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Netflix stock down 40% after subscribers losses. What this means for Gamepass.

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ChorizoPicozo

Gold Member
You actually touched on the real issue in my eyes, its the constant WANT for new content. We even see it without the service, the way major 100+ hour games just came out but people are already squirming in their seats for the next dopamine hits of news and acquisitions, and big game announcements and…etc
Yep.people are insatiable and ironically the vast majority didn't even finish the games (that they even pay for it).

I feel like once a game comes out its already dead. The most hype parts about gaming for a lot of people is the build up before release and the discussions, same with movies and music.
They hype cycle is just part of the marketing.

The rapid fire approach to releasing more and more games for such a low cost is only going to lead to games becoming even more devalued.
Exactly. Even lower rates of competition.


Then you factor in the other stuff, F2P, MTX, NFT, Ad’s….then you just have far lesser quality stuff coming out because the companies are making more money appealing to the fast food gaming crowd.
Which also means Time Sinkers.

I hope if this actually does become a reality that it mimics video streaming where there are the lesser services that continue to invest big budgets into big polished games still like hbo max, disney plus, and Apple TV+ are doing
This is going to be the very interesting situation between Xbox and Play Station.
 

Chukhopops

Member
What’s the point in comparing a service that is an entry point into an ecosystem where you will then keep spending money, to a service whose entire revenue stream is the subscription?

A better comparison to GamePass is a cheap ticket to Disneyland. What matters isn’t that you make a profit on the ticket but that you make a profit on the total experience, restaurants, hotel, goodies whatever. Which in MS’ case are MTXs, game sales etc.

My guess is that Netflix will start diversifying their revenue streams by selling other subscriptions inside itself (like Amazon is doing with Prime), movies (same) and other services. They can then leverage their gigantic sub base and increase their ARPU.

And my guess is that MS will keep running GP even if it somehow runs out of growth potential, because it keeps people in their ecosystem. Maybe they’ll spend a bit less on it, offer fewer games or whatever but the service will still be offered.
 

Jaybe

Member
What Netflix has shown is a subscription’s value to a consumer largely comes down to the quality of new content every month vs the monthly price. The back catalog is a nice driver if you are joining and haven’t been invested in the media, however, in the long run most people burn through what interests them from the catalog and are left with only what’s new. I don’t think Game Pass will be a home run but it is one number on the roulette wheel of investments that Microsoft Corporation put money on, so it won’t sink the place and will likely survive long term. I do wonder if several years down the road they will ever make games Game Pass-only or stop deep sale discounts on their catalog.
 

Clintizzle

Lord of Edge.
Sometimes it's good to take a step back and look at these SERVICES and ask the question, "Is this service valuable to ME at its current price point?"

Personally I don't care if GamePass is financially viable for MS. I don't care if MS spends $$ buying others devs. I don't care if Playstation+ has more games.

If Gamepass has the content I like, I'll subscribe. If not, I'll go back to buying specific games as that is still an option and probably will never not be one.
 

Menzies

Member
Yes, but Netflix also had to wait for technology to catch up as they slowly transitioned from being primarily a DVD mail service. Smart TVs and overall functionality for bringing streaming to TVs wasn't a common thing for many of those years. That is not the case for Xbox and PC gamers and yet the numbers are not exactly skyrocketing.
How many *gamers* right now aren't adopting streaming due to similar technology complaints. How many smart TV's right now have a GamePass app?

I just think it needs a few more years before we announce it dead.
 

Topher

Gold Member
How many *gamers* right now aren't adopting streaming due to similar technology complaints. How many smart TV's right now have a GamePass app?

I just think it needs a few more years before we announce it dead.

I'm not talking about game streaming. I'm talking about the hundreds of millions of Xbox and PC gamers who have the ability to subscribe to Game Pass right now and download games through the service but opt to buy them instead. But yes, game streaming is going to have to go through similar growing pains. Whether or not that becomes a big market is a different question entirely.

And at no point did I announce anything was "dead" so no idea where that came from.
 

Lupin25

Member
Netflix is losing subscribers, because it’s price has increased while production companies have protected most of their own IP away from them and made it exclusive. It was only a matter of time.

So now Netflix is scrambling to create and renew their own content (all the keeping up with costs to maintain the service).

Why stay subscribed to the service if you binge a show/movie/game, but go weeks again without consuming more content?

There’s also the issue of “shared account/passwords”, or the uptick in popularity of piracy, firesticks and jail broken Apple/Android boxes. There’s always a lot of competition, but more so than ever now with every company vying for relevance.
 
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Netflix losing subs is more a function of competition than anything else. Just count the number of new streaming services are available now? Seems like almost every studio wants to have their own streaming service. When the market becomes so fragmented and content is divided more and more, obviously the share available for one single provider will become less. That's normal.

What will be more pertinent to look at the overall growth of the streaming market. The growth is quite strong still (despite some slowdown due to end of covid). Streaming model is quite popular.

Gamepass is still unchallenged in the game streaming market I believe. Until more comparable services pop up, it will still have very good growth potential.
How about we ask someone who just cancelled Netflix after over a decade and still pays for GamePass, HBO Max, DisneyPlus, AppleTv Plus, Peacock Premium, Hulu & ESPN (bundled), has PlexPass with a massive Synology NAS with my Bluray connection on there. I enjoy media and can afford it.

I cancelled Netflix not because of competition. I cancelled Netflix because they had the gal to raise prices again and they continue to keep 4K in a higher price tier. They reminded me that they exist and I pay for them. And not in the good way. I'm tired of subsidizing the millionth true crime documentary or trashy/cheesy/boring reality show or competition. If you're a producer with a crappy idea and a low budget Netflix will throw it at the wall to see if it sticks...throw a thousand pieces of sh!t at the wall and you might get another Tiger King.

No thanks.

As long as Microsoft respects their users GamePass will be just fine.
 
Netflix is losing subscribers, because it’s price has increased while production companies have protected most of their own IP away from them and made it exclusive. It was only a matter of time.

So now Netflix is scrambling to create and renew their own content (all the keeping up with costs to maintain the service).

Why stay subscribed to the service if you binge a show/movie/game, but go weeks again without consuming more content?

There’s also the issue of “shared account/passwords”, or the uptick in popularity of piracy, firesticks and jail broken Apple/Android boxes.

There’s always a lot of competition, but more so than ever now with every company vying for relevance.
Piracy has nothing to do with it. If anything it furthers interest and drives paid subscribers who want convenience. This has been proven time and time again. Just look at Game of Thrones.

Also, sharing accounts and passwords is a lame excuse they used. This isn't affecting their bottom line either.

It's also not about NBC or Time Warner withholding content from them. HBO learned a long time ago that non original programming is not going to drive subscribers.

This is 110% about a company that can't find their next hit original series. They were outbidding HBO and now AppleTV, HBO, and others are outbidding them for IP.
 
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Jigsaah

Gold Member
I'd be shook if Microsoft were only streaming. Honestly I think Microsoft will follow whatever the numbers tell them to do. I imagine they have some date in mind as to when Gamepass will become profitable, however I don't think profitability is the only thing they are concerned about. Gamepass brings a bunch of mindshare to the brand, which can translate to more console sales, more exclusive deals...pretty much every Sony enjoyed the lionshare of up to this point.

One thing I think Netflix is suffering from is a sudden influx of competition. Paramount+, Disney+ Peacock and Hulu are all vying for the same customers. I look at my own situation and what do I do? I subscribed to Peacock and immediately cancelled, leaving me with a month to watch The Office all over again and check out any other shows or movies I might like to see. My new habit of doing this also prompted me to cancel my Netflix subscription as I was not going to be watching Netflix for that month. As people are lured to other subscription services, cancelling them becomes more of a habit. The subs will come and go, there will be popular shows, and there will be droughts.

The issue with this is that the business model for streaming is based on perceived value and...frankly...human forgetfulness. It's harder to forget that you're subbed to 3 or 4 different services when it starts to make a real dent on people's bank account. Gamepass doesn't yet have this issue. Partially because most people still associate the various video game subscriptions to the consoles they are attached to. These services being mainly proprietary to their home console is a barrier to entry and therefore You're not gonna find many people subbed to Gamepass and PS Now and Nintendo Online. Secondly, the value of Gamepass is CURRENTLY undeniable. However, that can change. The acquisitions Microsoft has made may slowly catch up with them. Maybe Gamepass goes up 5 or 10 bucks. Maybe people don't wanna pay 5 or 10 more bucks every month.

For now, I think Gamepass and video game subscriptions as a whole are still in it's infancy and it's too soon to tell if it would be affected by what's occurred at Netflix.
 
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onesvenus

Member
It's quite telling to see which posters are concerned for the future of Gamepass 🤦‍♂️

There's a big, enormous, enormous difference with Netflix: Gamepass has other revenue streams. Bringing more people in is not the only way to grow revenue. You can keep the number of subscribers at a fixed numbers but increase the revenue by MTX. That's why they are selling 1$ conversions. That's the end game, not the subscription money per se.
That people can't see that says it all
 

Kdad

Gold Member
It's quite telling to see which posters are concerned for the future of Gamepass 🤦‍♂️

There's a big, enormous, enormous difference with Netflix: Gamepass has other revenue streams. Bringing more people in is not the only way to grow revenue. You can keep the number of subscribers at a fixed numbers but increase the revenue by MTX. That's why they are selling 1$ conversions. That's the end game, not the subscription money per se.
That people can't see that says it all

And NETFLIX is dipping it's toe into gaming....
 
I think it's very clear that subscription services like GP can't just grow subscribers forever. There's a cap.

That's about all the parallels we can draw from the recent Netflix news.

That said, probably a better subject of discussion is how Phil and the higher-ups in MS will react to Netflix's woes. They seem to be all in on GP. The question of will the recent Netflix news force them to rethink their strategy is a legit question.

Not saying they'll abandon GP altogether, but maybe this might make them pull the breaks on the multi-billion dollar acquisitions until they get a better handle on where they think the ceiling is for subs on their gaming service.
 

jakinov

Member
Trigger warning: This might come across as bit of a blogpost, but I think the current Netflix predicament is something Microsoft will run into eventually with Gamepass.

Netflix, the king of streaming, just lost subscribers for the first time in 10 years. Stock went from $350 down to $220 at one point. Mind you, this is a service with 200 million subscribers and a revenue of $25 billion a year. And yet, everyone freaked out after they lost instead of gaining subscribers. As if stockholders are surprised that they were never going to stop gaining subscribers. There is always a cap. This is it for streaming. 200 million isnt enough?

This brings me to Microsoft, Gamepass and how a lot of people on this board believe that the future of gaming is subscriptions. Microsoft is at 25 million users right now. half of the number of consoles they sold last gen. What is the ceiling for Microsoft? 50 million? 100 million? Will they ever get there?

I highly doubt that they will ever get to 100 million. I think if they get to 50 million and stay there, that's a massive success. Console Gaming isnt as popular as tvs and movies. Disney has 100 million subscribers. HBO 50 million and Netflix 200 million. Combined other services and we are looking at maybe 400 million divided between 4-5 big players. For gaming, that slice of piece is even smaller. 200 million users per generation for MS and Sony. How many of those will subscribe to gamepass especially if MS can only sell 100 of those 200 million consoles.

I have come around on Gamepass but I dont think its sustainable in ways people think. They will hit a ceiling in a few years. If not earlier. It will be a good alternative service, but people will pay good money to buy AAA games just like how they paid to go watch Spiderman and Batman. I just dont see it being the FUTURE of gaming. Future of gaming will be games, not services.
Netflix is a growth stock. People own it expecting it to grow. There have been people callikng otvervalued for a long time. Now that it's showing signs of stagnation at 221 Million subscribers people don't want to own the stock. It doesn't even pay a dividend you get no value in owning the stock if it's not growing like crazy. It's hardly a freakout and an expected reaction. Netflix at it's peak was worth as much as Disney. Lots of people said the stock was overvalued.

If you read into the details lots of decline happend in regions where prices increases which is just a simple matter of the "Law of Demand", it also happened in areas connected/near the Ukraine/Russian war. But most importantly the 700k subscribers were kicked off the service from Russia. The net add if they didn't have to remove Russians would be +500K. However, with the way things are going and peoples ability to get content anyways for free, there's going to be a declinine and people paying for streaming services in general. The day before Netflix announced their Q1 results there were reports that at least in the UK people were going to start subscrinbg to less services bevause of the way things are going. By that I mean countries are dealing with things likehyper-inflation and super high gas prices.

Anywho back to gaming

  • the cost structure of a game and a movie or TV showis a lot differnet, you can still monetiize on a game you sellthrough a subscription with MTX, DLC and battlepasses.
    • For the games that get cyclled out the licensing cost is cheap
    • There's no backend deals for internal games, game devs or voice actors don't get extra money
      • This means when Microsof makes a game, they don't have to keep paying to redistribute that game, Streaming services have to pay fair-market value for shows that they own distribution rights to. You can't make a deal where someone gets a percent of the profits and you just distribute it for $0. Streaming companies license out shows/movies to themselves based on fair market value and then give a percent to whoever it is owed
    • there's no unions asking for better pay every year and again even more backend deals with unions
    • Sequiels to a game can be more cost effective than a second season with actors asking for more money per epsid
  • Netflix has been profitable from 50-200 million subcribers, and Microsoft can probably run game pass a lot cheaper than Netflix runs Netflix. So even at 50,60,70,80,90,100 subs there's still good moeny to be made.
    • Netflix does a lot of work in discovery algoritmh, and data anlysis. Microsoft doesnt seem to really care. They aren't relaly building complex game recomendation systems. Netflix is one of the highest paying companies in tech they new grads average like 250K cash last I heard and their senior engineers average around 500k
  • I don't think streaming is the future of gaming either but I do think it will be a major part of it.
 

Three

Member
It was inevitable. They had a massive increase because of covid and now people are out again. Their shows are kind of shit too IMO.
 
  • Netflix has been profitable from 50-200 million subcribers, and Microsoft can probably run game pass a lot cheaper than Netflix runs Netflix. So even at 50,60,70,80,90,100 subs there's still good moeny to be made.

Lol at anyone who thinks a videogame sub service will get anywhere near those figures.
 

Fitzchiv

Member
FFS. Ok, I'll bite.

1) Netflix and Gamepass and Disney+ and Apple TV and PlayStation and Amazon Prime are all competitors. Framing this in direct comparison of media types is useful only when considering particular segments at the extreme ends of the overall distribution, and production costs required to compete (think difference in budget for a "AA" TV show Vs a "AA" game). This battle has been raging for some time now, and it is the battle for share of time of consumers - of which there is a finite amount.

2) This arena is approaching saturation point, as there are also a finite number of consumers willing to overlap services.

3) This arena has benefited significantly from a recent market shock (Covid-19) and now needs to re-correct as the world opens up and new competitors like cinemas, restaurants, bars, clubs etc reclaim their share.

What does it mean in context it Netflix and Gamepass? Sure there is more likelihood of a Gamepass subscriber redeploying to PS or a Netflix to Disney+ as people manage their portfolio of ways to waste time and there are big overlaps, but the question for all of them is how to avoid what's happened to Netflix: price no longer equates to quality, so they're the little bear that just rolled out of the bed.

Will it happen to Gamepass? Entirely up to MS and what they do with that price/quality dynamic. Right now I'd say it is getting it right, particularly in context of a penetration pricing strategy designed to drive growth fast of a newly defined category. That's the other thing to consider with Netflix, where are they in their product lifecycle? As you increase price it is natural the pool of customers able and willing to pay for the offer reduces, but those that do are paying more - it's a fine balance.
 

arvfab

Member
A lot of providers have started their own services and trying to keep their content locked to their platform.

Netflix was best before all of that content became fragmented and then it seems like they offer less interesting content that I am interested in and keep raising the prices.

Now swap Netflix out with any gaming subscription service and watch history repeat itself.
 
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Bogroll

Likes moldy games
Sometimes it's good to take a step back and look at these SERVICES and ask the question, "Is this service valuable to ME at its current price point?"

Personally I don't care if GamePass is financially viable for MS. I don't care if MS spends $$ buying others devs. I don't care if Playstation+ has more games.

If Gamepass has the content I like, I'll subscribe. If not, I'll go back to buying specific games as that is still an option and probably will never not be one.
Really is this simple. People are so dramatic today.
 

jufonuk

not tag worthy
Do you think they will close the internet down because Netflix lost some people ?

How will this affect Nintendo online ?

Scared Bladesmiths GIF by DefyTV



I am sure it will all be ok in the end. I hate how the stock market moves up and we get no money but when it drops we all get in trouble ? Yay ??
 
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Kagey K

Member
Sometimes it's good to take a step back and look at these SERVICES and ask the question, "Is this service valuable to ME at its current price point?"

Personally I don't care if GamePass is financially viable for MS. I don't care if MS spends $$ buying others devs. I don't care if Playstation+ has more games.

If Gamepass has the content I like, I'll subscribe. If not, I'll go back to buying specific games as that is still an option and probably will never not be one.
Facts. Too many people care about helping the businesses they love over caring about how those businesses are helping them.
Netflix is losing subscribers, because it’s price has increased while production companies have protected most of their own IP away from them and made it exclusive. It was only a matter of time.
This is the crux of Netflix problem.

They arent making (or securing) content people want to see, and rais8ng prices at the same time.

Its a bad mix.
As long as Microsoft respects their users GamePass will be just fine.
This is where they lost thier way. They can't keep raising prices while losing content people want to watch.

Thats not the way to win consumers over.
It could on playstation, Xbox has 25 million and doesn't even have that many good games and a smaller installbase
I don't think any gaming subscription is going over 100 million anytime soon.

Even basic ps+ or Switch Online can't hit those numbers. People aren't clambering to spend more.
 

Lupin25

Member
Piracy has nothing to do with it. If anything it furthers interest and drives paid subscribers who want convenience. This has been proven time and time again. Just look at Game of Thrones.

Also, sharing accounts and passwords is a lame excuse they used. This isn't affecting their bottom line either.

It's also not about NBC or Time Warner withholding content from them. HBO learned a long time ago that non original programming is not going to drive subscribers.

This is 110% about a company that can't find their next hit original series. They were outbidding HBO and now AppleTV, HBO, and others are outbidding them for IP.

Why would they make the efforts to eradicate account/password sharing if it didn’t affect them?

Losing 200k subscriptions is a number of variables, including this one (while consumers are trying to save money with rising costs and competing platforms).

I agree with IP being outbid on with the likes Apple, Disney & Amazon investing heavily into the space, but these are all competing variables at this point in time.

If I unsubscribe paying $20 premium, because I can resort to cutting costs using a relative’s or trusted source that could certainly affect their “bottom line”.
 

Kagey K

Member
Why would they make the efforts to eradicate account/password sharing if it didn’t affect them?

Losing 200k subscriptions is a number of variables, including this one (while consumers are trying to save money with rising costs and competing platforms).

I agree with IP being outbid on with the likes Apple, Disney & Amazon investing heavily into the space, but these are all competing variables at this point in time.

If I unsubscribe paying $20 premium, because I can resort to cutting costs using a relative’s or trusted source that could certainly affect their “bottom line”.
I guess they will save on server costs if the person that was shared with doesn't resubscribe, but I think they are betting the shared person will get thier own subscription.
 

Kagey K

Member
Such a small percentage in a greedy world owned by investors 🤣 1st world problems …
It's a fucked up world.

What did you do to promote growth?
Nothing.....

Did it grow?
No.....

Well let's charge the people that stuck around more, so it looks like it grew
 

Kagey K

Member
It took to the second page, but we have a winner. This so much.
Nah,

Inflation rate, cost of food, cost of housing, cost of fuel are all meaningful.

Let's not handwave the costs this is going to have on all of us as a blip on Netflix subscribers.

The tail coming out of 2 years of lockdowns is going to show it's ugly face soon.
 

Zeroing

Gold Member
When you say your service is the Netflix of gaming of course people will start making comparisons…
 
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