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Adding a bit more to the discussion on whether game subscription can be "the future", it looks like despite the heavy push made in the past decade, subscriptions only make up 10% of total video game spending in the US.
Link: https://nitter.net/MatPiscatella/status/1747660051269988522
What a lukewarm take. A quick glance to the subscription video-on-demand market should be fairly informative to the future of video game subscription services.
Right now they're still in the honeymoon phase, that is to say the "offer better value to capture a market" phase, of enshitification.
Not at all surprising he's getting pushback.
Not really.
Video on demand works because the content is short and you need a large variety in a pay period as a consumer.
I don't just watch one show or movie in a month, it's several. So bundling makes sense.
It's also fairly commoditized. I will watch what movies are available on Netflix, not like I'm extremely committed to watch a single given movie as long as the general selection is good. Maybe there's one or two films a year I care about seeing that specific film before it rotates into a subscription service I subscribe to (and if not, meh).
For video games, it's maybe one title a month that I really care about playing and then I only have time for that one game. But I only really care about setting aside time for that game and a lot of the other options out there you couldn't pay me to play.
They are very different markets and a subscription model isn't necessarily the future or even what's most profitable for a company to offer (as Sony was recently acknowledging).
a subscription model isn't necessarily the future or even what's most profitable for a company to offer (as Sony was recently acknowledging).
It's worth remembering that the goal of subscription services like gamepass is not to be the most profitable avenue. The goal is marketshare.
Microsoft lost, and Microsoft lost hard. Reportedly, the CEO wanted to exit gaming entirely after the Xbox One. They didn't based solely on the new business plan, which was to disrupt the market. Kill the existing model by offering super low-cost subscriptions (paid for by Azure and Office 365) and become the new encumbant of a new industry where you can jack up the prices and lower the cos(and quality) over a decade trying to chase profitability.
Subscriptions are not about revenue generation as every subscription model out there lowers revenue massively. It's about holding a larger share of the market so you can make money in other ways.
I think you're confusing the advantages and strategies of having a subscription and the advantages and strategies of having a loss leader.
Not all subscriptions are designed to be loss leaders, and most of the benefits you see in GamePass (lower or even negative revenue in exchange for increased market share) is seen over and over with loss leaders that aren't subscriptions.
Yes, I agree that Microsoft has adjusted strategy from a focus on winning console wars to increasing software gatekeeping across PC and now apparently even competitor consoles. And that GamePass plays a large part in that.
But it would be a mistake to assume that subscriptions in games are all going to have the same goals and focus as Microsoft with GamePass.
I would argue that there are three kinds of game subscriptions right now
the last one has existed for a long time and doesn't really factor into the discussions people are having today. it's not really relevant. the other two are both a factor of each other and relevant to what we are talking about.
I mean... yeah. Turns out that having models and looking at the actual data and analyzing the market tends to land on lukewarm takes. The hot takes are for the press and the trolls.
FWIW, I don't have visibility on subscription growth at all, so I'll have to take his word for it, but none of that sounds unreasonable.... except maybe for the fact that the hype may make people make bad moves and double down in ways that are harmful. A degree of fearmongering can be useful, if only as a deterrent.
I think there are plenty of valid criticisms of the subscription model, and the reasons for those criticisms are the same as many of the reasons growth has flat lined. Labeling criticism as fear mongering seems like overly reductive spin, especially when this analyst doesn't seem to be interested in addressing those criticisms.
It's like saying "data shows very few people die annually from eating tide pods, therefore maybe we shouldn't be so scared of eating tide pods." Like, no, it's because nearly everyone realises it's a very bad idea that nobody dies from it.
You've crunched the numbers correctly, but have drawn the exact wrong conclusion.
Any time I see someone use the term "fear mongering" sincerely, I add a general heaping of salt to whatever they are saying. It's often an attempt to turn the topic to the "evil motives" of the "other side" before the original debate is settled.
If there's nothing to fear, that can be said without accusing anyone who thinks there is something to fear of trying to generate it for selfish reasons. In fact, I'd think that showing someone is fear mongering will be a greater burden than showing any particular thing they say is untrue, let alone a deliberate lie. But it gets thrown around so much lately as if it's an argument on its own.
I'm not sure there ever was a honeymoon phase for game subscriptions. They generally still push you to buy dlc/season passes. They still segment stuff into pre-order bonuses that you don't get in a subscription. You already have titles leaving the service.
I'm not sure there ever was a honeymoon phase for game subscriptions
Couldn't you repeatedly get gamepass for a month for £1 or similar? Assuming they don't offer that anymore, I think the honeymoon is over!
I did have a honeymoon phase with gamepass. Now it's just a thing that keeps charging the monthly fee in the background but also reminds me of the list of games I'd like to try that it has each time I open it up to consider cancelling.
They've figured out how to make money from me having a backlog, I just realized. I might have to open it again and compare the amount I'd pay for x months vs the expected sales price to just buy all of those games where x is how many months it'll take to clear my backlog. I don't even have to open it to see that I should cancel, because x might be infinite. Hell, I could even just cancel it with the intent of starting back up if I manage to clear my Steam backlog if I want to lie to myself about eventually getting through my backlog.
🏴☠️🏴☠️game subscriptions only offer one path for consumers. 🏴☠️🏴☠️
Time to get back in the boat.
For single player games, or multiplayer games where there’s not a bigger progression system, yes, I 100% agree.
But sometimes this is necessary, like with an MMO. You’re paying for access to unlimited server time for that period (typically month or year).
I can pay a subscription for Netflix-style block access, or I can buy individual games I want. I don't really understand this comment.
It's 2024 and you can't buy any individual movie or TV show you want, you have to buy access to literal Netflix or others as a subscription. Op is saying games are heading towards that.
You can buy individual films and TV programmes though, it's just that most people want them now rather than in a day or two when the DVD arrives in the post
you can buy some individual films and tv programs, you can not buy many, if not the majority of modern film/tv shows.
Ok...someone help me out here, because I must be reading this wrong.
In the first tweet, Mat says "the idea that subs will become dominant is unsupported by data." Ok, so subs are not helping the industry.
But then in the second tweet, he says "Subs have been more additive than cannibalistic"--so wait, they're actually good for the industry?--and they offer more choice, and fearmongering is unnecessary?
Am I reading this wrong?
Consider the french fry.
When McDonald's started asking "would you like fries with that?" their sales and profits exploded. That really happened.
Now let's get theoretical. Imagine you were a potato farmer, and your friend was a cattle farmer. You both have an interest in selling as much of your product for the highest price possible.
You might try to promote potatoes, because that's good for you. "French fries are going to become the main course, and burgers are going to become obsolete." Well, no, that's not supported by the data. That doesn't mean that fries aren't good for McDonald's. Sales for both went up. People buying french fries didn't buy fewer burgers. The effect was additive, not canibalistic.
Of course, does that mean that either is "good" for the industry? Does that mean it's "good" for consumers? Is it fearmongering to point out the health risks of eating fried potatoes and ground beef every day, or how bad factory feeding people is for the economy?
Subscription gaming isn't going to replace traditional games. But it has become a significant part of the industry. If that's good or bad depends on your perspective.
Golly that was really well put. thanks, friend
Thank you. That's perfect.
He means that the subscribers don't stop buying games elsewhere. They do both instead of migrating from one model to the other.
Ok, that's exactly what I thought it meant. So why isn't that good for the industry? Doesn't that mean that they're double-dipping?
It is. But the industry would rather have all of us subscribing because that's a constant profit and they love constant profit. They'd rather have 100% subscribing and 0% buying than 10% subscribing and 100% buying.
I think I'm getting it now. He was saying "don't worry" to consumers, not video game companies.
I think he's saying that neither extreme is right. Subscriptions aren't going to take over the entire market but they will likely continue to play a role going forward.
So my current understanding of this is that he's telling us, as consumers, not to worry because subscriptions are not taking over the industry like the industry wants it to. It's working for them, but it's not taking over.
Something not being dominant does not mean that it is cannibalistic or bad for the industry... it just means that it isnt the dominant form of income for them.
“the idea that subs will become dominant is unsupported by data.” Ok, so subs are not helping the industry.
I'm not really sure how you're reaching the conclusion that subs not becoming dominant means they're somehow not helping the industry.
Subs becoming dominant... is this why Nintendo called it the "switch"?
Top reply to it is:
Not to mention it’s an oxymoron to say that subs will be dominant
All I want is a way to rent PC games before I buy them. Gamepass kinda works for that, but I REALLY don’t want yet another subscription service. I suppose I could buy them from Steam and request a refund if I don’t like it, but I hate paying that kind of money up front and downloading a 100 GB game just to turn around and refund it.
We used to have a similar solution years ago: demos.
I know, right?! I remember downloading a demo (or popping in a demo disc) that let you play like one mission or a set amount of time in a game. In the era of 120 GB downloads why can’t I download like 5 GB of the game and try it first?! The only answer I can come up with is that, much like the charlatans of old, they know a lot of it is shit so they have to grab your money and run.
The games that end up that large are probably all the AAAs with big deadlines that end up released half-finished anyway, I doubt the companies in charge want to justify the extra cost of releasing an optimised demo if they don't think it's going to be worth the effort.
Aren't demos kind of making a comeback? I've played lots of demos on Steam.
On pc yeah. There are a couple for console but they’re far rarer
I mIss shareware games.
Demos were bad for business.
A good demo for a good game was minor advertising that was dwarfed by good press. If every player wont shut up about how good the game is, their friends would skip the demo and buy anyway.
A good demo for a bad game was good advertising that bit you later. You got more up front sales, but got harder drop offs once word gets around that the demo was all you had.
A bad demo for a good game stuttered sales. Some people would turn away and maybe never come back, and it took time for word of mouth to tell everyone to skip the demo and just buy the game anyway.
A bad demo for a bad game was shit all around.
In the end, this punnett square made it pretty clear that the best option was to make a really good demo if youre game was shit, or you thought you needed the help finding an audience. but if you knew (or """knew""") your game was good? The demo was wasted time and effort. Either it was a smaller ad bump you werent upset to cut costs for, or you were slowing sales by accident.
Demos are good for us, but suck for the company making them. So they largely stopped making them.
PS+ set forward a theme of letting people have game trials - you can download and play for a few hours before needing to buy. I think they want that tied to some kind of invested subscription setup just so that people wouldn't abuse the system.
It's easier to avoid abuse if every game has demos coded to end after level 1, but as many old analyses have shown, that takes a huge amount of developer resources.
The issue of downloading 100 GB is something that some publishers have tried to solve with cloud gaming. If you're only mildly interested in a Game Pass game, you can play it on cloud, and then if you enjoyed your first session, download it locally for the next one.
Worth noting that game trials on PS+ are kept behind the highest tier of PS+. Outside of that, there isn't too much of interest encouraging you to pick up that subscription in my books since the classics Sony's been putting publishing there aren't really that good. Streaming PS5 games sounds nice but is highly dependent on your internet connection. Not sure if I'm missing anything.
the idea that subs will become dominate is unsupported by data
wise words
For that to happen, you’d need to play with a certain Nintendo product…
Don’t worry we won’t have have to worry about subs being dominant. Oh wait you meant subscriptions
Ok but jokes aside in some cases a subscription is necessary. Probably a bad example but Netflix needs to operate servers that I can get behind if it’s reasonably priced
However games and services that offer a subscription that don’t need it, unless I REALLY like it, I think it’s plain bad
And frankly I’m kind of a hypocrite here paying for planetsides “premium” service even though they could keep the lights on without it
I kinda went off on a rant but even it only makes 10% (which to me is definitely a big number but seems smaller than it is) of sales it kind of sends a message that this a way to extract more money from people like me that go “hmm well I like the game I guess I’ll pay $120 or more a year for this yes this a sane financial decision”
TLDR: subscription bad but I’m personally using one :(
Do micro transactions or even battle pass type things count as subscriptions in the data he's referring to? Or buying subscriptions/passes with in game currency that was purchased with real money?
I think it'd be more appropriate to compare the upfront cost of a game (and the revenue from it) vs additional revenue generated by people who already paid that upfront cost.
Gotta love when people start making shit up in order to do a 'gotcha'. Especially when they usually don't read any additional materials to back up their incompetent viewpoints.
I am personally against subscription models and prefer to pay for a product but I'm not going to just ignore the benefit that sub models have provided to the industry.