IIn the realms of music, television, and film, the emergence of streaming has dramatically revolutionized the traditional business model. Instead of purchasing an album or movie, most of us now opt for a few subscriptions based on our viewing preferences, occasionally supplementing this with unique records or special Blu-ray editions. This shift poses significant challenges for musicians, as they earn roughly $0.004 per play on Spotify. In contrast, Spotify itself has achieved a billion dollars in profit (after years of operating losses). On the television side, customers are increasingly frustrated; in my household, we juggle five different TV subscriptions, based on our series interests, just to manage costs effectively.
This subscription model has not gained the same traction in video games. Apple’s Arcade service provides premium mobile games for £6.99 per month, but the free-to-play model prevails on mobile devices, generating massive profits primarily through advertising and in-game purchases. (Fun fact: approximately 85% of the gaming industry’s total revenue predominantly comes from free-to-play games in regions like China.) While Netflix offers games included in its subscription, user engagement remains low. PlayStation and Nintendo have their own subscription services, but these mainly feature older titles rather than new releases. Xbox Game Pass stands out with over 200 games available, but purchasing new exclusive games still comes with a hefty price tag—until now.
Recently, Microsoft revealed that the price of its Game Pass Ultimate subscription would rise from £14.99 to £22.99 per month. (This tier includes all the latest releases, with more affordable options still available.) Additionally, subscribers in certain countries (primarily Europe) received emails notifying them about a delay in the price increase, while those in the UK and US face the additional cost. Price hikes had long been considered unavoidable given the millions of dollars invested in blockbuster game development, alongside payments to developers for hosting on its services. A Bloomberg estimate indicated that Microsoft spent $300 million on revenue by including Call of Duty in Game Pass.
Does this imply that Game Pass isn’t achieving the success Microsoft anticipated? We consulted Christopher Doling from the Game Business Newsletter, who provided invaluable insight. “Game Pass is profitable,” he noted. “However, it affects premium game sales. Notably, titles like Halo Infinite and Starfield have not performed as well on the charts as anticipated. Microsoft’s acquisition of Activision Blizzard for $70 billion is under scrutiny by company leaders, including Chief Financial Officer Amy Hood. It’s not just about profitability; it’s about growth. Microsoft expects a significant return from the Xbox division on this investment. This isn’t excessive,” he added, simplifying matters. Thus, Xbox is cutting costs, projects, and even studios, while raising prices across the board.
With sluggish console sales for Xbox in recent years, the company is depending on Game Pass for growth. Microsoft has ceased reporting Xbox migrations, preferring to discuss revenue and engagement. However, sales of the Xbox Series S/X are estimated to be substantially lower than those of the 2013 Xbox One, putting it in a competitive third place behind Nintendo and PlayStation. Xbox executives themselves have acknowledged that console sales are no longer a priority. This is likely why Microsoft has started to release many of its games on PC and PlayStation, while heavily investing in studio acquisitions to create more content for Game Pass.
However, the broader question remains: what does the future hold for subscription-based video games? Furthermore, what implications does this have for developers? One potential trajectory may mirror trends seen in the television industry where subscription costs gradually increase, and streaming services proliferate, forcing gamers to pay substantial amounts annually for the latest titles. Meanwhile, developers may feel the impact of decreased direct sales, making it harder for them to financially support ambitious projects, which could stifle the emergence of original art. Despite this, millions of gamers are still willing to spend £70 on games upon release. Titles like Mario Kart World and Assassin’s Creed Shadows were among the top-selling games in Europe the first half of this year. Why then are major companies attempting to undermine this?
“For the [smaller] developers, right now, Game Pass serves as a vital discoverability tool in an industry where that’s genuinely a concern. It also enables players to access games more economically (well, that used to be the case) and is crucial in today’s economic environment. Nonetheless, there are valid worries about what the future may hold.”
Certainly, diverse business models can coexist within the gaming landscape, with video games currently finding a balance between free-to-play and premium formats. These categories cater to different audiences, and data indicates they do not cannibalize one another’s revenue. Some consumers prefer investing in high-end consoles and premium game titles, and the market has remained relatively stable over the past decade. As more casual gamers flock to free-to-play titles, the overall gaming landscape has expanded significantly, leading to enhanced viewership. If managed effectively, subscription services like Game Pass could provide intermediary solutions that do not completely erode traditional industry business models. However, given precedents in other arts sectors and the profit-driven ambitions of large corporations like Microsoft, this may be overly optimistic.
Despite rising costs, Xbox Game Pass continues to deliver substantial value for the most engaged players. “Xbox is asking the most active players to shoulder higher prices. Game Pass Ultimate caters specifically to these individuals,” Dring points out. “Statistics show they receive considerable value, so if they can afford it, a good portion of these players will likely accept the cost. The average Game Pass Ultimate user is expected to play around $550 worth of games annually.”
Editor’s Notes: Due to an editorial oversight, last week’s issue incorrectly referred to the new president of Nintendo of America, Devon Pritchard, using the wrong pronouns despite her being the first woman to hold the position. I apologize to Devon and appreciate those who brought this to my attention.
What to play
September had a host of exceptional games, and I’m still catching up on them (and engrossed by Silksong). One game I’m particularly excited about is Baby Steps, a surreal slapstick comedy experience I’ve been eagerly anticipating forever. The narrative kicks off with a not-so-promising scenario where a sluggish man and woman, Nate, are dragged from their parents’ basement and plunged into the unforgiving wilderness. Using the triggers to lift your hesitant feet and the control stick to balance, you stumble out of the cave, bound for the camp at the mountain’s base.
However, the ensuing experience is among the most exasperating in gaming history. Expect to slip, stagger, and slide down areas you’ve painstakingly navigated for 20 minutes. I once stumbled Nate’s foot into a wooden beam and plummeted down, necessitating a lengthy trek back to the campsite I had just left an hour prior. Yet, astonishingly, I was glued to the screen until 2 AM, drawn in by its bizarre humor and the persistence required to maneuver Nate’s clumsy body. It truly embodies “painful beauty in art,” and if intriguing challenges appeal to you, give it a whirl.
Available: PS5, PC
Estimated play time: 10 hours
What to read
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For those interested in the ethical implications surrounding Saudi Arabia’s Public Investment Fund – as noted last week, EA is set to co-own a part of EA – Euro Gamer highlighted, “This is the Saudi national wealth that should be harnessed to advance the economic and social rights of the Saudi populace. Instead, it’s being directed towards lavish mega projects both domestically and internationally… This appears to be a deliberate tactic to distract from the human rights situations in the country.”
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This summer yielded an animated Netflix film, K-POP Demon Hunter (if you know, you know), which has achieved notable popularity taking over Fortnite with new modes and character skins added. This sparked some lively discussions between me and my partner, who believes young kids shouldn’t play Fortnite. I’m more okay with it since it appeals to them. Either way, I will be engaging with it.
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Pour one out for Rock Band, the once-famous plastic instrument game and the soundtrack of my college years. Its final installment, Rock Band 4, was delisted last Sunday, marking its 10th anniversary as the music licenses for the songs have expired. If you still own a copy, make sure to beef up your track library before all songs are taken off the market. As for developer Harmonix, they’ve shifted to creating music for Fortnite, thus signaling the end of new Rock Band games.
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What to click
Question Block
A couple of weeks ago, I asked readers for thoughts on video game quotes that resonate with them. The responses were abundant. In no particular order:
“I’ve always believed if life hands you lemons, don’t just craft lemonade! Return those lemons and get angry! You don’t need those stinking lemons right now! What should I do with this? I’m calling for an emergency meeting with my life advisor!” – Portal 2, Submitted by Helen
“We work in the dark to serve the light” – I resonate with this phrase from Assassin’s Creed. It often echoes in my job as an assistant director in the film and television sector, where I spend a fair amount of time working in both literal and metaphorical darkness as a lighting manager. – Submitted by Stephen
“Please make your determination.” Undertale submitted by Kelly
“‘Comment is never forgotten, so there’s no need to remember it'” – this quote from Breath of the Wild holds a personal significance for me. A non-gamer friend wanted to give me a baby gift, so she printed this quote alongside a baby blanket and sent it to me. I still have it on my fridge. Loving everything her about Zelda, I named my daughter after the game. This line strikes me as particularly poignant during the final battle when Link confronts the dark beast Ganon, and his wise companion encourages him: it captures the essence of our journey as new parents. – Submitted by Kelly
“‘We’re not going to Ravenholm.'” – I often recall this quote from Half Life 2 whenever I am hesitant in my job and personal spheres—iykyk.
“Okay. This won’t cease until I die, but I yearn for pain when that moment comes. As friends depart and when I must let go, even when all hope collapses, I crave to feel it all. It is daunting. I embrace loss. I want to face challenges and rise above until it all concludes. Can I express that? I wish to find light again, even through hardship. Because feeling pain signifies meaning. It confirms my existence.” …at least, at least…” From May Borowski in Night in the Woods, submitted by Keira
If you have inquiries regarding the Question Block or anything related to the newsletter, feel free to reply or email [email protected].
Source: www.theguardian.com
