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NPD analyst Mat Piscatella: The risk of subscription is in the potential devaluation of content
- Thread starter stormfire
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I never expect things to be perfect just workable. I am not trying to insinuate that subscriptions are a magic bullet but rather a response to the market. MS, SONY, Nintendo, & Steam have a job to sell us things we want.
The number of developers that have shut down, been absorbed, or moved on in this industry is staggering. It is a volatile market and we as consumers ask for bigger, better, cheaper. Additionally it is a market that is brutal on its employees. The current model is broken as well.
Any shift in the market will bring it's own problems including subscription services.
I do agree that we will see the impact next gen but people that don't like GP are big on handwaving positive results from DEVS that used the service. Could it devalue games? Sure, but that's a judgement call that hasn't had enough time to bear out.
People said the same about Xbl gold, ps+, humble bundles, steam sales, so now subscriptions are finally going to devalue games ?
You mean Gears 5? We have multiple examples of the opposite being true. Most recently Outer Worlds. What metric are you using?
Gears 5 is a good example. What kind of numbers do we have for Outer Worlds? Do we know the platform split?
This is what always happens in America with capitalism run amok. You finally get consumer value from mega-corporations with services such as Netflix, Game Pass and Spotify, and others in the industry come out and tell you how everyone is getting screwed.
I have done entertainment law. These companies screw creators on a daily basis. Always have and always will. And now you want me to believe that the reason they can't pay them for their work is subscriptions? This is corporate messaging pure and simple, and if you believe it, you are getting played!! Analysts are paid to make money for investors. They don't give a shit about consumers.
If Sony Entertainment, MGM Movie Studios, Disney or Polygram records are so concerned that their IP will be devalued to the point that the creators won't get paid, then how about they all institute revenue sharing on everything and let artists retain their rights when they create IP?
And don't even get me started talking about Hollywood and the music industry-- those guys are dirtier than the mafia.
@#$% em all! As a consumer, I want to pay 10 bucks and get unlimited content. The market says that's what it's worth. They need to take the money for the creators out of their end for a change. One less corporate junket or reductions in thier executive bonuses should more than cover it. This isn't MS versus Sony. This is consumers versus corporations. If Sony did Game Pass first would you praise it then? Please don't listen to this nonsense.
I have done entertainment law. These companies screw creators on a daily basis. Always have and always will. And now you want me to believe that the reason they can't pay them for their work is subscriptions? This is corporate messaging pure and simple, and if you believe it, you are getting played!! Analysts are paid to make money for investors. They don't give a shit about consumers.
If Sony Entertainment, MGM Movie Studios, Disney or Polygram records are so concerned that their IP will be devalued to the point that the creators won't get paid, then how about they all institute revenue sharing on everything and let artists retain their rights when they create IP?
And don't even get me started talking about Hollywood and the music industry-- those guys are dirtier than the mafia.
@#$% em all! As a consumer, I want to pay 10 bucks and get unlimited content. The market says that's what it's worth. They need to take the money for the creators out of their end for a change. One less corporate junket or reductions in thier executive bonuses should more than cover it. This isn't MS versus Sony. This is consumers versus corporations. If Sony did Game Pass first would you praise it then? Please don't listen to this nonsense.
So you are basing it off one example that is contrary to all others examples?
I don't think most of the people agreeing with this care about the actual business side of this. It just supports the narrative they enjoy the best. Never have I seen something this good for the consumer concern trolled to death. Steam sales have been going on for years? No concern. Games 30 bucks sometimes as soon as a month after launch? No concern. Free games with online subscription? No concern. Gamepass successful?"Subscriptions are devaluing games". The truth is they are, but subscriptions are just one of many factors devaluing games. All this is before you even get to a publisher/creator relationship.
I remember when people argued games being $70 would be great because they'd still get them cheaper with Best Buy gamers club
Yawn. Wake me up when the concern is over. Or when GP bankrupts MS. Or when 80+ MC games have no value. Or when the GP model destroys the games industry. I'm still waiting for that day when gamers, analysts, and the media told me that a service like EA Access would cripple the gaming industry. Here we are, concerning ourselves to death again.
i don't know how companies are gonna make money if people can just sub for one month to play a new game and come nowhere near paying the 60 or more people are paying for new games these days. people want sony to start a similar service and put their new games on there but they would lose so much potential revenue since they make a ton of great 1st party games that people want to play. EA's game pass works for them because they don't put their new games on the service. what microsoft is doing is like disney putting all the new marvel movies on disney plus at the same time they are releasing them at the theatre. they would lose a ton of money even if their subs skyrocketed.
But I thought we were doomed??
This whole discussion is thinly veiled warz. Guarantee noone in this thread rages at Sony for their policy of putting all new games on sale within a month of launch. And I've never paid more than $20 for a Sony exclusive this gen and got most either free on PS+ (Detroit, Bloodborne, Infamous) or paid $10-15 (Horizon, Last Guardian, Lost Legacy). But I guess that doesn't "devalue games" because...?
That is a silly comparison those games you got for $10 are after what over a year or 2 years on the market? Games going on sale after a month has been happening for as long i can remember, nothing new and nothing to do with sony, that's just how the market has been working for decades. It doesn't devalue anything games prices at launch are always high so the publishers can make the most from the initial hype.
And the sales after a month are not even big sales for example days gone which is probably one of the lowest rated sony AAA titles is still around £25 in the uk, which is pretty damn good for over 7 months on the market. It has held it's value alot longer than games that came out at the same time.
It's interesting to think about the numbers behind this.
Currently, there are 64 million xbox live subscribers.
If MS can convert 30% of them to game pass, that's 19.2 million subscribers.
$10 a month would mean they have an operational budget of $192,000,000 a year.
So, if MS 1st party games all start to fall under the game pass umbrella, and MS has about 13 studios now (can't remember the exact #) , then the average budget on a 1st party title would be around $14 million.
This doesn't account for operational cost of the game pass division and the funds MS uses to license games onto the service, but it's just a fun exercise to think about.
Currently, there are 64 million xbox live subscribers.
If MS can convert 30% of them to game pass, that's 19.2 million subscribers.
$10 a month would mean they have an operational budget of $192,000,000 a year.
So, if MS 1st party games all start to fall under the game pass umbrella, and MS has about 13 studios now (can't remember the exact #) , then the average budget on a 1st party title would be around $14 million.
This doesn't account for operational cost of the game pass division and the funds MS uses to license games onto the service, but it's just a fun exercise to think about.
When I had a Xbox and game pass it did devalue games in a different sense for me because I'd just keep dipping in and out of games,never finishing any. If I'd paid full price for a game I'd invest my time to getting a lot out of it
I've had that probly with acumalation of games from xbox live gold + ps+
This was inevitable even without Game Pass. Younger generations like Millennials and Gen Z don't like paying $60 for one game. Hence why we see Netflix, Office 365, Spotify etc gaining in popularity. Of course, this model will extend to all other areas of capitalism. The Average consumer gives no shit about the devaluation of games, they just care about playing a large of games at a cheap price.
But let us face it Traditional gamers that care about ownership and prefer to pay $60 lost, they are a declining audience.
But let us face it Traditional gamers that care about ownership and prefer to pay $60 lost, they are a declining audience.
Steam sales prices are much higher than they used to be, the race to the bottom was devaluing games, so they adjusted to keep it sustainable.
Edit: wow, xbox hardcore sure do like to shut this conversation down.
Don't see younger people having issues shelling out 60 bucks for Switch games or the big PS4 exclusives. These games are doing huge numbers.
Outside of MS first party games, it usually takes a while for these games to make it to the subscriptions, 12+ months. To put that in perspective, i got The Evil Within 2 for $20 one month after release physically.
No they're not declining at all. That's just your personal interpretation without any data to back it up.
Devaluation is a huge problem with subscription services because you don't want there to be only a few live service games that are profitable and nothing else. That's not how the gaming market can survive and that's why the model doesn't make sense. Game subscription services will never hit the kind of numbers that is needed to support game development.
That's not true. Even in the first reply here you see people don't agree with that.
The problem is, the service just launch, so you still don't have games made with the service in mind. And this will be ugly.
Declining based on what exactly? Console game sales are seeing record numbers at the moment. This gen Sony and Nintendo's exclusives are selling more than they ever have in their entire history, sometimes by massive margins. Really the only publisher that has seen potential or notable decline in their tentpole franchise (with the exception of Forza Horizon) sales is Microsoft, which is no doubt partly why they went the Game Pass direction in the first place, to try and bolster their platform by providing increased value proposition.
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I've written about it before here, but I think GamePass is a more potentially lucrative venture than people give it credit for - and would bring in enough revenue to support a substantial investment into AAA development should they see the need to.
$10/month is the equivalent of 2 full priced games a year. $15/month is the equivalent of 3 full priced games a year. And $20/month is the equivalent of 4 full priced games a year. With any consumer group, there are power users and those that aren't. With that logic in mind, there are people who spent well over the price of 2-4 full priced games a year, and there are those who spend less. Depending on the price point, while you're losing potential revenue from your more engaged gamers, you're making more than you otherwise would have from those who are less engaged - so it balances out in a way in the end.
I'm pulling these numbers out of my ass, but lets be conservative (I have no idea if I'm being conservative) and say that at its peak - Microsoft has 20,000,000 active subscribers to Gamepass. That would be $2.4 billion to $4.8 billion in revenue annually, depending on the $10-20/month subscription cost. Every additional 5 million subscribers would be $600 million to $1.2 billion in additional revenue annually. Now that's revenue exclusively from the subscription. That doesn't include consumers who are still purchasing games, and the purchase of downloadable content - given that Gamepass only gives you the base game and not season passes / expansion packs. That seems like a fairly significant amount of money to me?
I think this model is beneficial to Microsoft in a way the AMC's A-List subscription is beneficial to AMC. I'm a subscriber to AMC A-List for $20/month, and while I easily make out like a bandit in terms of how many movies I'm watching a month - I ultimately find myself watching movies I otherwise wouldn't have. Yes, had I had to pay for the 8 movies I saw this month in theaters - AMC would stand to make more money. But I probably would not have watched 6 of those movies. Furthermore, since I find myself in the theater more often, I'm probably not saving as much as I feel like I am given concession purchases. The same is true for Microsoft. Simply because consumers are playing all of these games on Gamepass, does not mean that Microsoft is losing money - because someone consuming something on a subscription model does not mean they would purchase that item through traditional means had they not been able to play it through the subscription service. And since they're going to have consumers trying games they otherwise would not have, Microsoft stands to have situations where consumers enjoy games they otherwise would not have - and then purchase DLC / season passes for games they otherwise would not have.
I think Microsoft's short term and mid term goals for GamePass and First Party development is to create a value proposition that is irresistible to gamers, and bolster the existence of a subscription game platform to a generation of gamers - establishing it within the zeitgeist of gaming, similar to what Netflix did from 2012 until recently with streaming television. It's not a matter of what's practical, economical, or sustainable in the short term - it's a matter of creating a culture of dependency. And to do so, I believe they'll be willing to pump a ridiculous amount of money into creating that foundation. That's why they've purchased seven studios, created two (three if you include Playground Games second full team), significantly bolstered the workforce of existing and newly acquired studios -and on top of the fact that they're seemingly not done acquiring studios.
$10/month is the equivalent of 2 full priced games a year. $15/month is the equivalent of 3 full priced games a year. And $20/month is the equivalent of 4 full priced games a year. With any consumer group, there are power users and those that aren't. With that logic in mind, there are people who spent well over the price of 2-4 full priced games a year, and there are those who spend less. Depending on the price point, while you're losing potential revenue from your more engaged gamers, you're making more than you otherwise would have from those who are less engaged - so it balances out in a way in the end.
I'm pulling these numbers out of my ass, but lets be conservative (I have no idea if I'm being conservative) and say that at its peak - Microsoft has 20,000,000 active subscribers to Gamepass. That would be $2.4 billion to $4.8 billion in revenue annually, depending on the $10-20/month subscription cost. Every additional 5 million subscribers would be $600 million to $1.2 billion in additional revenue annually. Now that's revenue exclusively from the subscription. That doesn't include consumers who are still purchasing games, and the purchase of downloadable content - given that Gamepass only gives you the base game and not season passes / expansion packs. That seems like a fairly significant amount of money to me?
I think this model is beneficial to Microsoft in a way the AMC's A-List subscription is beneficial to AMC. I'm a subscriber to AMC A-List for $20/month, and while I easily make out like a bandit in terms of how many movies I'm watching a month - I ultimately find myself watching movies I otherwise wouldn't have. Yes, had I had to pay for the 8 movies I saw this month in theaters - AMC would stand to make more money. But I probably would not have watched 6 of those movies. Furthermore, since I find myself in the theater more often, I'm probably not saving as much as I feel like I am given concession purchases. The same is true for Microsoft. Simply because consumers are playing all of these games on Gamepass, does not mean that Microsoft is losing money - because someone consuming something on a subscription model does not mean they would purchase that item through traditional means had they not been able to play it through the subscription service. And since they're going to have consumers trying games they otherwise would not have, Microsoft stands to have situations where consumers enjoy games they otherwise would not have - and then purchase DLC / season passes for games they otherwise would not have.
I think Microsoft's short term and mid term goals for GamePass and First Party development is to create a value proposition that is irresistible to gamers, and bolster the existence of a subscription game platform to a generation of gamers - establishing it within the zeitgeist of gaming, similar to what Netflix did from 2012 until recently with streaming television. It's not a matter of what's practical, economical, or sustainable in the short term - it's a matter of creating a culture of dependency. And to do so, I believe they'll be willing to pump a ridiculous amount of money into creating that foundation. That's why they've purchased seven studios, created two (three if you include Playground Games second full team), significantly bolstered the workforce of existing and newly acquired studios -and on top of the fact that they're seemingly not done acquiring studios.
That's not really true. There are/were certainly new shows created for this fall while Netflix (along with Apple/Prime/etc) are also creating new content.
Agreed.
I would say Sony got this ball rolling (at least in the console space) with PS+.
If nobody made a 'huge deal' about it then, I don't know why they would now.
PS+'s Instant Game Collection begat Games with Gold years later, and Microsoft's 'just' taking it a step further with Game Pass.
If you were a customer who ever uttered the phrase "I'll wait for it on Playstation Plus" back in the PS3 days (and followed through by not purchasing said title), I don't know why you'd raise the red flag now, against Game Pass.
Microsoft is much more aggressive now than PS+ was back then (or PS Now is currently, in my opinion), but I'd guess it's about getting the framework in place before the next console launch, just so MS can say "Buy our system, give us ten (or fifteen) dollars more, and play through our entire launch lineup day one. We are changing the economics of gaming for players."
Getting games like Shadow of the Tomb Raider and Devil May Cry V four months after launch will help create the word of mouth to counter (or inform) skeptics of MS' next console.
(I swear Bloodstained showed up in three months, maybe. That was insane.)
Either way, consumers will always have the option to purchase games they're enjoying on Game Pass.
Ideally, it'll be no harm, no foul.
Sometimes I think all these streaming services are going to end in bringing the full mobile hellscape to consoles. Definitely feels like a real risk.
the other thig devaluing games is simple supply demand, look at how manny games are comming out. even if you elimanated all the bad ones, there is way way more than people can be expected to buy.
You believe that Game Pass has 20 million active subscribers?
And you believe that guess is ... conservative?
I know Microsoft has never released subscriber numbers for Game Pass, but your estimate seems unrealistically high.
It's pretty obvious that I'm talking about in the future? Given that we're talking about the viability of subscription services moving forward.
"Devaluing" game purchases and race to the bottom are 2 completely different conversations and I feel this forced correlation has an agenda attached to it.
Lessening the urge for someone to purchase rather than rent through a subscription doesn't somehow result in the industry demanding lower quality content.
The industry always has multiple corporations competing for a limited number of dollars. Blockbuster got its cut with game rentals. Then Game Fly and Red Box. Game Stop made the majority of its profits from the secondary games market that cut out publishers. Free to play games monetize with microtransactions and entice with low barrier of entry which devalues $60 games. GAAS games devalue short single player games.
If we look at sales charts, outside of Sony and Nintendo, nobody is selling the single player games regularly that people fear Game Pass will cannibalize. Considering Nintendo always exists on their own island, what this really boils down to is people are afraid that the Game Pass model will sway people from the Sony single player games. It's always been Sony vs Microsoft as the foundation of concern for the direction of the industry. It's hilarious to see people trying to circle the wagons and make it seem like it's something else. It's not about a race to the bottom. Microsofts 1st party commitment has improved since this Game Pass strategy.
these are the exact numbers the project was pitched to nadella with.feels good to see that there are still leakers here on era.
Ultimately consumers dictate pricing structures through their spending habits. To this end I personally think subscriptions services are in part a reaction to the popularity and engagement of the big free to play games rather than a proactive decision to shape the market.
It's a pretty strange thing to ignore where ~70% of this revenue is going...