they only play MLB The Show.

 

[AlphaWolf]

The most popular home console last generation which spanned over a period of 7 years had reached an attach ratio of ~11.5 games per unit just before it's successor launched ...

That's easily an average of less than 2 games per year and considering how trivial it is to see discounts on software just after several months on customers of that system and it's main competitor the only ones who truly stand to benefit from a subscription service are the outliers not the standard consumer ...

Most of those people buying 11.5 games didn't buy their console on launch day.

 

[Lurkmass]

What about the cost of Live/PS+. Assuming the consumer who buys 11+ games over 7 years is also playing games online, the cost of Live/PS+ would be in addition to those games. With that in consideration, $15 a month Gamepass Ultimate (which includes Live) is $5 more monthly than Live, or $60 a year. If you pay for Live annually, it's $60, while Gamepass Ultimate is $120 ($60 for 6 months is the largest prepaid amount I could find from a normal retailer), so again, $5 a month more than Live.

So $60 a year for Gamepass over 7 years is $420. Divided by 11 games is about $38.

I'm not contesting the value of Gamepass just adding numbers for context. If a person spends less than $38 a game and buys less than 11 games over a console's lifetime it's likely not a good deal. Unless they only play MLB The Show.

@Bold That's not MSRP ? Correct ? If so then the stated price of GPU is $15 USD per month ...

A part of your argument maybe contingent on non-standard price and the other problem with GPU is that it does NOT give the customer a choice in what game they want which lowers the value proposition as well ... (that's $38 a game of the user's choosing vs whatever the service provides)

Most of those people buying 11.5 games didn't buy their console on launch day.

It's very easy to see discounts after a couple of months so it works out somewhat similarly even if the customer does get the system later on. Also if most of the utility of the service is predicated towards newer and more recent system owners in a short window of timespan what does that say about the longevity behind it's concept ? Those who do actually benefit (sans choice of software) on longer timespans are still very much the outliers in the end ...

 

[AlphaWolf]

I benefit more cuz I don't play any games, take that gamepass.

 

[BRiT]

The breakdown of the various GamePass related annual pricing since some don't seem to know it, using US Dollars:

Xbox Live: $60 a year
Xbox Game Pass: $120
EA Play Console: $30
EA Play PC: $30
Game Pass PC: $120

Game Pass Ultimate: $180

GPU includes all the listed subscriptions above it. That makes doing the various "how much more does it cost" a rather complex discussion.

 

[Shifty Geezer]

GPU includes all the listed subscriptions above it. That makes doing the various "how much more does it cost" a rather complex discussion.

Indeed. As does trying to estimate how much consumers spend based on attach ratios with differing ownership durations and unknown game price when purchased.

Just thought of another angle, known sales. EG. https://www.gamesindustry.biz/uk-games-sales-dropped-6-in-2022-and-console-sales-plunged-29

However I can't find info that matches unit sales with revenues for console titles. Ideally wtih a "$x million was spent on y million game units" report, we can get an average price per title to see what consumers are really spending.

 

[dobwal]

What about the cost of Live/PS+. Assuming the consumer who buys 11+ games over 7 years is also playing games online, the cost of Live/PS+ would be in addition to those games. With that in consideration, $15 a month Gamepass Ultimate (which includes Live) is $5 more monthly than Live, or $60 a year. If you pay for Live annually, it's $60, while Gamepass Ultimate is $120 ($60 for 6 months is the largest prepaid amount I could find from a normal retailer), so again, $5 a month more than Live.

So $60 a year for Gamepass over 7 years is $420. Divided by 11 games is about $38.

I'm not contesting the value of Gamepass just adding numbers for context. If a person spends less than $38 a game and buys less than 11 games over a console's lifetime it's likely not a good deal. Unless they only play MLB The Show.

The likelihood that a gamer's behavior would remain the same is not a given. If a gamer's consumption is being limited due to the cost of buying individual titles, a subscription with a decent library might lead to a larger number of titles consumed by the gamer.

You are going from a personal library of 11 games to a library of 100s of titles. You can't expect the same behavior.

Buying individual titles vs subscription represent different value propositions and it hard to do a direct comparison.

 

[see colon]

@Bold That's not MSRP ? Correct ? If so then the stated price of GPU is $15 USD per month ...

Sorry, you are right. $60 for 6 months is MSRP on Gamepass for 6 months, not Gamepass Ultimate. I don't see any discounts for buying GPU in large amounts of time from any legitimate retailer.

 

[mrcorbo]

The most popular home console last generation which spanned over a period of 7 years had reached an attach ratio of ~11.5 games per unit just before it's successor launched ...

That's easily an average of less than 2 games per year and considering how trivial it is to see discounts on software just after several months on customers of that system and it's main competitor the only ones who truly stand to benefit from a subscription service are the outliers not the standard consumer ...

Attach rate relative to time on market can not be used to determine how many game purchases were made each year per owner as not all owners bought their consoles on day 1, so they didn't all have 7 years to buy games.

 

[Johnny Awesome]

The official attach rate doesn't take into consideration used games or probably even much of the digital data. I don't know ANY PS users that have played only 11.5 games in 7 years. Do you?

I'm paying $120 US per year - $60 US for Xbox Live = $60 US per year. Less than the cost of game, so the math doesn't work anyway.

 

[chris1515]

Logic

 

[Silent_Buddha]

The most popular home console last generation which spanned over a period of 7 years had reached an attach ratio of ~11.5 games per unit just before it's successor launched ...

That's easily an average of less than 2 games per year and considering how trivial it is to see discounts on software just after several months on customers of that system and it's main competitor the only ones who truly stand to benefit from a subscription service are the outliers not the standard consumer ...

And how much of that was because people didn't feel they could afford to pay for more games but would have played more games if they could have afforded them?

It's entirely too naive to look at just attach rate and assume that's all the games that those people wanted to play or had the time to play. Engagement (people actually playing games) goes up significantly if they are a GP member versus a non-GP members just due to budget no longer being a factor WRT how many games they can play over a period of time.

If engagement were to be translated into attach rate, it's quite likely that it would be double, triple or more of that ~11.5 number. That represents incredibly good value for the consumer.

Regards,
SB

 

[Lurkmass]

And how much of that was because people didn't feel they could afford to pay for more games but would have played more games if they could have afforded them?

It's entirely too naive to look at just attach rate and assume that's all the games that those people wanted to play or had the time to play. Engagement (people actually playing games) goes up significantly if they are a GP member versus a non-GP members just due to budget no longer being a factor WRT how many games they can play over a period of time.

If engagement were to be translated into attach rate, it's quite likely that it would be double, triple or more of that ~11.5 number. That represents incredibly good value for the consumer.

Regards,
SB

@Bold Well then we wouldn't really be having this debate if the general consumer thought that GP is actually good value for them, right ? It's as they say, the proof is in the pudding ...

I think quite a few hold the premise that the general consumer and a GP service subscriber DON'T have identical consumption habits hence why the derived value of GP is different with each demographics ...

 

[Johnny Awesome]

Different, but likely things like an ABK acquisition are going to change the equation for a lot of people.

 

[mr magoo]

Those decent saving will appear as a cost later indirectly. Reports show that the cost to produce a AAA game is becoming less and less sustainable.
I do not believe at all that Gamepass can support financially such super costly projects. I foresee that the subscription based model is going to haste the contraction of such projects if gamers buy into it in critical numbers,.
It is the perfect place for smaller scale games and indies though, but thats because their costs are less, and MS can have the flexibility to absorb the risk by treating them case by case basis.
I wouldnt be surprised if Redfall was scaled down to be supported by Gamepass

I disagree with that theory imo gamepass is good solution to increasing costs of big AAA titles as you have guaranteed cash flow. Its very disturbing how much current games costs to produce and one bad decision can basically ruin company if you cannot recuperate losses. GP gives financial stability imo. It is also evident in case of smaller projects as well, there was few interviews where smaller developers stated that because of GP deal they didnt had to close or sell.

 

[Nesh]

I disagree with that theory imo gamepass is good solution to increasing costs of big AAA titles as you have guaranteed cash flow. Its very disturbing how much current games costs to produce and one bad decision can basically ruin company if you cannot recuperate losses. GP gives financial stability imo. It is also evident in case of smaller projects as well, there was few interviews where smaller developers stated that because of GP deal they didnt had to close or sell.

It is not a guaranteed cash flow for AAA titles. It is for indie and AA games. The economics of Gamepass decrease the risk of failure for smaller projects unless MS is willing to absorb all the risk themselves and put millions out of their pockets just to sustain AAA projects that cost hundreds of millions to produce and market. Some games are even approaching or surpassing half a billion.
Remember that some big studios reported that they are hesitant putting their big games on Gamepass, whereas some indie devs saw it as a Godsent for a good reason.

 

[see colon]

It is not a guaranteed cash flow for AAA titles. It is for indie games. The economics of Gamepass decrease the risk of failure for smaller projects unless MS is willing to absorb all the risk themselves and put millions out of their pockets just to sustain projects that cost hundreds of millions to produce and market. Some games are even approaching or surpassing half a billion

It would still be guaranteed cash flow, just not guaranteed profit. Before Microsoft purchased Zenimax, the rocky launch of Fallout 76 was a motivative factor for putting '76 on Gamepass, which Bethesda management has cited as saving the game by both supplying money for further development and maintaining a player base.

 

[Nesh]

It would still be guaranteed cash flow, just not guaranteed profit. Before Microsoft purchased Zenimax, the rocky launch of Fallout 76 was a motivative factor for putting '76 on Gamepass, which Bethesda management has cited as saving the game by both supplying money for further development and maintaining a player base.

Thats exactly the point. What do you interpret as guaranteed cashflow? A set amount of money agreed with MS? Money coming based on how many Gamepass subscribers play the game? Is it an online game with microtransactions or a one off game? Was it getting the money from gamepass or from in game purchases?
Do you have a link of the specifics? Sustainability is defined by how much a multimillion AAA projects can break even by generating more revenue than the costs. If devs get for example a fix amount of money from gamepass which can be interpreted as "guaranteed cash", it isnt true cash flow, this is not a sustainable business for big projects. If a project costs 600 million to produce and market and is exclusive for XBOX and day one on Gamepass, MS should be willing to ensure that the game receives at least that amount in revenue. The less the actual sales, the more MS will have to subsidize the costs of the project. If the profit is not there, these projects scream unsustainability. The only devs that are most likely to be willing to bring their AAA projects on gamepass, are those who are underperforming so much that they see Gamepass as the lass resort to potentially minimize losses

 

[Johnny Awesome]

Nah. That view is too limiting. There are many different profit models within the GP umbrella.

If MS loads GP with Day 1 AAA content and it doesn't slowly generate 100 million subs, then GP will be a failure. They haven't even come close to putting enough content out. Redfall and Minecraft Legends aren't going to cut it.

 

[Nesh]

Nah. That view is too limiting. There are many different profit models within the GP umbrella.

You mean revenue models. They are not guaranteed to bring profits for projects of all sizes.