The infrastructure cost is probably an opportunity cost given that Microsoft own the servers. I still struggle to see them spending 2.38bn on having 3rd party games on the service.
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Shawn Layden: Consolidation is the enemy of diversity
- Thread starter saintjules
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Kagey K
Banned
The guy spent 10 years trying to consolidate games under Sony, now he is trying to undo the work he did.
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Magnific0giganticus
Banned
All I know is this: Gamers are not watchers. Gaming is a much more involved hobby than watching TV. Ask yourself, who's the subscription service for? Who's the target audience?
You will see is not hard to find the answer. Is it for casual gamers? No. They play few games that grabs them and just as they don't buy many games, the thought of paying a monthly fee for a catalog of games is even less enticing. Is it for the hardcore? Yes, and No. Yes because many hardcore gamers play tons of games and they constantly seek their next gaming fix, they're willing to try many games in diverse genres. But these hardcore gamers are not a large group, their hobby takes up much of their time, they're usually multiplatform gamers, they play on everything and are heavy spenders.
And no, not so much for the hardcore, that other segment of very invested gamers who like to carefully select what they play and pour tons of hours a year on only a handful of games, they spend money on their favorites, buy DLC, mtx and the like. They're invested and have little use staying subscribed to a service, dumping money in it that would only occasionally justify the cost.
Who is it for then? The "aspiring" hardcore gamer? Those who would game a lot more if not constrained by their limited income. The ones who more often than not wait for sales, but usually find a way to play many games, may them be borrowed, rented or purchased at heavily discounted prices. I personally think the main target is a mix between hardcores and "hardcores on a budget".
The audience is definitely there. But I see a major obstacle. The service is tied to a particular hardware, PC or Xbox. Gamers buy consoles and gaming PCs. Many PC gamers are true hardcores, the kind that invest heavily on what they want to play, but sure there's also a good amount of the other types in the mix.
What percentage of the gaming population fits the category of "hardcore" or "casual", etc?. I'm not sure. But one thing is clear, no hardware sale, no sub. Every generation there's roughly 230-260 million consoles sold. PC is more complicated, but Steam has more of less 120 million monthly active users so we'll use that. A single console or PC may be used by more than one gamer at a time, and a significant group of gamers may buy more than one unit of a console as we all know very well, and also many people buy used consoles, so the total number of consoles sold won't equal the number of active gamers, and there's also an amount of consoles that die
. So rough numbers we're talking about around 370 million -home- gaming platforms (I won't get into mobile devices and micro games here, that's irrelevant to this topic). The number of users on those 370 million devices may be on average more than 1 per device, but that's more than offset by the amount of devices that meet their doom.
Let's say there's potentially around 350 million active users gaming on modern consoles and PCs in the world right now. I think I'm being generous. That would mean pretty much every single console sold is alive and active right now and that's simply not true. What percentage of that is buying into a gaming subscription service and staying loyal to it? 50%? I'll give you 50% all on Game Pass, monthly. That's 175 million individual accounts. Is that enough to make it successful? Is that 50% attainable? I think you know the answer to the latter. And it all comes down to who sells more hardware where your main target plays and your service is available to them.
You will see is not hard to find the answer. Is it for casual gamers? No. They play few games that grabs them and just as they don't buy many games, the thought of paying a monthly fee for a catalog of games is even less enticing. Is it for the hardcore? Yes, and No. Yes because many hardcore gamers play tons of games and they constantly seek their next gaming fix, they're willing to try many games in diverse genres. But these hardcore gamers are not a large group, their hobby takes up much of their time, they're usually multiplatform gamers, they play on everything and are heavy spenders.
And no, not so much for the hardcore, that other segment of very invested gamers who like to carefully select what they play and pour tons of hours a year on only a handful of games, they spend money on their favorites, buy DLC, mtx and the like. They're invested and have little use staying subscribed to a service, dumping money in it that would only occasionally justify the cost.
Who is it for then? The "aspiring" hardcore gamer? Those who would game a lot more if not constrained by their limited income. The ones who more often than not wait for sales, but usually find a way to play many games, may them be borrowed, rented or purchased at heavily discounted prices. I personally think the main target is a mix between hardcores and "hardcores on a budget".
The audience is definitely there. But I see a major obstacle. The service is tied to a particular hardware, PC or Xbox. Gamers buy consoles and gaming PCs. Many PC gamers are true hardcores, the kind that invest heavily on what they want to play, but sure there's also a good amount of the other types in the mix.
What percentage of the gaming population fits the category of "hardcore" or "casual", etc?. I'm not sure. But one thing is clear, no hardware sale, no sub. Every generation there's roughly 230-260 million consoles sold. PC is more complicated, but Steam has more of less 120 million monthly active users so we'll use that. A single console or PC may be used by more than one gamer at a time, and a significant group of gamers may buy more than one unit of a console as we all know very well, and also many people buy used consoles, so the total number of consoles sold won't equal the number of active gamers, and there's also an amount of consoles that die
. So rough numbers we're talking about around 370 million -home- gaming platforms (I won't get into mobile devices and micro games here, that's irrelevant to this topic). The number of users on those 370 million devices may be on average more than 1 per device, but that's more than offset by the amount of devices that meet their doom.
Let's say there's potentially around 350 million active users gaming on modern consoles and PCs in the world right now. I think I'm being generous. That would mean pretty much every single console sold is alive and active right now and that's simply not true. What percentage of that is buying into a gaming subscription service and staying loyal to it? 50%? I'll give you 50% all on Game Pass, monthly. That's 175 million individual accounts. Is that enough to make it successful? Is that 50% attainable? I think you know the answer to the latter. And it all comes down to who sells more hardware where your main target plays and your service is available to them.
martino
Member
How will you do when streaming will be installed for long ? Do like mobile and pretend it doesn't exist ? Why would the audience by only a part of an already existing one ?
People want to analyze on a too short period of time and ignore entire part of the industry or potential targets...
Audiences are moving and changing over time.
Look where mobile gaming was 2 generations ago...
Look where it was last year: bigger in revenue than pc +console with an audience of 2.2 billion people.
What is sure is you will not see the long term potential audience locking the reasoning on smaller portion of it using gamer specific platform clichés.
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Azurro
Banned
Even if it's the same company, it's different sectors and the games division will definitely be paying the Azure division for the use of the servers. MS needs to be paying all of the development teams working on games every month, since they basically need to offset the huge revenue lost by putting them on GamePass day 1 that would normally cover marketing + development costs.
People just don't realise the amount of costs companies have and why profit margins are not enormous and in the case of GamePass, there are no profits at all.
Yeah, regarding the azure stuff it's a very different calculation. Also there is question marks about what the servers are doing whilst they aren't being used for xcloud. If they are getting used for other azure functions then it could be interesting.
GamePass is like prime video and prime, the profit isn't supposed to be there in the singular rev stream. Microsoft non-xbox division have really good profit margins relatively but yeah, xbox isn't ever going to be huge.
Haggard
Banned
You obviously don`t know what consolidation means......
Excess
Member
Seriously?
Magnific0giganticus
Banned
I don't pretend mobile doesn't exist. I just haven't seen any indication pointing to mobile gamers demanding gaming subscriptions or streaming services. Yes, mobile gaming has grown tremendously, but I think that's irrelevant to a subscription service like Game Pass.
Why would a mobile gamer care about streaming anything? All the games they play already fit in their phones, and that type of gamer usually plays no more than 2 or 3 games on average at a time, so why would they care about subscribing to any service with a catalog of dozens of games or more? They already have such catalog for *Free* on their mobile stores and yet they don't download and try everything or play many games at once on any given month.
Mobile gaming its doing its thing and will continue to do so, they figured it out a very long time ago. But the audience for a subscription/streaming service is not there and I don't think it will be for a very long time.
martino
Member
and i think subscription/streaming service will do its thing because audiences are not the living cliché prisoner of the simplistic behaviors you describe
Magnific0giganticus
Banned
Great. Not on mobile devices though. We'll see, but I don't think there's anything pointing to that.
the_master
Member
there is not one single game in gamepass, there are hundreds and they need to share the subscription cost
SlimySnake
Flashless at the Golden Globes
No you pay up front. You dont pay companies a cut of every month's revenue. See how Netflix cuts deals.
Magnific0giganticus
Banned
I think he meant the cost of each game on the GP catalog has to be offset by the total revenue coming in from the subscription fee. The cost of each game for MS may be paid completely upfront as you say though there's no data to show that's the only way Xbox cuts deals with 3rd parties.
Mabdia
Member
I don't like the guy but I miss him too.
But man... The ones that I really miss are House, Hirai and Tretton
the_master
Member
I think that with your numbers (700 devs, 6 years) + costs & marketing, Halo infinite would cost about 500 mThey started making profit last year.
Netflix Will No Longer Borrow, Ending Its Run of Debt (Published 2021)
The streaming giant borrowed over $16 billion in less than a decade as it built out its content library. The strategy prompted criticism that the company was unsustainable.www.nytimes.com
Last year they made roughly $2.5 billion in profits.
Not if you pay up front like Netflix does. They buy movies and shows every month because they are guaranteed to make $2 billion a month. The money for those shows comes from that budget of $2 billion.
Now the trick with these streaming services is that you cannot have a bad month. you have to make sure you keep the subscribers subbed every month. Which means you have to continually go out and buy new shit every month. So for MS's 24 million subscribers, MS needs to ensure they have at least one $120 million game like TLOU2 and then use the other $120 million on smaller games like a Plauges Tale. They dont need to worry about games that were included in a previous month because they were already paid for last month.
Halo infinite might be the month where MS will lose money. That's a game made by around 700 developers on a 6 year dev cycle. Probably somewhere around $300 million. MS will need to make sure they hit 30 million to recoup the costs. Then they need to make sure they sell around 2-3 million digital copies which will be pure profit. But games that expensive typically dont show up on the XSX. The biggest third party games they have received so far are Outriders and MLB The Show. And they are probably $50 million max. Easily affordable when you have a 20+ million subscriber base.
You DEFINITELY definitely dont need 500 million subscribers like shawn layden is saying. you dont even need 50 million.
50m users paying 10$ a month give 500m a month, subtract the costs of the service and they can cover one big title per month or every 2 months, if you don't add any medium and small sized games, not acceptable at all. That's why Gamepass is not only on the Xbox, it's everywhere, so they can reach to many, many more players.
megreotsugua
Banned
Streaming Service of "only games" will fail IMO. If they want to target the 3 billions casuals/gamers, they need to sell it in a package that will appeal to them.
Streaming of movies and shows has a bigger audience. Now package movies, shows, anime, and videogames. Sony's PS Now is sustainable since all games included in them already run their course and already made the bulk of its revenue. Rebrand PS Now, include movies, original shows, and market it towards the casuals.
Streaming of movies and shows has a bigger audience. Now package movies, shows, anime, and videogames. Sony's PS Now is sustainable since all games included in them already run their course and already made the bulk of its revenue. Rebrand PS Now, include movies, original shows, and market it towards the casuals.
the_master
Member
Sure. Although there are many ways to pay the companies, the maths are similar. You need to pay several games a month to make it attractive. If you pay up front it means more or less than one month you need to recoup the money for the 3 or 5 or 10 games that you release every month.
kingfey
Banned
Your 2nd point defeats your 1st point.
It doesnt matter whether the game made its revenue or not. You have to pay the amount you made a deal with them. and in no way psnow can pay it. Unless the game is like 3-6 months deal.
Psnow is 3m subs as of now. And you can get it for 60$ a year. That is $180m. Unlike gamepass or luna, It doesnt have any other form of sustainability.
Your last sentence is impossible for psnow.
kingfey
Banned
That is not counting non gamepass xbox sales, steam sales. You are looking at fracture of the cost from gamepass.
Steam/xbox users is their offset from gamepass. Steam users would cover some costs, same on xbox sales, while gamepass covers some too.
To summarize it, the game is in the middle, and steam/nongamepass xbox/gamepass users. All these will fund the game. Rinse and repeat for any game xbox makes.
megreotsugua
Banned
Yes it matters. Because the games which already run its course in the normal distribution will cost much much less to put in the service.
The only way "old" games will matter is if its marketed toward the non-console gamers. The casuals. The 3 billion. That's why the "old games" strategy of PS Now will only work if Sony package it with movies, original shows and anime. It's not a gamepass competition. It will be a Netflix and Disney+ competition.
That market where Netflix, Netflix, and HBO play is a lot lot larger than gamepass target audience. Disney+ was able to have 80 million subscribers in just 1 year. I'm not saying Sony could pull the same numbers. But targeting the mass market through their Sony Pictures division (which has a lot of movies and shows in its arsenal) is the way to go if they want to have a successful streaming service that will not "eat into" the profit of their traditional distribution.
Exactly why it needs to be revamped. It's either they follow the loss-leading business model of gamepass, or they follow a more casual-friendly route.
Yes it is possible. Sony Pictures has a lot of original shows they sell to TV, and other streaming services. Sony Pictures has thousands upon thousands of movies and shows. It would be easy for Sony to make a Netflix, Disney+, and HBO competitor. The gaming aspect will be an additional value for the not-much-of-a-gamer casuals. Considering the Sony games are heavy on the story, it's perfect for the casuals.
If Sony still wants to pursue a more gamer-centric service, then they can simply build such service on top of its 50 million subscribers of PS Plus. They can make a higher tier PS+ Premium or whatever and provide it with gamer-focused services. It could even have a more robust PS Collection.
In sum, what Sony could do is to SEPARATE THEIR GAMER-CENTRIC SERVICE FROM THEIR CASUAL-CENTRIC SERVICE.
Kagey K
Banned
Have we ever got any numbers for Apple Arcade or Google Play Pass?
It's hard to say if there's no demand for it, when we don't know what existing services are doing.
I think he wanted to say 50 instead of 500 or its a typo. Because his point about selling 250m console assumes that he is not thinking of 500m as realistic number.
Lets be honest here, apart from MS, no other company right now which makes game can afford to a subscription service because of risks involved as mentioned by Layden
Lets be honest here, apart from MS, no other company right now which makes game can afford to a subscription service because of risks involved as mentioned by Layden
Kagey K
Banned
The only way his statement makes sense as written is if he's assuming the entire industry goes subscription only, and he is talking about 500k subscribers across Sony, MS and Nintendo.
He's looking at the income of 250m consoles and what the average revenue was per console on PlayStation, and consolidating it for the entire industry.
Otherwise it just seems like he's throwing out big numbers and roadblocks as a scare tactic.
Magnific0giganticus
Banned
There certainly could be some demand, but that won't fly for those games and that audience for the reasons I presented.
Kagey K
Banned
Going to need some evidence to back that up, both those services have been running for some time, and neither seem like they are going away.
Facts before feelings.
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megreotsugua
Banned
I also do not see how a casual gamer who mainly plays games on his phone will spend $10 a month for games he doesn't care for. Maybe if it came with their Netflix sub, they would probably give it a try and perhaps get hooked. But the idea of enticing the larger gaming phone market into a $10/month service of console-type games is dead end IMO.
Kagey K
Banned
So how do Apple Arcade and Google Play Pass continue to exist?
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megreotsugua
Banned
1. Phone games don't cost $200 million to produce.
2. The target market is large. It encompasses virtually each and every smartphone.
3. The target market audience and the type of offered product are perfect match.
4. The services includes apps.
Kagey K
Banned
You are wrong on most levels.
GENSHIN IMPACT for example.
Just look at what they say thier server costs are.
The rest is nonsense, as you are moving goalposts now.
You said nobody wanted a subscription service on Mobile, I showed you two existing services, but they don't count......
It's ok to be wrong, but when you try to double down is when things get fucked.
Just admit you didn't have a clue and plead ignorant.
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megreotsugua
Banned
What we're saying is nobody wants a $10/month service to play console-type games on mobile. Read the very first post you quoted. You're the one moving the goal post.
You're the one moving the goal post. The $200 million comment I made was in response to Google Pass and Apple Arcade. And now you're quoting a free-to-play game available on all devices including PS4,PS5, and PC.
This is perfect example on how to capture the mobile gamers. Free-to-play games where probably 90% are freeloaders. You cannot expect those gamers to pay $10/month when they all they want to pay is one or two games.
Let me put this to in a context. Let's say Genshin Impact was put in the gamepass and the only way to play the game is to pay $10/month. Do you think Genshin Impact players will pay $10/months? IMO, that game will die because the casual mobile players will move on to the new hot game and there are new frequent free-to-play games nowadays.
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Memorabilia
Member
I don't know the inside story why he left Sony, but his deficit of math skills might have played a part in it...
kingfey
Banned
Let me rephrase this again.
With psnow profits as of now, it won't work with movies and TV at all.
You need tons of money for that. Movies and shows aren't like games, which are cheap to put it on your service.
You have to deal with licensing, actors royalty, and other royalties. Its why netflix is expensive. You need at most 50m to manage a TV, Movie subscription.
While on the gaming side, you don't have to worry about those at all.
Only way I can see Sony making big change to psnow, is bundling to ps+, and making ps3 and ps2 games downloaded. This will make it more enticing.
But as long as 3m sub exist, TV and shows would be a huge loss.
Dec 10, 2020 — The Disney+ streaming service lost $2.8 billion in fiscal 2020, despite adding 74 million subscribers worldwide in 11 months.
And as for content, its not that easy. You can own as much content as you can (disney+). But you will need nonstop content for your service. Something Sony can't afford to.
Sony is just too many companies, combined in to a 1 $200b company. As long as other sectors exist, they will be financially unable to create something like that.
In order to sustain that service, they need to burn their reserve cash, which is something they can't afford to. All their sectors have competition. And you can't carelessly waste money.
megreotsugua
Banned
Of course. And PSNow does not show any signs of increasing its subscribers. That's why they should rebrand it and leave that "only games" streaming service behind. They will have to compete with Disney+ and HBO targeting the casuals. The 3 billion. But Sony's offering would be something unique because it will have game streaming mixed in the portfolio to provide additional value.
I'm Sony Pictures know the math. Sony's movies still release on cinema before Sony sell them to Netflix and other streaming service. Unless of course they pay a hefty amount upfront. I'm not suggesting that Sony Picture's output be released day 1 on this hypothetical service. That will be a financial suicide. What I'm suggesting is that Sony Pictures to operate the way they do now, as is. The only difference would be that Sony's movies and shows to also release on its own service.
Sony has thousands of movies and shows waiting to be put in their service. Sony own those IPs. They could start with that.
Sony Pictures can operate the way it is operating right now. Sony movies and shows doesn't have to come to the service day 1. They can sell them to TV and other streaming services like they do now. The type of service I have in mind doesn't have to reinvent the wheel for Sony's business end. But of course it has to have its own original and exclusive shows. That's where the bulk of the expenses will come - the exclusive original shows.
I'm not suggesting that Sony has to outproduce Netflix with its 30 shows a month and put them in the service exclusively. They could mimic something like HBO Max with the kind of modest output they do. And then start from there. From the get go, it could have thousand of proprietary old movies and shows that Sony can shuffle in and out every month.
Sony doesn't need to bundle them. That would be stupid. PS+ already have 40-50million subs without it.
What Sony could do is offer a higher tier PS+ that offers more services which could include the one you're suggesting - PS3 and PS2 games download plus more. But Sony doesn't have to bundle PSNow with it in order to pull if off.
PS+ could be sony's gamer-centric service. They could have a PS+ premium that has a bigger PS+ Plus Collection library which could include PS3 and PS2 games as you suggested. They can look into EA Access and mimic that. Just don't go the gamepass route.
PSNow has to evolve because after all the suggestions above it could be then redundant with PS+. Sony could follow a loss leading business model like gamepass while killing their $70 AAA business or they could evolve it to something that would target the 3 billion casual market and compete with Netflix, Disney+, HBO Max while being unique in its offering.
Of course. Sony needs its Sony Pictures Department to help with the growth. Target the casuals. That's where the growth is at.
Sony already produce movies and shows nonstop month after month after month. They could put them in the service exclusively but I don't suggest they do that. They could operate Sony Pictures they do now, sell those movies and shows to other streaming services like they do now. The only difference is that it will also come out in their own all-in-one steaming service. But of course it has to have a few original shows of its own.
Netflix was able to pull it off despite them not owning a movie studio and production. Sony has a established movie production studios around the world. I'm not saying pulling it off is just a click of a button but Sony can definitely pull it off. Sony is not new to movie and TV show production business.
It has its drawbacks, but it also has its advantage. One advantage is Sony's ability to create an all-in-one streaming service that takes advantage of its different divisions - Sony Pictures, Playstation, Aniplex (anime), etc.
Sony is now looking for growth. Heck, they're even looking into the electric car business. One way they could grow is to have its own streaming service that is unique to Sony - movies, shows, anime, videogames.
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