Xbox Game Pass & new MS game store app - PC thread

This is a pretty simple math problem. Offering people more game access, for less money = less money to game developers. Streaming, by nature, shovels money into fewer and fewer hands, at the cost of content creators. The same thing that happened to music is now going to happen to games.

Streaming is a race to the bottom, and you can already start to see the effects of it.

And those are…?

I’m not taking a position on whether game subs will or will not lead to less overall revenue, but as I said above I’d really be wary about generalising from music streaming. Music just is not the same as other media and never has been, business model wise. Film and TV streaming have demonstrably not led to less money in fewer hands - quite the opposite, though whether that is sustainable is another question. And it seems weird to be more worried about the potential impact on games from subs rather than, say, the demonstrable impact from the App Store.

New twitter just for the PC version of Game Pass:

https://twitter.com/XboxGamePassPC

It’s more people and more games if it becomes popular enough. So no it’s not just a “race to the bottom”. You nor anyone else knows how this plays out.

TV streaming is very different. You can’t just have an indie director produce a show out of nothing, as you can for indie games. You have to have the backing of a giant studio, like Netflix or Amazon. In fact, what you see in TV streaming is differentiation of content – each streaming service taking/making its own content. That model could take off on PC as well. Each streaming service could become a publisher for its own content, which would be exclusive to that service. Basically what Epic is trying to do. Except with a store, exclusivity has little meaning other than getting you mentally used to seeing it as a legitimate store. It’s not worth it for Epic to subsidize content beyond its store’s establishment. A streaming service is different – every exclusive game is an incentive to keep paying the monthly cost. Games are even more effective at this than TV shows, as a single game can take months or years to finish. So I can definitely imagine a future where all PC games are mutually exclusive services provided on different streaming platforms, much like the video streaming platforms of today. Few true Indies would thrive in this future, and the money for investment in games would come from services competing against each other. That’s a very different future from one where streaming services don’t differentiate themselves with exclusive games and all have similar services.

Multiple services giving away games for free at decreasing intervals to compete, for starters.

Does it not seem likely that a proliferation of separate ‘stores’ incentivises some meta-app to organise and integrate everything? Regardless of the economics of the new world order it seems to suggest a whole lot of futzing around :/

That’s what we’re already seeing, surely, first on consoles and increasingly on PC too. What we’re not seeing, though, is games going exclusive to streaming and not being sold on a standalone basis. At least I’m not aware of any.

Right. But in order to mirror the video streaming world, PC games would need to do that. I think first streaming has to dominate over game ownership. Customer ownership was always minor in the TV world (somewhat less so for movies), allowing streaming services to take over very easily. This isn’t the case in the video games industry, so while I think there’s a good chance the value proposition of streaming will eventually dominate, it’s hard to know which scenario it’ll evolve into (music industry or video streaming industry, or something slightly different). It’s also possible gamers are too entrenched in their old ways to give up some sense of ownership, but there’s always a new generation of gamers who don’t know the old way of doing things.

What seems certain to me is that currently, gamers consume in excess of their needs, creating the infamous backlogs. While they often do that due to good deals, that’s still throwing money around at companies that wouldn’t normally get it were gamers to only spend money on the games they were actually playing. Anything disrupting this pattern is unlikely to be able to substitute for this excess consumption, and that includes streaming. Even adding DLC purchases to the mix doesn’t substitute for it, essentially dumping all money into the few winning games being played (see Fortnite).

I think it’s hard to have this conversation without data, because everyone is just throwing around anectdotes.

Epic has released estimated stats about how many people play Fortnite that have never installed steam. Those people are not hoarding games yet they are spending a lot on the singular game they are playing. The same concept seems to have been true for a lot of mobile games and MOBAs. I highly doubt that all those people still playing Counter-Strike on a daily basis are building up massive backlogs, because if they cared about other games they wouldn’t still be playing counter-strike.

I do not think it’s fair to assume that the majority of gamers (both in direct quantity and gross revenue) are game hoarders with massive backlogs.

Edit: Furthermore, even people with backlogs, If their steam account has 300+ unplayed steam games and they are still buying games how do you figure that game pass is going to stop that? They already have fundamentally unlimited games (more then they could play in their lifetime unless they only dedicate 1 hour to each) so why haven’t they stopped buying games already?

Um…those aren’t “effects,” those are the current situation. You suggested negative things are already happening because of the “race to the bottom,” but when asked what those are you just cite more of the “race to the bottom.” Just offering games for free doesn’t sound like such a bad thing to me unless it’s causing some bad result, for consumers or producers of content.

I wouldn’t jump to conclusions about subscription services like Game Pass necessarily being bad or a weaker position for dev studios. It will vary a lot case by case.

For instance, take Phoenix Point by Snapshot.

When they signed their exclusivity deal with Epic they said they took in enough money to keep the studio operating for years even if every backer refunded. Phoenix Point will launch on Game Pass (Xbox and PC) at release.

So Phoenix Point’s revenue includes:

  • Initial backer funding
  • Exclusivity deal with Epic
  • Ongonig backer-adjacent purchases on their site
  • Preorders on the Epic store
  • The Game Pass deal with Microsoft
  • Orders of the game post release

So theoretically the Game Pass revenue from Microsoft should be cream on the top at this point. One assumes something similar with Metro Exodus.

Again this will all vary a lot game by game as some studios may have less alternate funding sources. That said, subscription services like Game Pass are one tool among many for revenue generation right now. Thinking beyond that it isn’t all about revenue. Services like Game Pass are good for discovery (even a form of marketing) or providing a larger playerbase for multiplayer-only games. Microsoft does a fairly reasonable job of highlighting and featuring the titles that are new to the service; the apps have several discovery-focused UI designs, and they offer a reward system for trying out and playing different games on the service in a rotating fashion.

It’s another way for games to make money. It used to be just physical copies store was only option. Then came digital with the internet, and now a new option with subscriptions. We have more games coming out large and small than ever before yet some people always want to pull the “sky is falling!” card out every time something new comes along.

I’ll say that I’m playing some games on Game Pass that I would never have spent money on individually. There’s just too many games and not enough time for me to drop even $10 on something I don’t think I’ll play more than once or twice. At the same time, these are games that I’m at least marginally interested in and it’s possible one of them hooks me. If so, I’ll likely buy the game and the DLCs/expansions as they come out.

Hopefully this type of thing opens up new revenue streams and does not just cannibalize existing ones. At the very least, by not including expansions or DLCs it can be viewed as a very extensive demo you can rent for a month.

I’m interested in seeing how this shakes out. Games aren’t the same as movies or TV or music, so I don’t think we can expect to follow the model of Spotify or Netflix.

Good post!

LIKE

Those are absolutely effects, it’s the pressure of competition. It’s a response, and it’s exactly the race to the bottom. What makes the bottom drop out, is that there is no more hard copy of content, and that’s what killed the music industry. When your product can be delivered with no physical medium, and duplicated infinitely at will, the writing is on the wall. Distributors used to have a huge stake in this process, and as much to lose as creators, now that’s not true. Distributors have everything to gain, and not much to lose.

The only medium that’s been partially spared this, is movies, because there is still a lot of value placed on going to the movie theater. It’s not nearly what it used to be, but it’s still an experience you can’t get at home. A lot of this also has to do with bandwidth, download speeds, and access. Music was the first victim, because it had the smallest individual footprint. Movies and games have been harder to destroy, because of the size of the content involved, that’s all gone now and will only get worse.

/shrug. Time will tell. To me the writing is on the wall, I lived through this in my industry, and the same ideas and rhetoric are being applied to games now. Best of luck to all involved.

I think you’re misapplying the history of how this went down in the music industry. People consume music and games in very different ways. Outside of mobile, gaming requires a more dedicated effort, and games aren’t consumed like songs, quickly listened to and forgotten.

Right now there’s zero pressure on game developers and publishers to throw their first-run games into a subscription program. One day, when and if these services have tens of millions of subs, then maybe, but at that point the financials might actually be pretty good.

As others have said, Netflix hasn’t ushered in the death of movies (and lest we forget, this model has been around forever - HBO, Cinemax, etc. all have had original content in addition to stuff they licensed from other distributors for 30+ years). Digital sales are strong, and Netflix’s spending on content has create a market for movies and TV shows that would not have gotten made otherwise.

Think about Double Fine. They’ve always struggled because there’s not a huge market for the games they make. Now they’re part of Microsoft in their desire for original content to fill their Game Pass, and those struggles are (conceivably) over. Sounds like a win/win to me.

We have to project into the future here. Of course right now there’s a lot of money being showered at devs because it’s a transition period. It’s the same thing that happened when bundles started out. It seemed like bundles gave devs more money, and also didn’t cannibalize sales. But it’s ultimately impossible not to cannibalize sales unless the game-playing population grows dramatically. Which is a possibility, and the best one at that. But assuming the game-playing population doesn’t grow dramatically, you’re left with the same population consuming games in a different manner. This is going to distribute money differently, and the main beneficiaries are going to be the companies operating the services/stores that win out. Where the money will be distributed is anyone’s guess at this point, but we can look at other similar patterns to figure it out. In general, all these markets seem to favor the big winners, with the smaller players getting scraps.

Well GOG announced a few weeks ago that they were making going to be launching Galaxy 2.0 to organize all the stores. Also playnite already exists and does this pretty well.