Why microtransactions, IAPs and LootBoxes are here to stay thread

[Cassius_Smoke]

I think the main reason the Game Pass discussion keeps coming round, is because as gamers we don't want the quality of games diminishing due to decreased returns.
Unfortunately, we can neither predict the future nor know exactly what kind of money is being circulated. Its a great unknown.

[MartyG]

The shift away from physical media was going to happen regardless of all-you-can-eat services and the demand for UHD discs has never been large - it hasn't hampered choice in the film/tv market.

I still prefer my media in physical format (as I'm sure the majority of regulars here do), but just like fossil fuels, it's dinosaurs time with a push against unreusable materials especially in the rental markets (seeing the waste skips full of old rental DVDs heading for landfill at Choices video was terrible) - we're becoming more niché and our collections will be in museums in a few decades

[Neon Ignition]

With GamePass it's less the service viewed in context of the market moving forward and more a reflection of where it was four or so years ago.

GamePass was effectively less an inevitable solution to the future of gaming and more the solution to a real problem Microsoft faced at the time. How do you monetise an increasingly stagnant Xbox One user base?

And it worked great for them, it may have been unprofitable overall but given how far behind the XBO market was it certainly softened the blow. MS have clearly moved past that and are aiming on opening it up as much as they can as more users will mean more monetisation and they also clearly don't believe that the Series S/X market will ever be enough for that also. Likely rightfully too as it's probably unlikely the system will ever grow the Xbox market either.

Do I think GamePass will ever be profitable? Nope. I think it's potentially saved Xbox however, at least for the foreseeable future as MS will spend many years attempting to pursue a market that I don't think will ever exist but at the end of the day it means lots of free games for me and more competition for Sony and Nintendo who are the better for it.

I'm personally somewhat doubtful that the nature of Xbox's games will change too. I think the F2P or GAAS concept was definitely key in MS's mind when GP began to grow but its an area where the waters have already become muddied and success is harder to find. I think it makes sense for Halo to lean that way, maybe even Gears but Forza shouldn't do so anymore than it already does. We've swung back toward the major single player as a big seller so it'd be misguided to think GamePass can sustain all those MTX titles. If you're a game in that market you're better off just releasing as standard on XBL and skip GamePass's involvement completely.

So yeah, I don't believe GamePass will ever be profitable but I think it definitely has made Xbox far, far less unprofitable.

And no, there couldn't be less atoms within me that believes for one second that GamePass has 18m+ active subscribers. Easily, easily less than 10m and quite possibly lower than 7m.

[nonny]

I don't think the main goal of game pass is to drive F2P or GaaS... it's to expand the ecosystem of Xbox outside the confines of the console (and PC) market and reach consumers and territories otherwise impossible to tap into.

I feel this is why MS is cleverly wrapping up it's cloud streaming beta inside the service. You can't play xbox games in the cloud without being a game pass subscriber, but you can play Xbox games now anywhere there's an internet browser...

They're just starting the alpha to allow streaming direct on a console. They've managed to get it onto both Android and iOS, soon they'll have it on Android TV. The expansion of the service may include gamers who can't even afford a console in their region, but can afford to stream then over the internet. I know there were a lot of Mexican and Brazilian players saying it was great they can now play via the cloud there and couldn't afford the PS5 pricing on games at present.

Whether MS can sustain the subscriber base once they grow really big remains to be seen, and equally I am not convinced it can be massively profitable... but when it becomes so easy to gain entry to a gaming ecosystem that works on many different devices you'll start to see crossover sales and more sell through.

It honestly would not surprise me if Sony were doing something similar within 3 years.

[Neon Ignition]

GAAS etc is the best way to recoup costs so it would play into GamePass well, the subscriptions alone will never generate enough revenue to subsidise the service. MS is fine to do that, it just has to balance both approaches which is likely where Halo Infinite comes in.

The aim to expand GamePass to the millions upon millions who don't buy consoles is definitely the plan, to expand beyond the consoles. I 100% don't believe they'll do it but I somewhat admire that MS is giving a committed go rather than winding Xbox down due to persistently not leading the market. I don't think the barrier of buying a console is an issue at all, I just think there's a cap on the market size and it's about monetising it more rather than ever expanding the audience. We have failed systems and huge hit systems, to core gamers and casuals etc but within the console gaming space the upper roof always remains the same. I think they're pursuing an audience that doesn't exist but fair play on them attempting it.

For me, Sony already has the service with PSNow. It's not comparable in terms of how they handle it and the investment etc in it but I still think it's entirely because Sony knows it's a dead end. By this generations end I think they'll only have one real future looking plan and it'll have a 6 at the end of its name. I think MS is going to stand alone in this approach.

[MartyG]

Microsoft can afford to run Game Pass indefinitely and it absolutely can be profitable - the maths is easy - the threshold line simply has to be crossed and every user above that threshold is then profit and it's probably a lower than you think - it is absolutely no different to needing to sell X number of games. The income required in the pot is the same, it's just an additional revenue stream. The error on the thinking that seems abound is that a subscription to game pass is a lost game sale. It isn't. That faulty logic is similar to believing a pirated copy is lost sale.

Microsoft is in no way standing alone on this, SaaS is a massive and proven successful business model outside of Microsoft (and inside MS with Office 365). EA and Ubisoft has also recently entered the same arena with their premium subscription services.

It's simply a matter of numbers.

[Neon Ignition]

I don't doubt it isn't possible to be profitable in theory, I just doubt that it will be (or at least this gen/to a level the other two will follow). That's why I expect the same discussions will be going on at the end of this gen with zero gravitation toward it by the other two companies. We're fortunate that we have a player in the game that is in a position to give players this option and even that we still have a third player as by now most other companies would have ducked out by now.

[monel]

Weren't they considering making cable TV boxes with Dreamcast support or something. Was it Pace? I'm just mentioning that for no reason.

[nonny]

I think the thing to remember about MS as a whole is they've almost got the entire end to end model under their umbrella.

They have the xbox console business, the first party game studios, the PC hardware business, the subscription software business, the PC OS with Windows, the Azure server/cloud infrastructure...

In many ways they've got the best chance of delivering an ecosystem that can cater for what is needed to make this work. Sure they may monetise with some F2P titles in the service but that isn't necessarily a bad thing for the average consumer provided there are traditional game experiences as well.

With each milestone they reach the more I am convinced they have a solid plan and that its likely to work.

The last hurdles were really getting it working on iOS, getting Series X server backbone up and running and now it's getting cloud gaming possible directly on browsers, PC and Consoles.

I would fully expect to see Game Pass on Android TV early in the new year ... and then it's really about a gradual expansion into territories where it's not live yet. The last rollout was Japan, Australia, Mexico and Brazil... It looks like they'll hit more and more every quarter.

[Cassius_Smoke]

What I will say, is that if GP was being delivered by Nintendo for example, I would have less belief in it. Because its MS, and they've done pay to use services for ages, plus delivering apps like Azure and Power Automate, Im sure they know what they are doing. That doesn't mean I don't have some trepidation for the future.

[nonny]

I think given the myriad of practices going on in gaming with monetisation you've every right to be cautious but I think at the same time you look across the board at huge companies like EA, Ubisoft etc... and this stuff is happening whether game pass exists or not.

Microsoft has just made a decision to lead on this and I think if it wasn't them it would be someone else like Amazon, Google, Apple etc...

At least Microsoft has learnt some very important lessons on what not to do from the Xbox One era and appears to understand gamers more... I still feel companies like Amazon don't quite get it yet.

As for Nintendo, well they've just added a LAN port to the switch so they're not too far behind!

[MartyG]

Nintendo is always going to Nintendo - but I don't think we should be under the illusion that any of these corporations are doing anything other than for the money it brings in or will ultimately bring in.

As the title stated back when I started the original thread - Microtransactions are here to stay because it's a successful business model as the casual market doesn't really seem to care they're there.

[cutmymilk]

I think a Nintendo all you can play service for £10 a month would be profitable for them. It's probably roughly the equivelent of selling 5 first party titles on cartridge every year in terms of profit. It would also lock more people in. I personally like to keep Nintendo first party in my collection but there would be a huge market for this.

[Neon Ignition]

Nintendo has something better than a subscription service. The ability to slap a full price RRP on a last gen game and then shill it for an entire generation to the tune of tens of millions of units. Utterly nuts.

[Cassius_Smoke]

It costs over $3000 to buy all the cosmetics for Avengers!

https://mp1st.com/news/someone-has-computed-how-much-it-costs-to-buy-all-the-marvels-avengers-cosmetic-items