I think it might be constructive to look at how a Disney or Warner handle content distribution. They have the option of tying all of their content to their streaming service and insuring that all revenue for their content is theirs and theirs alone and more strongly incentivizing consumers to pay for their service to consume that content. They don't do that, though. They engage with other types of distribution for their biggest properties because the overall revenue is greater. The property benefits from being more ubiquitous and the opportunity for additional revenue streams (co-marketing, licensing for other media and products) becomes greater the more consumers you can reach. I don't see why this wouldn't equally apply to games. You have some exclusives and you have some titles that are so massive that you would be leaving money on the table by not releasing into to all possible markets.
Sony Game Studios Acquisitions [2022]
- Thread starter Silent_Buddha
- Start date
ChuckeRearmed
Regular
What Disney+ shows appear on other streaming platforms like Netflix or Amazon Prime (cinema can be considered retail)?
I'm not talking about the shows. I'm talking about the movies, which appear in theaters, digital rental and purchase storefronts, BluRay etc.
ChuckeRearmed
Regular
But those are not the competition to Disney+ no? The point is the availability on the platforms of the competitors and retail is not it (though theaters will dissappear sooner or later or become something different).
Are retail sales on other platforms the competition to GamePass?
ChuckeRearmed
Regular
Yes, because other platforms are the competitors.
PC is unique in that case though, but PC is essentially a single platform with multiple market chains with Valve being the biggest one.
I think you can compete without knee-capping yourself by putting a hard ceiling on your revenue potential. I think just putting COD, for example, on GamePass gets more people on GamePass and GamePass-enabled platforms solely from a value standpoint without sacrificing revenue from people who are not interested in GamePass or the platforms it is accessible from.
Not really. Retail sales actually help maximize the revenue of your first party ware.
You can make the argument that if there were no retail version then some consumers may have subscribe to GP or support your platform instead of your competitor's. But you can't expect the desire to play a title will automatically equal a platform/subscription sale. Minecraft has sold 238 million copies across a plethora of platforms. But in no way could you expect those levels of sales if Minecraft was exclusive to the Xbox and/or GP. The demand of Minecraft could in no way drive that level of Xbox console sales or GP subscription for MS. Minecraft owes a portion of its sales to its wide availability across platforms.
$70 to play COD is a different consideration than paying $300/500 Series console and/or buying a subscription to GP. (I used COD because I don't know Minecraft sale prices)
GP's attraction is that its offers a bunch of games and all first party titles for a monthly fee. Most who bite will buy an Xbox or subscribe through the PC. So the people who are left are people who may be attracted to a handful of the individual titles you offer. Do you try to force just a fraction of them on your hardware/sub model using exclusivity or do you take $70 for each title of yours that they enjoy?
Its like a person wanting a can of Coke and you trying to force them to buy a 12 pack.
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ChuckeRearmed
Regular
Attracting customers to your ecosystem > revenue from competitior's platforms.
Let's say Microsoft keeps COD on Playstation. People will stay on Playstation because not many will go and buy 299 console just to play the game via Game Pass because the console is already 4 full priced games investment. Then Playstation introduces their own subscription service and the person decides to subscribe to it. Person also buys different stuff including peripherals on the platform.
What Microsoft gains in return? Just some revenue from the competitor's platform.
What competitor gains? Customer that stays in their ecosystem, purchase games, MTX and DLCs there.
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Those consumers aren't very valuable, so you don't gain very much if they choose your platform over another.
ChuckeRearmed
Regular
They are valuable because they are the sizeable chunk of the market. Most of the people buy at most 7 games per generation (I don't remember exact value, but I remember there was a report). So bringing customers to your ecosystem is more important than getting some revenue from the competitor's platform.
Yeah, MS use to think that way but don't anymore. Its why Office isn't exclusive to Windows. Why you can run Linux VMs all day long on Azure. Its why MS put GP on PC, Android and wants it iOS. There is no need to encumber a bunch of its software or services to the Windows OS or Xbox hardware.
Microsoft ecosystem doesn't exist behind a piece of hardware or software. Its ecosystem actually sits behind a subscription. If you look closely literally MS entire business revolves around subscriptions.
Retail sales help drive consumers to adopt MS subscription model. Its much easier to push current customers who don't subscribe into a sub model. Versus trying to convince people who have never experienced your wares to subscribe.
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Silent_Buddha
Legend
It's all accounting math at the end of the day for MS. There might be some migration from PlayStation to Xbox if COD is made exclusive, but not everyone would migrate or get an Xbox as a second console.
So, just examples here. And we'll also hypothetically say that if they buy an Xbox they only buy 1 game a year by your supposition that they only buy 1 or 2 games a year. If they are only buying 1 or 2 games a year on PlayStation and COD is one of them then it's highly likely that the 2nd game would be a PS5 exclusive title. If they buy more than 1-2 games a year and some of those games are PS5 exclusives they'll likely continue to buy all of their non-COD games on PS5. So the hypothetical 1 COD purchase a year is likely close enough to what would happen as to be a viable example.
Let's say you currently have 10 million COD players on PlayStation and COD costs 60 USD to buy. Further MS only gets 70% of this due to Sony taking 30% Currently those 10 million COD players are bringing in 420 million USD (60 * 10 * .7 * million)
- If 25% now buy COD on an Xbox console.
- Xbox revenue from players switching = 150 million
- Revenue lost from players not switching = 270 million
- If 50% now buy COD on an Xbox console.
- Xbox revenue from players switching = 300 million
- Revenue lost from players not switching = 120 million
- If 75% now buy COD on an Xbox console. Unlikely, IMO, but possible I suppose.
- Xbox revenue from players switching = 450 million
- Finally we see a relatively small (30 million) increase in revenue.
If the console is being sold at cost or nearly at cost then your profit margin is miniscule until that player buys more software on the platform.
Those are some of the primary drivers for Microsoft wanting their titles to appear on PC day and date with Xbox consoles. It's more profitable in terms of profit margin for them if a player that only buys 1 or 2 exclusives on Xbox and no 3rd party games to instead buy them on PC, even if they buy it on Steam and they lose 30% of revenue from that 1st party exclusive title.
That same dynamic is in play for people that might only buy an Xbox to play COD and nothing else.
From a purely revenue generating standpoint and profit margin standpoint it makes far more sense to leave COD on PlayStation. The only reason to remove COD from PlayStation would be to either increase the Xbox Hardware install base (not very important to MS) or increase the subscriber base of Game Pass and/or Xbox Cloud Gaming. Now if they can get Game Pass available on PlayStation then that Game Pass customer wouldn't incur further hardware costs for MS (a win). Keeping COD on PlayStation and somehow getting Sony to allow Game Pass on PlayStation would be a massively huge win for Microsoft.
Now, the calculations they are working with will be far more complex than this simple exercise. However, this should at least illustrate that it's not necessarily in Microsoft's best interest from a revenue generation and profit margin perspective to remove COD from PlayStation. Other considers for MS may either increase or decrease their desire to remove COD from PlayStation or leave it on PlayStation.
And then of course, if any government balks at the acquisition and MS are required to leave COD on PlayStation as a concession in order to get the acquisition approved then all of this would be moot anyway.
Regards,
SB
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Gamepass is only a good value if it's contents are available at retail for a known amount. So having a game that's $60 at retail anywhere else means that a monthly Gamepass sub is the value of at least that $60 game's content that you could consume in that month. Or, if a game is $60 retail but on Gamepass, how many months would I have to pay for Gamepass to equal the price of that game, and will I want to play that game after that time.
Except that you get as much Coke products of various flavors you can consume in a month for less than the cost of just that one can of coke.
That’s cool but if I only want a can of coke every few months and don’t care for cherry, orange and asparagus flavored coke? And what if I don’t what to eschew my favorite restaurant? What’s the prospect of me going to another restaurant and skipping my favorite meal?
Now if I love Coke, want it with every meal and I enjoy a number of different flavors than that low cost is a deal. Now I might chose a new favorite restaurant because the experience is something I highly value. Otherwise its just a inconvenience and I might realize I like Pepsi better. LOL
Here is the issue with placing something totally behind a piece of hardware or subscription. How do you expose people to your wares who have never previously played those titles. Hope they have a friend with a sub? Hope YouTube videos convince them to switch hardware or just invest in the sub.
It’s easier for us to see the value of in MS purchases but new users become harder to convince because they don’t know these titles. My son knows COD but he has no interest in a bunch of titles MS has gathered. He likes game pass because I bought it for him. But if I was a dad who was not into video games? Game Pass may have just went unnoticed by him.
To me retail sales especially on other platform allows people to more easily become fans of MS software and more readily to subscribe or switch hardware.
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Totally agree. Honestly, one of the best examples of Gamepass' value I think came when they got MLB The Show. A $70 (on PS5) retail game just included with your Gamepass sub. If that's the game you play, and it comes out every year and then you guy the next one every year... are you going to play last years game? Probably not. So renting it for a year is essentially the same as buying it as far as it's yearly use is concerned. If you are going to play it online, you are already paying for Live or PS+, and the upgrade from Live (@$10 a month) to Gamepass Ultimate (@at $15 a month) is only $60 a year, so $10 less.
Unknown Soldier
Veteran
If Activision actually releases an actual good COD again in the future, I would most likely get it on PC and not a Xbox. I would also not buy Gamepass for it, would likely buy it straight.
At this point in time, last COD game I bought was BOPs2 and even that was mediocre compared to the best COD - MW. I never bought into that Game as a Service BS and won't. Won't support any game PS releases either with GaaS.
Of course there are people who like COD and will follow, but buying an Xbox isn't needed as many have pointed out as MS's plan is Gamepass and not Xbox.
Funnily enough PSN is the only service I subscribe to and that's because I want to play online with family/friends when I want to.
You are still paying $180, not $60. So $110 more if you are hardcore and only play MLB The Show(which most won't).
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Right now in Sweden COD:V next gen version costs almost as much as 6 months of gamepass sub... For somone who dosent play hours daily and have work and family i dont need own physical games, subscription service is all i need. The same way i stoped buying CDs when i hop on Spotify and stoped buying dvds/BRs when i got netflix. My needs are not everyones needs thou.
But i think when MSFT will start to spit games via Acti/Blizz/Bethesda etc etc people will be tempted to get at least xss with gamepass becouse it will be darn cheap to have access to all those titles and still own PS5/Switch whatever
But i think when MSFT will start to spit games via Acti/Blizz/Bethesda etc etc people will be tempted to get at least xss with gamepass becouse it will be darn cheap to have access to all those titles and still own PS5/Switch whatever
D
Deleted member 11852
Guest
The motivation to bring GamePass to mobile is because Microsoft no longer have a mobile platform. Is there a native GamePass app for macOS or linux? Microsoft want to bring GamePass to the platforms that GamePass subscribers are using. which they obviously know because every damn thing anybody does on the internet is tracked, plus they have dedicated apps for Android and iOS.
Maybe the web interface is great and negates the need for a native desktops apps but I have yet to experience an app where the web experience is close to equal, let alone better, than the native app.
ChuckeRearmed
Regular
Except you confuse retail sales with Office subscriptions. Office 365 subscription provides recurring revenue while tying people to Microsoft ecosystem (OneDrive and other stuff). Retail sales on Playstation, doesn't do that (with online games it is easier though). If Playstation allows full Game Pass on Playstation (with all ecosystem, third parties, Xbox Live stuff, DLC shop and so on), MS would put it on Playstation.
It is similar thing like Microsoft currently fighting with Apple regarding App Store, where Apple proposes either browser based solution or single app for each game (or whatever), while Microsoft wants full Game Pass experience (inside App Store I guess), but Apple doesn't want it (as it might affect its Apple Arcade business).
That's the difference. If Game Pass comes to Playstation in its true form - Microsoft will gladly put it. But selling games independently in retail - not gonna happen. The goal is to attach people to your ecosystem, not to attach people to other ecosystem and get some $$$ from them.
I don't understand what's is confusing about that.
(In fact I think even if somebody in the future will force to open walled gardens, Microsoft will benefit immensive from having the best content on Game Pass too)
And selling the games in retail on competitor's platform is exactly the reason why people stay on those platforms - because they literally don't need hundreds of games as they often play the same game all the time (like Fortnite or whatever). There is no indication that people go to Xbox and we can see that clearly in sales - people buy Playstation regardless of Game Pass existence. But when stuff like COD got the chance to disappear from the said platform, people started to either panic or question their purchase decision. That's the power of exclusivity. And it is completely irrelevant to any perk that Game Pass provides.
People go to the platforms to play the games the want and exclusive games help with that. Yeah, there is a price in which the game might become less popular, but that's not a big deal and have never been.
Because client will use Microsoft's infrastructure and will pay for it, while running Linux? That way they will stay in Microsoft's Azure ecosystem. Microsoft also is trying to move as many clients as possible form on premise Exchange servers to their Azure infrastructure too.
You can argue that "but why Microsoft allows to run Windows on AWS" but there Microsoft also gets recurring revenue.
Maybe not, but the point is to bring as many people to ecosystem in possible. Disney doesn't put their movies in Netflix in hope that one day some Netflix subscriber will go to Disney+.
The fun thing is that all these debates about how selling games on competitor's platforms are beneficial to your platform are negated by one thing - the very existence of console exclusives that are not coming to other platforms. If there was no value in having console exclusive games on the platform under the idea that people will come to Platform X if Platform X releases the games on other platforms - we would not have console exclusive games. Exclusive content is extremely important to bring people to your ecosystem. People in your ecosystem are much more important than any $$$ from third party platform (and please don't bring Minecraft - aside not having Minecraft 2 release, Phil Spencer literally said that they regretted releasing the games on other platforms because it created false expectations).
P.S. I have an assumption that each and every person who is advocating for Microsoft to sell the games in retail on Playstation (for example) is the person who want to play the game on Playstation without buying Xbox
P.P.S. anyway I don't want to answer big posts and the forum does not provide good formatting so all these letters look the same and I miss what is quote and what is not quote and so on. Also difficult to read.
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