Sony reportedly going toe-to-toe with GP in new service.

BRiT

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Legend
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Breakdown of the Bloomberg article is 3 tiers of the service.
  1. Existing PlayStation Plus
  2. Access to PS4 and eventually PS5 games, played locally.
  3. PS Now streaming functionality for extended demos and a library of classic PS1, PS2, PS3, and PSP games.
 

iroboto

Daft Funk
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Bloomberg says the launch of the service will see Sony's two existing PlayStation subscription offerings - PlayStation Now and PlayStation Plus - merged into a single package, with Sony retaining the PlayStation Plus branding while phasing out PlayStation Now.

https://www.eurogamer.net/articles/...-pass-with-new-subscription-service-in-spring
A good first start. It seems like they are trying to get onto cloud more than they are competing with gamepass right now. So by merging the two together they will get more users using the streaming service. But we will have to wait and see the actual product before I judge it. But as rumoured a good first step. A lot of change for it to match gamepass; exclusives on PC day 1 and Xbox day 1 is a big lift and from what I understand from others unsustainable in the long run.

Though I am poking fun a bit; I honestly do not know if they are correct or not. So far Phil has said very sustainable, but very profitable is a different discussion.
 

zed

Legend
hows that like gamepass?
Until they release eg next god of war game day 1 to everyone who pays for PSN then its not like gamepass
 

DSoup

Series Soup
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hows that like gamepass? Until they release eg next god of war game day 1 to everyone who pays for PSN then its not like gamepass

There is clearly some information that hasn't been reported yet. This is how Bloomberg drip-feed a story.

The source is Jason Schreier - who has a very good track record of reporting industry events ahead of time. If he is saying it's like GamePass, there will be a tier like GamePass. Microsoft have done all the hard work softening-up publishers to the idea.

You know what the good part of this is? We'll eventually get some clarity on the profitability of such a model through Sony's financial statements.

I am no more interested in Sony GamePass than I am Microsoft GamePass but I am a fan of giving options for consumers to consume content. :yep2:
 

zed

Legend
You know what the good part of this is? We'll eventually get some clarity on the profitability of such a model through Sony's financial statements.
we both know this will not being as profitable for sony as 10million x $50 = half a billion for a single title you'll need a hell of a lot of PSN subscriptions to make up the difference :LOL: the maths doesnt work out. MS plan is different they are willing to take a major profit lose now for the long term goal of being the one stop gaming place on windows, i.e. they want to surplant steam.
I think when whatever gets revealed it wont be like MS gamepass, i.e. all sony titles appearing on day 1 free to play for subscribers
 
we both know this will not being as profitable for sony as 10million x $50 = half a billion for a single title you'll need a hell of a lot of PSN subscriptions to make up the difference :LOL: the maths doesnt work out. MS plan is different they are willing to take a major profit lose now for the long term goal of being the one stop gaming place on windows, i.e. they want to surplant steam.
I think when whatever gets revealed it wont be like MS gamepass, i.e. all sony titles appearing on day 1 free to play for subscribers

At some point we'll start to get a better idea of things. But currently there's greater than 30 million Game Pass Subscribers. Plans are from 10 USD a month to 15 USD a month. So that's between 300-450 million USD a month. Or 3.6 - 5.4 billion USD a year. That's also without the cost associated with physical media, although there is the cost of licensing which varies from title to title.

Of course, the real dollar amount isn't going to be that high as MS still has their 1 USD for 3 month promotion for new users. On the flip side, Game Pass subscribers spend on average 50% more than non-Game Pass subscribers on game purchases and content. So even while paying a monthly subscription Game Pass subscribers on average are also buying more games and game content (DLC, etc.) than Xbox gamers who aren't subscribed to Game Pass. So, it's not like someone subscribes to Game Pass and they suddenly stop buying games or content. Basically this means we don't know how much revenue MS averages per subscriber (who don't technically have to buy the exclusive) versus non-subscriber (who has to buy the exclusive).

What we do know based on what MS has said is that Subscriber Revenue - Subscription fee is 50% higher than Non-Subscriber revenue. So, is that potential loss of 1st party exclusive sales really hurting them?

Sony would have to sell ~42.86 million titles at 70 USD a piece to get ~3 billion USD revenue. Of course, retailers don't pay retail to Sony for physical resale, so the number of sell through would need to be a fair bit higher, say 60+ million units for the sake of argument. And that doesn't take into account that people spend more money on top of their GP subscription while they are subscribed. Basically do people that buy Sony 1st party exclusives spend 50% more money than people that don't buy Sony 1st party exclusives?

On top of that quarterly/yearly revenue is not as variable if you have a lot of subscribers versus boom years (when you release a lot of high selling exclusives, say 2+) versus bust years (where you only release 0-1 high selling exclusives).

This isn't by any means any sort of real comparison between putting your first party titles on a subscription service day one versus not doing so. We don't have the numbers and this really isn't something that is directly comparable.

All this is meant to do is illustrate that it isn't necessarily detrimental for a company to put their 1st party exclusives on the service on launch day. If it does generate a loss in terms of the sale of a 1st party title, it appears that this is more than made up for by subscribers spending more money while subscribed than they did when they weren't subscribed.

If there wasn't a compelling business case to be made for this (IE - revenue generation) then MS wouldn't be pursuing it and Sony wouldn't be potentially showing interest in doing it as well.

Myself, I'm glad that Sony are looking into something like Game Pass (if the rumor is true). I'd love it if game developers (especially indie developers) on PlayStation could also reap the benefits of greater exposure that a subscription service brings.

Regards,
SB
 

DSoup

Series Soup
Legend
Subscriber
we both know this will not being as profitable for sony as 10million x $50 = half a billion for a single title you'll need a hell of a lot of PSN subscriptions to make up the difference :LOL: the maths doesnt work out. MS plan is different they are willing to take a major profit lose now for the long term goal of being the one stop gaming place on windows, i.e. they want to surplant steam.

I do not understand the economic model in play, nor do I don't think Microsoft are willing to eat losses for no reason at all. This is not how responsible companies operate, nor how a board - representing the significant money of investors - instruct those companies. Well-managed public companies do not spend on business ventures without a plan to make money. There has to be a plan. In many cases the plan may not be good, but there has to be an end-game scenario and economic model which recoups investments when you're dealing with literally billions of dollars of acquisitions.

If Microsoft was still mostly owned one a few people, and it was their money at stake, they could definitely do what they like - eat losses for lulz to please fanboys. But this is not how Microsoft operate. They have just need really been clear about the monetization plan. And to be fair, their plan may be highly variable. They are trying to build a new business model in gaming which is very different from what has been the established model for 30-40 years. There is a degree of 'riding the wave' but there still needs to be a plan. An end game. Even if its' only vague.

You just don't buy Mojang and Zenimax without a plan to turn those billion-dollar investments into profits. ¯\_(ツ)_/¯
 

zed

Legend
I do not understand the economic model in play, nor do I don't think Microsoft are willing to eat losses for no reason at all.
Look at the most recent quarter revenues, percent numbers are YOY change
Code:
LinkedIn Marketing Solutions 61%
Azure and other cloud services 50%
Dynamics 365 48%
LinkedIn 42%
Search and news advertising excluding traffic acquisition costs 40%
Server products and cloud services 35%
Dynamics products and cloud services 31%
Office 365 Commercial 23%
Office Commercial products and cloud services 18% 
Windows Commercial products and cloud services 12%
Office Consumer products and cloud services 10%
Windows OEM 10%
Xbox content and services 2%(*)
Surface -17%
xbox was after surface the 2nd worse performing segment, how could this be? revenues are meant to greatly increase as theres a nearly fixed amount of coming in each month from subscriptions blah blah.
MS plan as you know, is forgo profits now to greatly increase subscriptions which increases revenues which in a decade or so can be eventually turned into profits (epic is doing the same thing now with their store) but the thing is revenues are not even really growing?
I predict if in a year its still flat they will have to seriously look at cancelling gamepass, MS is like you say a company that wants to turn a profit.

(*)FWIW sony game segment revenues grew 27% during the same period
 
D

Deleted member 7537

Guest
I think it's the right move, a bit late but PSNow is basically gamepass for them. Bundle it, make a PS+ and PS+ Gold/Ultimate, whatever. Don't expect day 1 games or things like that, Sony can't lose money with this like MS does with GP.
 
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D

Deleted member 7537

Guest
I do not understand the economic model in play, nor do I don't think Microsoft are willing to eat losses for no reason at all.

The same way Amazon, Netflix, Spotify, etc. lose money with their subscription models. They sell you the 10$ a month pass, and once you become dependent on them, they'll raise the price.
 
Yes. MS hasn't hit the "irresistible content" point with GP, but in a couple years they will. Many will have a hard time resisting Psychonauts 2, Forza Horizon 5, Halo Infinite, Hellblade 2, Avowed, Fable next, Doom next, Starfield, Elder Scrolls VI, Outworlds 2, Forza 8, Perfect Dark next, EA games etc.... for only $10 per month. It's going to become a ridiculous value. Keeping that pace will get them to 100 million subscribers ie. $12 billion in revenue + microtransactions. Which likely means $15+ billion in revenue. That's where this is all headed IMO.

What Sony is going to do is start off with "GP light" where they don't throw their 1st party exclusives up on Day 1 and then introduce another charge tier if you want that and test the waters. They aren't as convinced as MS (and me) that GP is going to be the model of the future, but they want to be ready to emulate MS if they turn out to be correct.
 
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BRiT

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What Sony is going to do is start off with "GP light" where they don't throw their 1st party exclusives up on Day 1

They already have that with PS+ and PSNow, so this move is more of a rebranding and refocusing of marketting and positioning to the users.
 
Look at the most recent quarter revenues, percent numbers are YOY change
Code:
LinkedIn Marketing Solutions 61%
Azure and other cloud services 50%
Dynamics 365 48%
LinkedIn 42%
Search and news advertising excluding traffic acquisition costs 40%
Server products and cloud services 35%
Dynamics products and cloud services 31%
Office 365 Commercial 23%
Office Commercial products and cloud services 18%
Windows Commercial products and cloud services 12%
Office Consumer products and cloud services 10%
Windows OEM 10%
Xbox content and services 2%(*)
Surface -17%
xbox was after surface the 2nd worse performing segment, how could this be? revenues are meant to greatly increase as theres a nearly fixed amount of coming in each month from subscriptions blah blah.
MS plan as you know, is forgo profits now to greatly increase subscriptions which increases revenues which in a decade or so can be eventually turned into profits (epic is doing the same thing now with their store) but the thing is revenues are not even really growing?
I predict if in a year its still flat they will have to seriously look at cancelling gamepass, MS is like you say a company that wants to turn a profit.

(*)FWIW sony game segment revenues grew 27% during the same period

From MS's earnings call slides.

Xbox content and services revenue grew 2% (relatively unchanged CC) on a strong prior year comparable, with growth in Xbox Game Pass subscriptions and first-party titles partially offset by declines from third party titles"

So depends on how you want to look at. Despite Game Pass existing and growing, first-party title revenue also increased. However, much of those gains was offset by third party sales underperforming.

Looking at it from the other side, one could claim that third party sales underperforming is due to Game Pass growing. However, if that argument were true, then Microsoft 1st party sales should suffer more than 3rd party sales due to to ALL MS 1st party titles being on GP while only a relatively small number of 3rd party titles (and almost none of the big AAA ones) are on Game Pass. But assuming that Microsoft aren't lying in their fiancial earnings call, that is not what is happening.

Looking at NPD sales data during that time period it's easy to see why Sony's PlayStation division outperformed Microsoft's Games and Services division.

Multiple Sony 1st party exclusives (4) were in the top 20 of sales in NA and likely did well world wide as well during that 3 month period. For the past year+ there has been no comparable 1st party release out of Microsoft. Flight Simulator while impressive isn't going to bring in tons of sales. Psychonauts 2 while a fantastic game is also a relatively niche game with a relatively small budget.

Microsoft's big hitters for 2021 (FH5 and Halo Infinite) won't be included in that quarterly report. And I'd argue that FH5 due to being a driving game wouldn't have brought in great sales regardless of whether GP exists or not, however because of GP it's broken all launch engagement records at MS up to it's release.

Basically, if GP didn't exist FH5 likely would have had far less than half as many people playing it now, but arguably might have resulted in similar or greater levels of revenue. Keep in mind that despite being on GP, Game Pass subscribers spent over 5 million USD on FH5 despite them being able to play it for free (100k early access GP players that could only access it if they purchased the Premium Content pack at 50 USD) before the game officially released and plenty of people bought the game on Steam rather than play it on Game Pass. So, it's not a given that if GP didn't exist that FH5 would have brought in more revenue. For example, me playing FH5 for over 30 hours now isn't a lost sale because I never would have purchased FH5 in the first place and most of the people I know playing it a lot wouldn't have purchased it either because we just don't buy racing games. It does, however, give me a reason to not cancel my GP subscription. :p

Regards,
SB
 
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DSoup

Series Soup
Legend
Subscriber
Yes. MS hasn't hit the "irresistible content" point with GP, but in a couple years they will. Many will have a hard time resisting Psychonauts 2, Forza Horizon 5, Halo Infinite, Hellblade 2, Avowed, Fable next, Doom next, Starfield, Elder Scrolls VI, Outworlds 2, Forza 8, Perfect Dark next, EA games etc.... for only $10 per month.

And what if Sony are offering their entire back catalogue and God of War 2, Horizon Zero Dawn 2, Gran Turismo 7, Spider-Man 2, Wolverine, Final Fantasy Whatever, The Last of Us Part III and so on, and whatever comes next from their other first party studios? As Always - as it has for decades - the appeal will depend on the overall appeal of individual titles and broad appeal of the whole package. Because the appeal of a monthly subscription service - which you can dip in and out monthly - is dependant on what is available.

As BRiT posted, Sony aren't "starting off" with anything because PS Now launched years before Game Pass despite Sony not having marketed it well (or at all).

It's all good. Competition is good. :yes:
 
Your post just illustrates why Sony has to make this move. It's the only way they can counter the irresistible deluge of content MS will soon be offering.
 

BoardBonobo

My hat is white(ish)!
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As I see it the only way that Gamepass can ever be successful in the long run is if MS can produce enough 1st party content, that is top quality, to keep it continually fed. If it is at all reliant on 3rd party games to drive it then the cost will make it eat itself. And that is going to take a lot more studios to do or more purchases of Zenimax sized publishers.

Sony are entering with 40+ million PSN subscribers who may be tempted to pay extra to get the Last of Us or God of War on day 1 - if Sony can see that this will drive uptake of subscribers and also sales of consoles. And that is a difference between MS and Sony - MS don't really seem to be interested in selling consoles, in a way doing that they are competing with themselves in the PC market, and in that they have back pressure from both Steam and Epic. Sony on the other hand is hungry for console sales and are attempting to try and entice none console owning elements of the PC market into considering a console purchase by releasing back catalogue games. And they're also making a play for the mobile market but my guess is that will fail hard. If having a top teir subscription model doesn't just drive subscription numbers higher but can also be proven to drive console sales higher then I can see Sony making a play for it.

Personally I have zero interest in a subscription model, I prefer to own my games and not just rent them, putting myself at the whim of market forces that drive the cost of subscriptions ever higher.
 
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