Your idea of revenue from direct sales being sacrificed due to subs only works out (in terms of getting more money from a subscriber on that service) if a person is buying less in games (and MTX/DLC) than the cost of the service annually.
Which would work out well given most gamers probably do only spend about $120 - $180 or so a year in buying games, or getting MTX for F2P games, mixed in with a basic online gaming sub. But with GamePass, this becomes an issue because of how many ways there are to get a sub at a heavily discounted price, to where even mainstream & casuals would know.
And I know this, because every single big bag of Doritos has a GamePass trail slapped right on there. Other common grocery items do, as well. I don't think stuff like the $1 conversion, free trails or even MS Rewards redemption are as obscure to mainstream & casuals as some of us in enthusiasts circles want to think.
True, there's a lot of ways to get a discount on Game Pass subscriptions but not everyone knows them. And people could still spend money on DLC and/or MTX with the game being in Game Pass. For example, I will be playing Monster Hunter Rise via Game Pass on my Xbox Series X and if I complete it, then I will buy the Sunbreak expansion. I will save a total of $30 but they will still get me to spend $50 where as without day one on Game Pass, I wouldn't buy the game at all which means that they would get nothing from me.
I do agree though with this to a large extent, the psychological angle to a sub service. Still, I think there are ways to do this for other companies which are more fitting to their business structure. Sony and Nintendo, for example, would never do Day 1 for their games into a subscription service the way Microsoft is, BUT I would be interested in seeing them do a per-game subscription model where you pay off for a game in low monthly installments, with different plans available that can have higher monthly installments if you want any available DLC or MTX bonuses wrapped in there.
You can do that for say the course of a year, for whatever individual game you're looking forward to playing, but I'm sure there would be a caveat like making sure you're connected online (or connect online periodically) to validate/authenticate access to the game while you're still paying off on it. And you'd probably need to use a credit card or debit card connected to a bank account (so, no pre-paid cards or those types of cards you can just load with raw cash at a 7-11 for example). All or many of these things I'm sure MS already implements for GamePass.
But, for companies like Sony & Nintendo, just on a per-game basis where you're effectively still 'buying' the game, it's just in installments. At least you get to play it Day 1 for, say, $5 upfront instead of $60 or $70, and with installments that would incentivize maintaining launch MSRP pricing longer (practically forever in Nintendo's case), because there isn't really an excuse to not be able to afford the game anymore if you can get it for $5 a month.
I think that's the compromise Sony & Nintendo can take to doing 'Day 1' in a subscription service for their games; it's treating the payment option as a service, not the game itself, and not the game itself being rolled into a sea of 100s of other games for a sub costs that can't realistically be sustained (for Sony or Nintendo) over the long-term like it probably can for a company like Microsoft.
That's not a bad idea at all regarding to Sony and Nintendo. However, pretty sure we can agree that's highly unlikely to happen from either. I don't see Nintendo doing anything in regards to subscription and for Sony, I see them putting their first party titles on PlayStation Plus as a last resort if they start to lose market share at a high rate in order to keep people with Sony and PlayStation. But even this is more of a "what if" scenario than anything else.
Dunno man. A sub service can only retain subscribers if enough regular new content keeps coming big enough to warrant them sticking around. We see the high churn that other sub services experience when there's a lack of content. Potentially, a gaming sub service like GamePass can nullify some of that thanks to having enough of a backlog where if there's a game or two a person is into playing, and considering the average game (even indie game) is longer than the average film or short TV series, combined with the psychological angle of to that sub they're only seeing it as "$15/month" instead of $180/year (since they're paying month-to-month),...supposing those games are played over the course of a few months, then maybe that becomes valuable recurring revenue for Microsoft after all.
But how likely is that to really be the case? MS obfuscate a lot of their GP numbers, we don't know the daily churn rate for example, or quarterly sub count results, either. This is in spite of GP supposedly being so important to their overall gaming strategy (at least until recently, going by Phil's statements of GP accounting for at most 15% of gaming revenue going forward).
Even supposing, however, that subs stick around in light of lacking new content, if that means they're only around because they forgot they are subbed (it happens a lot; the day comes up where you're auto-charged for the next month and you forgot, and it's not easy (maybe even impossible) to get a refund so you just have to remember to cancel before the next charge to your card or account), or doing so out of sense of obligation without maximizing what they get out of it...that doesn't sound like great value for money to me WRT those type of subscribers.
The only thing we know for sure is that Microsoft makes a profit off of Game Pass and even if it was only a penny, still a profit with the potential for a lot of growth in the future.
The statement by Phil was more now due to them having no major first party titles for 2022 and because of the ABK deal. I don't believe for a minute that Phil actually believes that.
The last part doesn't matter all that much because refunds are easy on Xbox. Unless you hit a certain amount within a year, they normally approve every refund request. Also, im pretty sure that Microsoft has an automatic cancellation process if they see someone is paying for Game Pass but the usage isn't there. I'm not 100% certain but I think this aspect is a three month duration.Not sounding like great value to you obviously isn't the same to someone that's into the Xbox eco-system. You obviously prefer Sony's business model and PlayStation so of course, you'll be very skeptical and cautious regarding Game Pass where as a regular person will calculate the cost and even if it's just $5 a year in savings, they would still be better off subscribing.
Actually MS already have $70 games; Psychonauts 2 had a physical release in September at $70 for at least PS5 and Series consoles. So they are already toying with the concept of increasing game prices.
You're right that no one's forced into GamePass...unless you sub to something like a Verizon mobile plan, and something like GamePass is baked in. You're effectively auto-subscribed in that case. But the thing about predatory pricing is that it enables a company like Microsoft to price aggressively low if they WANT to and feel there's a NEED to do so to beat out rivals. Since, again, MS wouldn't need revenue off the service nearly as much as a company like Sony or Nintendo would, and have other corporate divisions to bring in the money for them. They don't need the service itself to generate a reasonable amount of money on its own as if it were something they depended on to sustain themselves as a company, therefore they can price it aggressively low compared to rivals.
So I still genuinely believe there's a concern of predatory pricing involved with something like GamePass in particular, and I'm interested how that could see integration into discussions going forward from a groups of bodies.
FYI, there is no PS5 version for Psychonauts 2. On PS5, it's the PS4 version running via BC. And yeah, I know. As you typed this, Microsoft officially announced $70 games starting with their 2023 releases which im expecting them to all be current generation only.
I agree with the second part but only to an extent. While you may see an issue with aggressive pricing by Microsoft, I don't because they're simply not at the level of Sony and Nintendo and thus, should be offering their games and services at low prices because until their games start releasing and are as the PlayStation guys call them "bangers", they're simply not worth the equal cost or close to it. Also, they simply need to bring in more consumers into their eco-system and if your prices are the same as Sony's, they're not going to gain much if anything.
The real test will be is if Microsoft ends up having an excellent generation with some truly amazing games to where they don't need the extremely low prices going into next generation yet, still do it. Then I can agree with your point but as of now, nah. They're literally rebuilding all of their shit and they can't charge higher prices because of this and that, they're simply not at Sony's or Nintendo's level as of now.
I genuinely don't understand in what way a subscription service needs 10 years in "growth phase" to fully establish itself unless it is backed by a massive corporation which can afford sustaining revenue losses for that long just to drive sub counts up. Conversely, platform holders making console hardware would never describe a "growth phase" of 10+ years because those types of sustained losses for that long would make most any of them bankrupt (except for, again, a Microsoft thanks to the profits they generate from other divisions like Windows and nowadays Azure & Office to offset those kind of losses); I mean we saw Sony almost go bankrupt due to PS3's struggles and that was just in the span of a few years.
So that would suggest that sustaining a subscription service platform is inherently less expensive than a console hardware platform. I get that side of things, and theoretically would suggest that any company that can sustain a console hardware platform, can theoretically sustain a subscription service platform...but how many can do both simultaneously? I think that's the part of Sony's contesting to leaning so heavy into a sub model that some people don't understand; there are only a very small number of companies globally that can sustain operating BOTH models simultaneously and Microsoft is one of them, and that ability has NOTHING to do with their revenues or profits from the console gaming industry!
And that's before even getting further into it, like if for example it costs less (theoretically) to operate & sustain a subscription service model vs a console hardware model, why do some of the companies heavily pushing the former need to justify buying major publishers just to have regular content in a subscription service to keep sub numbers up? Is it because a subscriber can technically cancel their subscription, versus a console buyer whom after paying for a console, can't just "cancel" that payment as it's a single-time transaction? But then IMO that asks ANOTHER question: how many companies can realistically operate on a business model where the customer can choose to end payment any given month, let alone that AND simultaneously support a business model where billions of dollars have to spend annually on producing hardware at volume for customers to purchase? That one, of course, just feeding back to my idea that only a very small number of companies can do both simultaneously, Microsoft being among the few.
You can probably guess how this links back up to my ideas on such financial capability (which, let's not be meek here, was built up on a history involving at least in some capacity monopolistic and shifty business practices on Microsoft's part, to which current-day Microsoft continues to benefit from in numerous ways) can enable practices like predatory pricing, but no need in bringing that back up here.
I didn't mean subscription services in general need a decade even though that's usually how long they take to really grow and take off. The only exception is Disney which has so much family friendly and kids content plus like 50 years of history and nostalgia, that their subscription service took off. Disney's content will forever be in high demand.
This doesn't apply to Xbox. lol. If it was PlayStation Game Pass, this shit would be like double if not more already. You main factor is that it's not just the subscription that Microsoft has to grow, it's the brand and image of it which after Xbox One was badly damaged.
The revenue that Microsoft makes from Xbox isn't from the hardware but more so from the software and subscription services. Plus, they tend to sell a lot of controllers for some odd reason. This is how it's always worked. Sony is making a profit on their hardware with PS5 because first, the digital edition is pretty much non-existent and they've already scaled down the internals of the PS5 to where they were able to cut costs while Microsoft's internals can't be scaled down as of now so they're still losing money on the hardware.
The reason why Microsoft is acquiring publishers (with more to come) is simple - they want to own the vast majority of content that will be on Game Pass. They don't want to have to pay for licensing fees and whatnot. It's literally always better, cheaper and more effective to always have everything in-house so if a company like Microsoft can accomplish this, then of course, this is exactly what they're going to do and it's perfect business sense because this is ideally what every company wants - to own everything internally and not have to pay licensing fees and whatnot for content to be on their own subscription service.
As for Sony, I believe that they can afford to put their games in PlayStation Plus day one. They would make more money from a single individual for the year ($120 or $180 depending on the tier) compared to just being a $70 one and done. And even if you say two games for $140, if they're both physical, they're not internal (meaning digital or on their subscription) which means that Sony is paying for manufacturing, distribution, etc. for every copy shipped. Digital or subscription, they eliminate those costs that they accrue from physical sales. I also believe that PlayStation Plus would sky rocket. Hell, even if I had to stay subscribed for a year at $15 a month for $180 a year but I get at least 2 games, I would definitely subscribe because I know that im probably going to get at least one or two other AA first or third party titles releasing day one that would at the very least, even out the cost.
95% of subscribers don't do what I do in regards to signing up for a month, complete the game and then cancel. Plus, I do this with Netflix, Hulu, etc. I only subscribe to one at a time and once im done watching everything, I cancel it and move on to my next subscription service for a period of time.
Yeah, I can agree with the last part but at the same time, pretty much every company does fucked up shit to get to where they're at. No company is pure or innocent. They all have their fucked up history. Most of which we just don't know. Imagine if there was no internet and how much shit none of us would outside of probably a few handful of people would know? This is why I don't nuts with what companies do. Because I know none of them are "good" and as a consumer, I simply use what they offer me to best of my ability.
