Analyzing the viability of Sony putting their first party software day 1 on PSNOW

[Memento]

2018 is probably Sony's biggest year ever in terms of software revenue with their first party titles. So I think it would be a good year to take it as an example.

WARNING: There will be a lot of guess work here in regards to numbers, since we dont have updated numbers for most Sony releases this year.

Lets start with the big guys: Spiderman and God of War. We know God of War sold 5 million in 1 month and Spiderman sold 9 million in 2 months and 18 days. It is pretty safe to say Spiderman surpassed 10 million by the year's end (December sales must have been huge) and God of War is probably very close to that too, so lets wrap it up at 20 million units sold between both of them. Most of those sales were probably at $60 (I mean, God of War sold 5 million in its first month and there was no deal until Black Friday), but for the sake of not overstimating it, lets put a $40 value to compensate the Black Friday deals both games had.

That means $800 million. Of course there are the retailer's take, and in regards to Spiderman there is also bundling. So lets wrap it up at $500 million since a lot of sales now are digital and they take it everything on PSStore. Then we add the revenue that came from smaller stuff like SOTC Remake, MLB, Detroit, VR Software, etc. And of course, sales of first party games from previous years. Also worth noting that in a lot of countries prices are much higher than $60. $250 million sounds plausible. So we have $750 million. I probably forgot of something very big and my math could definitely be fucked up so yeah lol.

Anyways, someone with more knowledge than me could help me here. Is ~$700 million in first party software in 1 year a good guess for a publisher like Sony?

In any case, lets keep up.

$750 million. Now, at a industry price of $15 per month (Netflix style, and yeah, I know Microsoft charges less but I think Sony would go for higher since they are market leaders), in 1 year they would make $900 million with 5 million subscribers every month. Now, that is definitely a high ceiling, 5 million active subscribers every month sounds like a small number near PSPlus subscribers or Netflix subscribers, but it will be a service in its infant years and the gaming industry is still not used to it. In any case, they could definitely hit it if they had a good flow of big exclusives hitting the service day 1. Imagine stuff like Spiderman 2 and God of War 2 hitting the service? And then people subscribe to play those and find out dozens of others in the service... it all starts like this. Also, we can't forget that sales of first party games wont simply stop existing in their digital and retail venues. If Microsoft is to be believed, GamePass helped some games sell more. Now if that is going to work the same way for AAA SP driven games, we don't know.

But the thing is, according to my (porbably terrible) math and industry analisys, Sony made in their best first party year ever something like $750 million. For PlayStation Now to accomplish that kind of revenue, they would have to have 4 million subscribers, minimum, during an entire year. THAT SAID, they still have to pay royalties for the eventual third party games hitting the services, which we know nothing how it works...

All in all, I would like some analysis of a person with actual industry knowledge here. How many subscribers would it make PSNow logical for Sony putting their flagship titles day 1 on the service? Could the nature of Sony games (SP focused) be bad for subscribers retention?

 

[LewieP]

I wonder what the cost would be of maintaining the PS Now streaming infrastructure if it were to scale up, if they were serious about going big on subscriptions. Dunno what the split would be for a subscription service like that for downloads vs streaming.

 

[Alex840]

Pretty low as Sony's games have generally been of higher value than Microsoft's games this generation.

Why would you include games like God of War and Spider-Man if you know you'll sell 10 million + copies of them?

 

[LewieP]

Pretty low as Sony's games have generally been of higher value than Microsoft's games this generation.

Why would you include games like God of War and Spider-Man if you know you'll sell 10 million + copies of them?

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The argument for would be that you might be able to convince a bunch of people to pay $x a month forever for it.

 

[Deleted member 437]

I'll be honest, I am really interested to see what MS does when their non-gaas games come out. The heavy hitters like gears 5, fable, and the next halo.

 

[QuiteSomething]

I'll be honest, I am really interested to see what MS does when their non-gaas games come out. The heavy hitters like gears 5, fable, and the next halo.

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Both Gears and Halo are gaas now

 

[Betty]

It wouldn't work for Sony because a lot of their big exclusives are one and done affairs.

I could easily see people sign up for Spider-Man then opt out of renewing the following month.

 

[TitlePending]

Both Gears and Halo are gaas now

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Makes me wonder the financials of a customer interested in only the single player portion of those games and paying $10 for a month instead of buying the game (be it full retail or later on in a sale).

Although I suppose $10 for the month is better than nothing at all.

 

[Kill3r7]

It wouldn't work for Sony because a lot of their big exclusives are one and done affairs.

I could easily see people sign up for Spider-Man then opt out of renewing the following month.

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Unless you have other compelling games, DLC, etc. Plus plenty of folks will simply buy games the old fashion way. That said, it only makes sense if it will help Sony reach a new demographic who are not presently invested in the PS ecosystem.

GaaS makes this easier for MS.

 

[Memento]

It wouldn't work for Sony because a lot of their big exclusives are one and done affairs.

I could easily see people sign up for Spider-Man then opt out of renewing the following month.

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That is why you nurture your service to have all kind of games that would make people keep subscribed.

 

[QuiteSomething]

Makes me wonder the financials of a customer interested in only the single player portion of those games and paying $10 for a month instead of buying the game (be it full retail or later on in a sale).

Although I suppose $10 for the month is better than nothing at all.

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We can't say anything for sure about how much GP makes. We got like 0 numbers. It's a shame

 

[FIREKNIGHT2029]

It wouldn't work for the type of games Sony makes. Sony makes "one and done" SP games that don't have an emphasis on microtransactions or Multiplayer so this model isn't catered to them. The revenue they pull in from games like GOW and Spiderman selling 10 million copies pales in comparison to what they'd get from a service like this where most would play their games and be done within a month and probably wouldn't resubscribe.

 

[Kill3r7]

It wouldn't work for the type of games Sony makes. Sony makes "one and done" SP games that don't have an emphasis on microtransactions or Multiplayer so this model isn't catered to them. The revenue they pull in from games like GOW and Spiderman selling 10 million copies pales in comparison to what they'd get from a service like this where most would play their games and be done within a month and probably wouldn't resubscribe.

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People said the same thing about Netflix releasing an entire season day 1 and that has worked well for them. You can't just assume the worst outcome or that the majority of people will game the system.

 

[Heckler456]

Generally speaking, Sony first party games are blockbusters that move millions upon millions of copies. When's the last time you've seen a Marvel movie come to Netflix day-and-date with the theater? Or a James Bond movie or something? There is literally no incentive.

 

[Deleted member 50969]

I would stop comparing Sony to MS since we don't know what route MS will take with Gamepass and future games.

At current moment, it wouldn't be viable for Sony.

 

[bsigg]

I'll be honest, I am really interested to see what MS does when their non-gaas games come out. The heavy hitters like gears 5, fable, and the next halo.

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2 of those games will 100% have microtransactions. It'll be interesting to see how they monetize Fable 4

 

[QuiteSomething]

Putting FP titles on PS NOW on release will be great. A lot of value for the consumer
The only reason why i'm against this is that subscription service orientation will influence the game design. I don't want broken unfinished games with a promise of "keep subscribing we will fix our game next month!!". I'll gladly pay 60$ for a complete game without the BS

 

[Elandyll]

The argument for would be that you might be able to convince a bunch of people to pay $x a month forever for it.

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But you would potentially have a ton of people only paying for a month or two a year ($10-$20), and playing the entire catalogue in that time span, hundreds of dollars worth of games...

 

[Trago]

I think it's inevitable.

With other tech companies entering the gaming space via streaming services, depending on how aggressive things get, Sony will have to counter.

Companies like Microsoft and EA are ahead of the curve, and other companies will follow.

 

[EkStatiC]

I gon't want to comment on this "ama;ysis" but i have one question:

Why someone who is interested in single player offline cinematic games, the ones that sony is making, want to subrcribe in an online service in order to play them?

 

[Deleted member 437]

I gon't want to comment on this "ama;ysis" but i have one question:

Why someone who is interested in single player offline cinematic games, the ones that sony is making, want to subrcribe in an online service in order to play them?

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Same reason I'll sub to gamepass when Gears 5 comes out.

Pay $10, play it, then cancel the sub.

 

[bsigg]

I gon't want to comment on this "ama;ysis" but i have one question:

Why someone who is interested in single player offline cinematic games, the ones that sony is making, want to subrcribe in an online service in order to play them?

Click to shrink...

Pay $10-15 a month to play them day one? Count me in.

 

[Kill3r7]

I gon't want to comment on this "ama;ysis" but i have one question:

Why someone who is interested in single player offline cinematic games, the ones that sony is making, want to subrcribe in an online service in order to play them?

Click to shrink...

For the same reason folks subscribe to Netflix, Prime, Hulu or HBO. They enjoy the content and they think they are saving money. If you are only buying 2-3 Sony games a year then this does not make sense. You can also download the games.

 

[Deleted member 50969]

2 of those games will 100% have microtransactions. It'll be interesting to see how they monetize Fable 4

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GP is still in its birth phase, so I imagine MS is still working things out. I think if we are truly going to receive SP only games next gen, MS will scale GP back a bit.

Why someone who is interested in single player offline cinematic games, the ones that sony is making, want to subrcribe in an online service in order to play them?

Click to shrink...

Sony has the download feature.

 

[Deleted member 5764]

I gon't want to comment on this "ama;ysis" but i have one question:

Why someone who is interested in single player offline cinematic games, the ones that sony is making, want to subrcribe in an online service in order to play them?

Click to shrink...

For the same reason I subscribe to HBO Now and Netflix. Original content as part of one subscription fee as opposed to buying it separately is very appealing! None of my consoles are ever "offline". I also still buy copies of movies/shows that I really enjoy and would like to re-play at some point.

 

[InfinityDOK]

Sony would be able to do it and I see them doing it. I have no interest in Days Gone or Dreams but put in them a Sony Gamepass I probably would buy it. Gaas is not key for gamepass since gamepass itself is gaas by design . What fuels Game pass is content, that is why MS are buying studios and probably will continue that this year.

 

[VX1]

Loss of revenue for Sony would be,obviously,massive and it doesn't make any business sense for them to do something like this.
Sony first parties are AAA single player games ( those games are very expensive and they sell well,as we know),not GaaS that MS and 3rd parties are mostly making these days which are much easier to monetize with subscriptions and micro transactions.

 

[crimsonECHIDNA]

For now, I doubt they'll put titles out on launch onto the service. What I could see happening though is them adding them about 6-months after release since that is typically around the time they do the first real price drop of the game for retail.

 

[Trago]

I think when Sony eventually starts putting first party titles day one on PSNOW, the service needs to be accessible on virtually every device.

PS4 and PC only wouldn't cut it.

 

[TechnicPuppet]

I don't think business works like this. A strategy is developed and you go with the strategy. Sony have decided their strategy is to pump lots of money into a certain type of game (I'm not saying they are all the same, they aren't) and 3rd marketing deals. They leverage this to sell consoles and games in the traditional manner.

MS have a different strategy where they are going to prioritise getting gamepass and eventually Xcloud working together to be the new Netflix. To aid this they are investing in a lot of variety which you can see in the games they release, the ones they bring to gamepass day 1 and the studios they have bought. They want to capture as many people as possible.

So the companies just seem to have a different focus. MS aren't sitting thinking ok we did the maths we would make more not putting Halo Infinite on gamepass just like Netflix wouldn't release Birdbox 2 in the cinema for months before it came to Netflix to cash in.

 

[Deleted member 5764]

I do think that putting first party titles on PSNow is in Sony's future. I also think that they'll take a different approach when this happens though. The subscription fee might be higher, day one games might be a "premium add on" to regular PS Now, and/or they may not be day one.

 

[Deleted member 27471]

I think Microsoft is dumb for doing what they're doing. However it's not like they're releasing the same quality of content, yet. Maybe they will back track once they get everyone invested by delaying 1st party games on their service if they take a good lead next gen.

I think Sony should put their games on PS Now, but several months later. Let initial sales take the lead.

Maybe I just lack the foresight to understand how releasing all your games on a service day 1 is more beneficial. Again, I think they're trying to give incentive since they're not market leaders.

 

[Fredrik]

I doubt that it would happen but I'd love it if they went with a Gamepass-installs type of solution, I'd subscribe for life!
Paying $60 for each game makes me trust far too much on reviews before giving a game a chance, I never buy a 7/10 game for $60 but I'll gladly keep a subscription live and install even a 5/10 game "for free" if something about it gets me interested.
Not sure how Sony would make money on it though...
(I still don't understand how MS makes money on Gamepass either, I haven't payed a single cent for my #2 game of the year Forza Horizon 4 besides the subscription fee, I might eventually jump in on the DLC though but I would've done the same with the disc release so in the end they're still losing money on Gamepass on me at least.)

 

[Anthony Hopkins]

Now I understand why they don't do it.
But if MS first party studious start delivering in both quality and quantity it will give them an edge if Sony dony follow suit.

Game Pass actually suits the majority of play styles, gamers will complete a game like god of war, and they won't touch it for years and move on to the next game.

 

[bsigg]

Loss of revenue for Sony would be,obviously,massive and it doesn't make any business sense for them to do something like this.
Sony first parties are AAA single player games ( those games are very expensive and they sell well,as we know),not GaaS that MS and 3rd parties are mostly making these days which are much easier to monetize with subscriptions and micro transactions.

Click to shrink...

Keep in mind the attach rate on PS4 is just under 10 games per console. Those blockbuster titles aren't recurring revenue which is something I'm sure Sony is looking at long term.

 

[Falconbox]

Pretty low as Sony's games have generally been of higher value than Microsoft's games this generation.

Why would you include games like God of War and Spider-Man if you know you'll sell 10 million + copies of them?

Click to shrink...

Loss of revenue for Sony would be,obviously,massive and it doesn't make any business sense for them to do something like this.
Sony first parties are AAA single player games ( those games are very expensive and they sell well,as we know),not GaaS that MS and 3rd parties are mostly making these days which are much easier to monetize with subscriptions and micro transactions.

Click to shrink...

Sell 10 million copies, or get 30+ million people paying an additional annual subscription of about $100.

In the end, they may make MORE money. Not to mention, Microsoft has said repeatedly that Game Pass subscribers end up buying MORE games.

 

[Deleted member 27471]

Sell 10 million copies, or get 30+ million people paying an additional annual subscription of about $100.

In the end, they may make MORE money. Not to mention, Microsoft has said repeatedly that Game Pass subscribers end up buying MORE games.

Click to shrink...

Or sell 10 million copies and get 10's of millions of PSN members paying an additional subscription at the same time.

Nobody cares that movie theater releases aren't on Netflix day 1. Some ppl go to the theater, they make millions. Some wait and rent or stream, they make money from royalties or other deals.

Riding initial sales until they drop off then releasing games on the service so everyone can play it makes way more sense. The game keeps its initial value while extending its value to the service.

I also don't buy what Microsoft says. Because they have no data to compare it against. They can possibly infer, but if I'm playing a free game day 1, I would be a fool to buy it. I can see maybe a slight increase because of exposure, but then why are you not just buying the service instead of buying the game. Or do they mean service members buy more games in general? (That make more sense). Also they're pretty much giving away their service right now. Plus they like to say fancy things.

 

[Prine]

I think Microsoft is dumb for doing what they're doing....

Maybe I just lack the foresight to understand how releasing all your games on a service day 1 is more beneficial.

Click to shrink...

At least your honest.

 

[EkStatiC]

For the same reason I subscribe to HBO Now and Netflix. Original content as part of one subscription fee as opposed to buying it separately is very appealing! None of my consoles are ever "offline". I also still buy copies of movies/shows that I really enjoy and would like to re-play at some point.

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My mistake, i misread the title as PSplus and not psnow.
My original comment was illogical and mod can delete it.

For psnow this move is just a matter of time to happen.

 

[InfinityDOK]

Or sell 10 million copies and get 10's of millions of PSN members paying an additional subscription at the same time.

Nobody cares that movie theater releases aren't on Netflix day 1. Some ppl go to the theater, they make millions. Some wait and rent or stream, they make money from royalties or other deals.

Riding initial sales until they drop off then releasing games on the service so everyone can play it makes way more sense. The game keeps its initial value while extending its value to the service.

Click to shrink...

30 mil * 100 is about 3bil your suggestion is 1.2 billion so they would be making less than half of what they could and you also are ignoring that those 30 mil are most likely going to sub to PS+ as well.


Edit: Microsoft is one of the most valuable companies in the world, and probably have a lot smarter people than you or me to decide if this was financially viable.

 

[Betty]

Unless you have other compelling games, DLC, etc. Plus plenty of folks will simply buy games the old fashion way. That said, it only makes sense if it will help Sony reach a new demographic who are not presently invested in the PS ecosystem.

GaaS makes this easier for MS.

Click to shrink...

I kinda like how Sony isn't going the GaaS route though, even allowing their devs to just make they games they want first and foremost.

But sure, if this is a thing that takes off then i'm sure they'll hop on the bandwagon.

That is why you nurture your service to have all kind of games that would make people keep subscribed.

Click to shrink...

Sure, but I still feel a great deal would only sign up short term for big exclusives then run out their month long sub without renewing.

Until Microsoft can offer games as good as Sony's and have them all land on Game Pass day 1, I don't think Sony need to feel any pressure to do the same.

 

[Kerotan]

For now I'd say no chance of day 1. They'll probably get into the habit of adding select first party titles 1 to 2 years after launch going forward. Sony have the ability to make back from regular first party retail + digital, ps plus and ps now.

 

[Braaier]

It wouldn't work for Sony because a lot of their big exclusives are one and done affairs.

I could easily see people sign up for Spider-Man then opt out of renewing the following month.

Click to shrink...

Yep.

Games like TLoU have multiplayer so it'll keep people coming back. But Sony's two big exclusives in 2018 lacked multiplayer. I think they would need to start shoehorning in multiplayer to add to the replay value of such games to keep people subscribed. TLoU had a decent number of people playing online, and while it's not COD, it could definitely keep people subscribed to play it online.

Games like GOW, Spiderman, and Days Gone aren't going to keep people subscribed long term. I think a lot of people would just pay the $10 for a month to play those games. I guess the other alternative is Sony could offer only annual subscriptions. That way they get a minimum of $100 out of someone (upfront) and then hope they stay subscribed. But if they cancel after a year Sony probably still ahead.

 

[Falconbox]

Or sell 10 million copies and get 10's of millions of PSN members paying an additional subscription at the same time.

Nobody cares that movie theater releases aren't on Netflix day 1. Some ppl go to the theater, they make millions. Some wait and rent or stream, they make money from royalties or other deals.

Riding initial sales until they drop off then releasing games on the service so everyone can play it makes way more sense. The game keeps its initial value while extending its value to the service.

I also don't buy what Microsoft says. Because they have no data to compare it against. They can possibly infer, but if I'm playing a free game day 1, I would be a fool to buy it. I can see maybe a slight increase because of exposure, but then why are you not just buying the service instead of buying the game. Or do they mean service members buy more games in general? (That make more sense). Also they're pretty much giving away their service right now. Plus they like to say fancy things.

Click to shrink...

It's a harder sell months down the line, because by then you can find the game on sale for about $30-40 nowadays.

Movie tickets are $10-15, not $60. If you had to pay $60 to see a movie you might not like, there'd be more outcry to have it available in an all-in-one service at release.

As for Microsoft, they're probably comparing the amount of games a Game Pass subscriber buys to the amount of games a non-Game Pass subscriber buys. OR they're comparing the amount of games a user bought in prior years to games bought after joining Game Pass. Either way, they've said repeatedly now that it's beneficial to them, so unless you think they're straight up lying to investors, then it's true.

 

[Memento]

I kinda like how Sony isn't going the GaaS route though, even allowing their devs to just make they games they want first and foremost.

But sure, if this is a thing that takes off then i'm sure they'll hop on the bandwagon.



Sure, but I still feel a great deal would only sign up short term for big exclusives then run out their month long sub without renewing.

Until Microsoft can offer games as good as Sony's and have them all land on Game Pass day 1, I don't think Sony need to feel any pressure to do the same.

Click to shrink...

It is not about Microsoft pressure at all. It is about maximizing their revenue stream. Sony managed to get 34.2 million subscribers to sign up for PS Plus currently. Imagine that kind of active base paying for PSNow? At $15 per month, it means 6 BILLION per year. 6 billion is enough to fund their first party releases for 4 generations in a row. That is 60 AAA games with an $100 million budget right there.

Of course getting to that kind of numbers would be incredibly difficult. But putting their flagship titles day 1 on the service would be the first step.

 

[Falconbox]

It wouldn't work for Sony because a lot of their big exclusives are one and done affairs.

I could easily see people sign up for Spider-Man then opt out of renewing the following month.

Click to shrink...

Yep.

Games like TLoU have multiplayer so it'll keep people coming back. But Sony's two big exclusives in 2018 lacked multiplayer. I think they would need to start shoehorning in multiplayer to add to the replay value of such games to keep people subscribed. TLoU had a decent number of people playing online, and while it's not COD, it could definitely keep people subscribed to play it online.

Games like GOW, Spiderman, and Days Gone aren't going to keep people subscribed long term. I think a lot of people would just pay the $10 for a month to play those games. I guess the other alternative is Sony could offer only annual subscriptions. That way they get a minimum of $100 out of someone (upfront) and then hope they stay subscribed. But if they cancel after a year Sony probably still ahead.

Click to shrink...

That's why you sweeten the pot with a continual drop of 3rd party content.

Very rarely do we see news that PlayStation Now has added games to their library (just a few days ago was the first time in forever I remember additions being added), while Game Pass seems to be adding games on a monthly basis. And good AAA games too, not just indies.

 

[Memento]

Yep.

Games like TLoU have multiplayer so it'll keep people coming back. But Sony's two big exclusives in 2018 lacked multiplayer. I think they would need to start shoehorning in multiplayer to add to the replay value of such games to keep people subscribed. TLoU had a decent number of people playing online, and while it's not COD, it could definitely keep people subscribed to play it online.

Games like GOW, Spiderman, and Days Gone aren't going to keep people subscribed long term. I think a lot of people would just pay the $10 for a month to play those games. I guess the other alternative is Sony could offer only annual subscriptions. That way they get a minimum of $100 out of someone (upfront) and then hope they stay subscribed. But if they cancel after a year Sony probably still ahead.

Click to shrink...

That is why they need to have a good revenue of content dropping every month.

 

[Nintendo]

It wouldn't work for Sony because a lot of their big exclusives are one and done affairs.

I could easily see people sign up for Spider-Man then opt out of renewing the following month.

Click to shrink...

Exactly!

What I think they should do is release multiplayer modes as standalone downloads included with the subscription.

Uncharted 4 and TLOU 2 multiplayer on PS Now would be great!

They kinda did that with Uncharted 3 multiplayer when they released it standalone for PS+ or something back in the day.

 

[InfinityDOK]

That's why you sweeten the pot with a continual drop of 3rd party content.

Very rarely do we see news that PlayStation Now has added games to their library (just a few days ago was the first time in forever I remember additions being added), while Game Pass seems to be adding games on a monthly basis. And good AAA games too, not just indies.

Click to shrink...

This
I think most don't realize that Xbox game pass has at least one title each month that is a launch day and date. You get people by regularly releasing content whether that is brand new or older.

 

[vivftp]

I think a good chunk of PS Now's future is also how the service will be on mobiles and how things go with 5G implementation. If you can utilize PS Now to play the full PlayStation catalog on your mobile or on a potential PS tablet/handheld while you're on the road via 5G then I think that'll be a massive selling point for many. A lot of those people might never have considered buying a PS console in the first place, but now they can play everything wherever and whenever they want. Or heck, lump in people who will have TVs with PS Now built in, or blu-ray players, or Roku sticks, PC... there's a large population of people who would buy these devices but wouldn't buy a PS5. If PS Now is a worthwhile enough endeavor to draw that crowd in and we add that to the actual PlayStation owners who will also get PS Now then maybe that could bump up the numbers to the point where it makes sense to put 1st part titles on the service without having to bog them down with microtransactions or needing them to have DLC to turn a profit.

Of course that might be a chicken and the egg scenario where people would only invest in the ecosystem if the high end games are already there, so Sony would have to take a gamble and put some of their big titles on it first. I don't know how many people currently sub to PS Now but if they could eventually get 20-30 million MAU's consistently then I can't think of a reason they wouldn't dive fully into that business model. Just a very quick google search shows March 2018 they had 34.2 million PS Plus subscribers, and that's just to play online and for a few monthly games. To get access to all 1st party PS 1, 2, 3, 4 and 5 games along with whatever other 3rd party games they can secure to play on peoples PS4, PS5, TV, phone, tablet, PC and more? I'm thinking they could pull in the needed numbers. Hell if Sony wants to sweeten the pot even further they could mix in additional value from their movie and music divisions.