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BPX047: You Shall Not Game PASS!

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    BPX047: You Shall Not Game PASS!

    One of the crowning pro-consumer wins of the current generation is undoubtedly Microsoft's launch of Game Pass. It's a service that has already delivered unparalleled value to ten million gamers with its low pricing and regular turnover of titles to play inclusive of each new first party game that Microsoft releases. It's also a service that Microsoft is keen to expand in the coming years via its Xbox line of consoles and the PC market with their current drive being to refine the service before expanding on ways of making it more profitable for the company.

    As the owner of a gaming PC or an Xbox console you can currently pay a monthly fee and play multiple new releases at no extra charge. If Xbox is more of a secondary system for you then it's entirely possible to play all of MS's big releases for no more than £15 a year, if you make use of the various rewards systems they have in place then you can play them for free which is a set up that is literally unlike any that has come before it.

    Despite the unarguable value on offer though Microsoft is currently looking to launch a new generation of Xbox console with Game Pass at the heart of the experience yet just over three years into the life of Game Pass there are 10m users which at best represents 25% of the number of Xbox One consoles launched showing that a significant proportion of those with the means to access this seemingly irresistible offer are in fact doing just that, and that's before MS faces having to sell the service on the back of selling the need to pick up it's new console just as they look at ways of accessing the service without the need for the console at all as in the PC launch last year.

    There's also another curious anomaly. There have been questions about the long term profitability and viability of Game Pass which MS has been happy to dismiss saying it's a long game for them and gamers should just enjoy the current value of the service. That's true from a consumer point of view, there's no way of disagreeing with what is on offer. However, curiosity sets in when in a traditionally competitive market where one hit notion (ala lootboxes, Storefronts, MTX, Online Passes etc) springboard a sea of imitators... no-one wants to imitate Game Pass.

    Streaming services like Stadia are a close comparison but typically you'd expect the big hitters like Sony to be diving on this new found revenue stream but instead they're ignoring it in the same way MS itself has ignored the not-too-long-ago VR push others were making. There's only typically one reason as to why this would happen, they don't believe it will work so are unwilling to invest in it.


    From the drive to expand Game Pass and the clear marketing even within the Series X showcase it is clear Microsoft is all in on the service but with three years of history now built in, is it right of them to make Game Pass such a central focus for Xbox moving forward or should it be something more akin to PSNow as a supplementary option more focused on smaller and older titles?




    Personally, I suspect they've Catch-22'd themselves with Game Pass. In the short term it was a stroke of genius. It monetised games that weren't bringing in money on Xbox One due to how much the XBO userbase had stagnated. The platform had largely stalled and the service was like a shot in the arm bringing in easy revenue and even monetising games like Sea of Thieves were early figures hinted it may have otherwise failed in a traditional launch effort. But - then the onus is on MS to maintain that and even grow it. Largely a lot of the backwards compatibility for Series X games is presumably more for Game Pass's sake as people won't renew if they need to commit to new hardware as well but at the same time B/C makes it more likely they'll wait too which means Game Pass sub is protected but the risk grows rapidly that they spend their next £400 on the rival system instead.

    It must be so easy now for people with an XBO to think they'll hold on to it with Game Pass and get a PS5 instead which is great in the short term but means MS is fighting to maintain 10m users instead of the 40m the system sold to. They'd have probably been in a better position if they had built the Xbox brand back up to its X360 levels and then launched Game Pass but they needed a win. Once those belated XBO Game Pass users finally let the One go they will be deep into the PS5 Ecosystem also and then the question arises as to the worth of buying another system for continued Game Pass access.

    TBH, I can kind of believe that PC Game Pass isn't widely used. There's not really much of a need for the service on the platform. Indie games, older games etc keys can often be picked up incredibly cheap and there's already a very strong massive user desire to keep libraries under existing services like Steam. For the tentpole titles, they're few and far between and if the user is desperate to play them for super cheap then the platform provides no shortage of methods of making Game Pass look dear even at £3.99.

    It's also like the stories from devs about how good the service has been for getting their game noticed and earning for them. That's great but evokes memories of similar tales of the E-Shop before it became a convoluted mess where a lack of competition meant heightened exposure. More people play the games because they have cheap access to them and can see them on the store, they don't however buy the system on the basis of them - it's like a happy byproduct that eventually fades. You also don't get EA, Ubisoft, SquareEnix etc in that mix and without them it means that Game Pass will be perpetually dependent on Microsofts slow roll out of its own first party games to stop the service becoming focused on indie's and old releases unless they continue to cut their own profitability to shell out huge chunks of money to attract big titles temporarily like RDR2 which still won't be there near Day 1 when most want to play them.
    I'm still at a point where as a consumer Game Pass is brilliant but whichever angle I view it I feel like in the long run it's probably not sustainable in its current form and more importantly will probably prove to be harmful to the Xbox brand's ability to recover from the userbase drop off seen this gen.
    13
    It will grow to be huge and expand Series X sales
    0%
    4
    It will grow to be huge but away from the Xbox consoles
    0%
    2
    It will succeed but not in a huge way
    0%
    2
    It's going to hit it's growth roof soon
    0%
    2
    It's already peaked
    0%
    1
    It's downhill from here
    0%
    2

    #2
    I'm not qualified to answer in the poll because I just don't know enough about it but I think your question on the profitability is very relevant. Games are expensive and it's hard to see this model paying for them. Like streaming video services, they begin with content funded by traditional funding models and yet risk killing those very models or at the very least weakening them considerably. What then? What they make from the services doesn't seem to be enough to make content at the volume and quality expected.

    For me, I haven't tried Game Pass. I can see the draw and it sounds like a great deal but on the PSN service in the PS3 days, I realised that even though it was great value on paper I actually played very few of the games. My gaming habits and my TV habits are two very different things, as it turns out, and what works for one just doesn't work for the other in how I use them.

    Comment


      #3
      Game Pass will be profitable for MS as an 'add-on' service. Something people pay for alongside digital purchases and hardware accessories. Alongside their licensing deals etc. And that lucrative 30% digital cut makes them $billions per year.

      But for the model to work it will rely on old games, in-house content from their own studios and their AAA games being Live Services.

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        #4
        How long until Microsoft start putting unskippable trailers in place just after booting a GP game?

        Amazon have started doing it on Prime Video so crazier things have happened.

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          #5
          Id need to know more about the profitability exactly, however I'd guess like any subscription service it works similar to Netflix.

          For netflix, people pay a monthly subscription. All this money is pooled together and netfix takes a slice off the top, it then divides out the rest to the various production companies (probably based on number of views) to continue the shows or make new ones.

          Now, lets say 343 sell 1 million copies of Halo for $60, that's $60 Million.

          We know there are 10 million Game pass users, let say 6 million of those pay $9.99 a month. That also comes to $60 million, however MS will take some off the top and the rest of the money will be divided between the rest of the development studios (probably based on game play figures), meaning 343 won't get anywhere close to the $60 million it would have done.

          Now you could say 'That's fine, people will pay every month and 343 will get a continued slice'. That works if the game is something open world; something that has longevity and keeps peoples interest. But what about games that are one shot single player experiences? Too many of those on game pass and people will likely dip in and out of game pass and you'll lose a large monthly revenue. So MS will be much more likely to create games that operate like a Netflix series that keep going and going to keep you interested.

          All this means that I think you'll be less likely to see short impactful games like Last of Us on MS and more likely to see GaaS games to keep the money coming in.

          One last thing is that, while 343 will get a monthly slice, it will also get some cash from people simply buying the game outright. Does this make game pass viable, i'm not sure.

          Comment


            #6
            Originally posted by Cassius_Smoke View Post
            Id need to know more about the profitability exactly, however I'd guess like any subscription service it works similar to Netflix.
            In spite of being a market leader for years, Netflix is massively in debt, something close to $15 billion. Most of the content on its service was funded through older funding models - if streaming video kills those models or impacts them in large ways, the supply of that content will dry up significantly meaning Netflix needs to put even more money into its own content and it's very hard to see that making financial sense. And as more streaming services pop up, Netflix is losing more and more content.

            So yes, I'd guess it works similar to Netflix too but I can't see that being anything other than a problem.

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              #7
              I think gaming will shift from traditional home consoles and everything will sit on console farms that you connect into.
              Game Pass will be something that evolves into that.
              Why would Microsoft make a console that could RRoD, when they could just patch you into another virtual console?

              They also have you then. I have a One, but I don't have Live at the moment.
              That's months on end I've not sent them a penny, but can happily play loads of games.
              They can't be happy with that, so having you tied to a subscription to just play the games is a great way to make consumers be tied to a brand.

              I do think it's a little sad that we can no longer enjoy things without the feeling the grass is always greener.
              The joy of owning and hammering an album, gazing at the artwork and learning its intricacies is lost as we just have playlists of a bunch of artists.

              Will children coming into gaming be able to appreciate a whole game experience, or just flit between games for an hour each?

              Here's my thoughts on Game Pass from the Xbox thread:

              Originally posted by QualityChimp View Post
              So, I totally agree with Game Pass being great value, but it doesn't really click with me.

              Maybe it's because I'm a gaming dinosaur and years of growing up and as a kid only having one game for months meant I rinsed it and replayed it and that's now in my nature.

              Maybe it's because I like paying for something and owning it, rather than renting it, which is essentially what these services are, even the "free" games won't work without a current subscription.
              (Although I admit the move towards virtual over physical will make this more of a grey area as servers get switched off and licences expire etc, but that's a different conversation.)

              Maybe it's because I'd rather pay for a game and play it until I've had enough.
              It's really tough with anything using your free time to not think "I could be doing something else".
              Even with a game you're enjoying, you still look at your backlog and upcoming games and think "what else should I be playing".
              With Game Pass, there are hundreds of games you could be playing instead, which really doesn't help with this anxiety!

              Maybe it's the thought of paying for a game not on the Pass that you really want to play when you're already forking out for Live and Game Pass smarts a little?

              Maybe it's getting tied down to so many services that's starting to grate. Live, PS+, Nintendo Pass, Netflix, Prime, NowTV, Disney+ and so on. They want you to be attached to their services.

              Maybe it's because when you have too much choice, you feel overwhelmed.
              Sometimes I think the availability of pretty much every song, book, film and game whenever you want can stop you from appreciating what you have at that moment?

              It's probably the dinosaur thing, though.

              Comment


                #8
                Originally posted by Dogg Thang View Post
                In spite of being a market leader for years, Netflix is massively in debt, something close to $15 billion. Most of the content on its service was funded through older funding models - if streaming video kills those models or impacts them in large ways, the supply of that content will dry up significantly meaning Netflix needs to put even more money into its own content and it's very hard to see that making financial sense. And as more streaming services pop up, Netflix is losing more and more content.

                So yes, I'd guess it works similar to Netflix too but I can't see that being anything other than a problem.
                I'd say the bolded bit above is really relevant to Game Pass too. The way I see it, the only way Game Pass works as a profitable delivery mechanism for a AAA is if either:

                1) The game is made by Microsoft, and is helping to sell consoles, peripherals and GP/Live subscriptions (although this theory seems a bit unproven since even post-GP, the Bone hasn't exactly flown off the shelves)

                or

                2) The game is third party and has already made its money back at traditional full price retail and now would benefit from getting more players in at a low cost to buy DLC/MTX

                For that reason it feels to me like it'll always be a side salad to the traditional £50-a-pop method of selling games.

                Comment


                  #9
                  Originally posted by Cassius_Smoke View Post

                  Now, lets say 343 sell 1 million copies of Halo for $60, that's $60 Million.

                  We know there are 10 million Game pass users, let say 6 million of those pay $9.99 a month. That also comes to $60 million, however MS will take some off the top and the rest of the money will be divided between the rest of the development studios (probably based on game play figures), meaning 343 won't get anywhere close to the $60 million it would have done.
                  Don't forget though, just because the copies sold for $60 each that includes retailers cut, distribution costs, advertising costs so 343 don't get the whole amount.

                  Comment


                    #10
                    Originally posted by teddymeow View Post
                    Don't forget though, just because the copies sold for $60 each that includes retailers cut, distribution costs, advertising costs so 343 don't get the whole amount.
                    That's true. It's more complex then i thought. I still don't think the money earned from Game pass would match selling the game straight up.

                    Comment


                      #11
                      The other issue is that if it needs more GAAS model games to make money and MS pivots that way they end up canibalising themselves because they can't have Sea of Thieves, Halo, Fable. Forza, Horizon, Gears etc all be GAAS games and sustainable at once, that's just adding a huge investment and splitting userbases up. That and stagnating the brands as it sounds like may happen with Halo Infinite where there's no plan to make a Halo 7 all generation. Christ knows how Hellblade 2 is supposed to be profitable without essentially destroying the core experience the original built up and if it's seen as a big loss leader, how long will they keep that approach up for?

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                        #12
                        One thing I don't know that might be somewhat relevant here, even though there are many differences, is how the streaming services have affected DVD and Blu-ray sales or digital purchase sales (such as iTunes). Most content still seems to come out on DVD and Blu-ray, which tells me that streaming hasn't impacted that market to the point of unprofitability. But I don't know the figures at all. Although music still comes out on CD and it's clear that streaming has devalued music (purely financially - I realise there are lots of positives to the music streaming services). I don't have answers to the questions I'm posing but I guess what I'm wondering is: can Game Pass ride that line of being an extra on top of traditional sales or, if it and other similar services become successful, will they have a negative impact on every other distribution method?

                        Comment


                          #13
                          Originally posted by Neon Ignition View Post
                          The other issue is that if it needs more GAAS model games to make money and MS pivots that way they end up canibalising themselves because they can't have Sea of Thieves, Halo, Fable. Forza, Horizon, Gears etc all be GAAS games and sustainable at once, that's just adding a huge investment and splitting userbases up
                          They already do.

                          All those games are rammed with microtransactions. Halo 5, Gears 4 and 5 have had multiple reddit threads raised about how aggressive the microtransactions are in MP. Sea of Thieves has a massive in game cash store for cosmetics. And Forza has Car Packs, Season Passes and Expansions.

                          Comment


                            #14
                            Which at a time when Sony is finding huge success with single player game after single player game, to the point where MP was literally removed from TLOU2 makes me wonder if MS is trying to catch a train that's already left by chasing the GAAS model

                            Comment


                              #15
                              Originally posted by Neon Ignition View Post
                              Which at a time when Sony is finding huge success with single player game after single player game, to the point where MP was literally removed from TLOU2 makes me wonder if MS is trying to catch a train that's already left by chasing the GAAS model
                              I'm waiting for TLOU2 Factions to be announced as a launch game for PS5.

                              Comment

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