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Sony Gamepass: Does it really not make sense financially? Let's see

IDKFA

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I really don't know if it makes financial sense. Microsoft may be losing money now, but they're thinking about the long game. I think Sony will have to jump on board soon and revamp PS Now to make it on the same level as Gamepass.

I still want a PS5, but I'm buying a XSX first because of Gamepass.
 
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yurinka

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That's not true anymore. Fact is PS Now use Microsoft Azure servers, they signed a deal a year or two ago.. Sony can easily now provide a game pass like service for its fans. Microsoft data centers all around the world in places Sony sells the PS5.

Sony doesn't have the same revenue stream as Microsoft, to splash the cash around.
PSN, PS Plus and PS Now are the same using Azure servers or using another kind of servers (I think the previous one they were using were Amazon AWS, the clear market leader). They can migrate them to whatever server they want. When a company migrates from a server type to another typically is to save money, or to pay more money but have certain scaling options.

Most data centers around the world aren't owned by MS, Amazon, Google, etc. There are 3rd party companies who are datacenters and then MS, Amazon, Google or any other company hire their services. So the same datacenter typically is working at the same time for Azure, AWS, Google and for many webs, apps or games, or a cloud like PSN.

Sony already has a game pass like service. It's called PS Now and debuted before game pass and before putting it on Azure. They also have PS Plus, which is more successful. To decide to put AAA games there day one is a (suicidal) business decision, not a technical issue that requires Azure or any tech from MS.

And sure, Sony's gaming division doesn't have the same revenue stream than the MS one, it has way more.
 

Negotiator101

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PS+ is also a subscription service, one that has been doing good for Sony for many years, so its not about that.

Expecting Sony to release their AAA titles on psnow Day one, would be like expecting Marvel to release their DCU movies at their peak on Netflix Day one.
Disney have been doing so, admittedly with a big price tag. Will they do this when the cinema reopen, who knows. Look the market is big enough for all 3 to do amazing but I think Microsoft are building for the future at the moment but Sony are still King.
 

Clear

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You could also look at it the other way and say that by actually testing the waters with this one title, they can get real data on how Gamepass affects sales performance that MS simply cannot bury inside aggregated annual reports, which they can then use to argue why placing titles day#1 is a net loss or gain.

Also, what does it say about Xbox's software line-up that they need to pay for a competitor's title day#1 on GP, and how it might look if they decide to not publish future Bethesda titles at all on Playstation.

I mean, and I'm not saying that this is what it is, this could be some sort of quid-pro-quo deal that Sony and MS have hashed out behind closed doors.
 
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dibella360

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To me, I don't think we have seen gamepass final form yet. I think Microsoft is playing the long game here and thinking beyond traditional consoles. Gamepass starts to make financial sense where you remove all the barriers and look at xcloud. When Phil said he believes billions of players will be playing Bethesda games ...I think he honestly believes that.

With the notion of xcloud tv apps, pc, and independent phone apps, we are not talking about 50 million subs here but 10x that. Like Netflix and every other streaming service, the key here is scale. Yes, Sony is right here... it doesn't make financial sense when you are applying it to the existing userbase but that is not what Microsoft is aiming for.
 
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reinking

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I guess my question is, is Game Pass making a profit yet? I have not seen anything to indicate that it is. I see pumped up subscriber numbers and that might lead to profit down the road but it has not proven to make financial sense yet.

I would welcome Sony putting more effort into PS Now and maybe adding some/all Sony new releases day one like MS does with Game Pass but I do not want them to combine PS Plus with it.
 

Clear

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tbh, unless its Microsoft or any mega corporation, its not sustainable for smaller companies like Sony.

Sony is by no measure small!

This is irrelevant anyway, GP is just an operating model that either makes enough money to support itself or it doesn't! Sooner or later the balance sheet needs to get tallied, and right now its years away from being a big money maker. Hell, whether it'll ever perform satisfactorily is debatable as it requires continuous investment to keep afloat.
 
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Sub Boss

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Depends, if they can get their userbase to buy their games at $70 each one in the millions i would argue changing to a GamePass model would be dumb.
 

Zeroing

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I guess my question is, is Game Pass making a profit yet? I have not seen anything to indicate that it is. I see pumped up subscriber numbers and that might lead to profit down the road but it has not proven to make financial sense yet.

I would welcome Sony putting more effort into PS Now and maybe adding some/all Sony new releases day one like MS does with Game Pass but I do not want them to combine PS Plus with it.
Gamepass is not profitable hence the marketing that is not free either so it’s more added cost.
Haven’t people realize why for the past weeks we been seeing a lot of podcasts and “opinion” articles about it? While some can be genuine, many others are definitely not!

so while people are busy fighting they don’t even realize that the service on PC doesn’t even work well.
 

radewagon

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Why would the platform with the single best exclusives on the market (eat it Nintendo fanboys :messenger_beaming:) want to minimize the amount of money they make from those exclusives?
 

MHubert

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Disney have been doing so, admittedly with a big price tag. Will they do this when the cinema reopen, who knows. Look the market is big enough for all 3 to do amazing but I think Microsoft are building for the future at the moment but Sony are still King.
True, but don't expect Sony to change their business model as long as they can see most of their AAA titles having life-time sales north of 8 million copies - I don't think their studios would want that, either.

If putting out first party AAA titles day one on PSNow would rake in more money, they would do it. It's that simple.

Also, as for the narrative that Sony is sitting on their laurels, while MS invests in the future: This is simply not true. I know you can't compare the value of PSNow vs. Gamepass, but its not like the two services are worlds apart. PSNow is a testament from Sony, that they also believe that there is a future for this kind of model.
 
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Trogdor1123

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Op you are I've over complicating it. Just add another tier with psnow included and add more games to it. They could add an additional fee for their animation stuff but they should keep it as simple as possible.
 

G-Bus

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Sony already has gamepass in the form of ps now. Is the only difference being Sony doesn't put exclusives or big name games day 1.

Don't get the argument. Maybe Microsoft has a better library. Still the same service isn't it?
 

Hitchyhero

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I don't see a Sony gamepass equivilent working... as PS fans are adament they don't like to "rent" games, and on top of that if gamepass is "unsustainable" then I don't see why their equivilent could be.
 

Outrunner

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Sony makes more money on game and services sales than Microsoft, why the hell would they bother.
 
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Hitchyhero

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GamePass isn't sustainable, it's a money hole. Sony isn't doing it because they don't need to, they are earning billions while MS is losing hundreds of millions trying to disrupt the market.

It is sustainable. We've seen this kind of service do exactly what MS do. Its what Spotify and more simularly Netflix did.

MS is offering subscriptions at discounted rates atm($1 for 3 months or roughly $121for 3 years). That will build the sub base up alot, and if going by history most tend to keep it. Word of mouth spreads how good it is. More people subscribe. Eventually the $1 deals wil stop and you'll have all full paying subs. Then down the line when you have a huge userbase the model becomes profitable and extremely so.

It may be a 'money sink' currently (you don't know) but these models tend to be at the start. It won't stay like that is the subscribers numbers continue to go up which I believe it will. Then MS will be making tons.

If your in the industry and know as much as your making out, perhaps work for MS and advise them as you seem to know more about how to make money then they do.
 
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Uncharted bunghole
Jar Sony can't afford a GamePass. So that is why they should just bring PlayStation onto GamePass

Xbox & PlayStation Gamers: Put PlayStation on GamePass - Sign the Petition! https://www.change.org/p/xbox-plays...ed_by_id=f1d60690-29e0-11ea-b4d3-dff79b3f7c34
the phantom menace GIF by Star Wars


Please don't do things like this.
 
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Excess

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"Financially unsustainable" is just a thinly veiled way of expressing a lack of cloud infrastructure that Sony does not have. That's why it hasn't happened yet.

/thread
 
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megreotsugua

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If you were to design a Sony Gamepass, what would you do?

Here.

 
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MonarchJT

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PSN, PS Plus and PS Now are the same using Azure servers or using another kind of servers (I think the previous one they were using were Amazon AWS, the clear market leader). They can migrate them to whatever server they want. When a company migrates from a server type to another typically is to save money, or to pay more money but have certain scaling options.

Most data centers around the world aren't owned by MS, Amazon, Google, etc. There are 3rd party companies who are datacenters and then MS, Amazon, Google or any other company hire their services. So the same datacenter typically is working at the same time for Azure, AWS, Google and for many webs, apps or games, or a cloud like PSN.

Sony already has a game pass like service. It's called PS Now and debuted before game pass and before putting it on Azure. They also have PS Plus, which is more successful. To decide to put AAA games there day one is a (suicidal) business decision, not a technical issue that requires Azure or any tech from MS.

And sure, Sony's gaming division doesn't have the same revenue stream than the MS one, it has way more.
psnow isn't like gamepass at all. Neither in terms of game quality (metacritic) nor as a basic feature, i.e. releasing all games on day One on the service. And above all not even as user reach seen that GP combines the PC and platforms console (and on top of this also streaming on basically everything else)
Anyway Ps+ it was not successful on its own feet, but solely due to the fact that you need it to play multiplayer, if you compare the number of PlayStation / ps+ users vs number of ms users and whoever pays for gold live you will realize that the two services are comparable. On the Sony side we have around 114m consoles with 47m ps + users on the ms side we have 47m of consoles with 19m of live Gold users
 
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Spukc

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GamePass isn't sustainable, it's a money hole. Sony isn't doing it because they don't need to, they are earning billions while MS is losing hundreds of millions trying to disrupt the market.
You sound like an old angry boomer not understanding internet and MP3's back when people still bought cd's to listen to music

Don't be that guy... Act now or lose it all
 

12Dannu123

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With the latest MLB on GP day 1 move, I think Xbox has forced Sony's hand. We will see some response from Sony in the near future. The most likely option would be that Sony uses the PS+ subscription to expand the PS+ Collection and use it as a competitor for Xbox GamePass.

However, a Sony Gamepass just wouldn't work (imo) if PlayStation Studios games do not release on that subscription service day one.

Everyone's favorite Jim Ryan has said that it does not make financial sense to put these AAA blockbuster games on a subscription service because those games cost over $100M to develop. Honestly, this makes sense because Sony's games really are the epitome of AAA.

But let's explore if it's really the case. More importantly, let's share our ideas of what a Sony GamePass could look like and how it would make financial sense (based on the limited information we have).

Possible Idea for a Sony GamePass

My idea is that Sony should just the PS+ subscription and divide it into 2 tiers:
  • Tier 1 ($30/$40 per year): Online multiplayer + Cloud storage
  • Tier 2 ($100/$120 per year): Online multiplayer + Cloud Storage + PS Now Downloadable section + PS Plus Collection + New monthly games + Day 1 releases of first-party games
Will it make financial sense for Sony?

PS+ current subscriber base is roughly 50 million active users. I think that's the biggest advantage Sony can leverage. How will it work?
  • Let's assume that by increasing the price, Sony loses roughly half the subscribers and ends up with 25 million active Tier 2 users. At $100 per year, that'd net Sony $2.5 billion every year. That's a lot of dough.
  • Assuming Sony releases 5 AAA games per year, each costing $150M, on the subscription, that would cost them $750 million per year. That still leaves them with $1.750 billion that Sony could use to get third-party deals.
  • Assuming AA and AAA third-party games, on average, costs $10M (seems high!) to put on a Gamepass-type subscription, Sony could add 10 third-party games every month (!) at an annual cost of $1.2 billion.
  • That still leaves Sony with roughly $500million as annual profit.
Sony would likely earn more than $500 million because of:
  • Income from Tier 1 subscribers.
  • Retail sales of first-party games from non-subscribers
  • MTX and in-game purchases in first-party and third-party games from subscribers and non-subscribers.
  • Sony already gives away 3-4 games every month to PS+ subscribers. I didn't include that cost in the above calculation. So that money will be saved or deducted from the aforementioned $1.2 billion.
  • Sony also gives away 3-6 games every month on PS Now. By merging these two subscriptions, Sony would not have to bear that additional cost, thus will save money there as well.
  • If Sony makes everything downloadable on consoles, they could do away with streaming servers (which would also save them money)
  • By making the subscription dependant on console downloads, Sony will also be able to bring people to their ecosystem.
  • They can release first-party games on day one, and then later release some games on PC at $60 or $70 retail after a year or two for additional income. But the value of their subscription will be more pronounced on a PlayStation console.
  • Most importantly, as subscribers grow above 25 million, Sony will also start increasing their profits almost linearly.
Note 1: There is a lot of assumptions simply because we don't have the actual data. But I kept the cost as high as possible.

Note 2: Personally, I am not a big fan of subscription services, and I'm not entirely sold if these are 100% sustainable in the long run. So a Sony Gamepass isn't necessarily my wish. But this has become such an interesting case study scenario b/w two very good companies and their contrasting business strategies that we likely won't see in the gaming industry ever again. So I wanted to share my ideas and seek others'.

What do y'all think? If you were to design a Sony Gamepass, what would you do?
There's a flaw in this math. You're only thinking about the existing PS userbase. You need to take into account the Cloud Gaming portion of a game subscription service. This is where the economics of a game subscription service by Sony becomes unsustainable. Because cloud gaming consumes more data than TV and film subscriptions, it will drive up cost, there's also the risk that cloud gamers consume more data than they are paying. The risk increases the more users there are.

Cloud infrastructure is ridiculously expensive, it's what forced Discord to sell to Microsoft. MS has their own servers so they don't have this problem that Sony will face.
 
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megreotsugua

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Why does Sony have to do anything? Why can’t they offer something different? They are still selling more consoles so they are doing something right.

Gamepass has been on the market for 5 years and barely doing 18M with lots of $1 deals. They plan to lure the casuals, the 2 billion, in this service but it's hardly moving the needle.

Compare that to Disney+ which has 80M+ subs and counting in only 1 year.

Gamepass is a hardsell among the hardcore crowd. Among the casual it'a dead.

What happened here is that MS bought the rights of MLB The Show. Now ms fans are acting like gamepass suddenly gained "full-paying" subscribers and started acting like gamepass is the future.

MS is silent about xbox and gamepass earnings for a reason. They will shout at the top of their lungs if gamepass is the successful business model that ms fans is bragging it as. The truth is, it's not. That's why MS hiding is hiding its earnings in their financials.
 

Outrunner

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And let's be honest if Sony would start releasing their first parties on a subscription service Xbox would be yeeted out of existence. So be glad Sony doesn't take that step
 

MonarchJT

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Gamepass has been on the market for 5 years and barely doing 18M with lots of $1 deals. They plan to lure the casuals, the 2 billion, in this service but it's hardly moving the needle.

Compare that to Disney+ which has 80M+ subs and counting in only 1 year.

Gamepass is a hardsell among the hardcore crowd. Among the casual it'a dead.

What happened here is that MS bought the rights of MLB The Show. Now ms fans are acting like gamepass suddenly gained "full-paying" subscribers and started acting like gamepass is the future.

MS is silent about xbox and gamepass earnings for a reason. They will shout at the top of their lungs if gamepass is the successful business model that ms fans is bragging it as. The truth is, it's not. That's why MS hiding is hiding its earnings in their financials.
barely doing 18m ?? the service has begun to gain traction in the last year making nearly 1 million users per month. all this without yet any new AAA exclusives from either the old or the new studios. If you think Halo Infinite won't bring new users to gp I really have a bridge to sell to you.
Gamepass is an incredible success and everyone in the industry is recognizing it just like this

I repeat when halo launches we will see the GP numbers splash .. especially on pc
 
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JerryinSoCal

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With the latest MLB on GP day 1 move, I think Xbox has forced Sony's hand. We will see some response from Sony in the near future. The most likely option would be that Sony uses the PS+ subscription to expand the PS+ Collection and use it as a competitor for Xbox GamePass.

However, a Sony Gamepass just wouldn't work (imo) if PlayStation Studios games do not release on that subscription service day one.

Everyone's favorite Jim Ryan has said that it does not make financial sense to put these AAA blockbuster games on a subscription service because those games cost over $100M to develop. Honestly, this makes sense because Sony's games really are the epitome of AAA.

But let's explore if it's really the case. More importantly, let's share our ideas of what a Sony GamePass could look like and how it would make financial sense (based on the limited information we have).

Possible Idea for a Sony GamePass

My idea is that Sony should just the PS+ subscription and divide it into 2 tiers:
  • Tier 1 ($30/$40 per year): Online multiplayer + Cloud storage
  • Tier 2 ($100/$120 per year): Online multiplayer + Cloud Storage + PS Now Downloadable section + PS Plus Collection + New monthly games + Day 1 releases of first-party games
Will it make financial sense for Sony?

PS+ current subscriber base is roughly 50 million active users. I think that's the biggest advantage Sony can leverage. How will it work?
  • Let's assume that by increasing the price, Sony loses roughly half the subscribers and ends up with 25 million active Tier 2 users. At $100 per year, that'd net Sony $2.5 billion every year. That's a lot of dough.
  • Assuming Sony releases 5 AAA games per year, each costing $150M, on the subscription, that would cost them $750 million per year. That still leaves them with $1.750 billion that Sony could use to get third-party deals.
  • Assuming AA and AAA third-party games, on average, costs $10M (seems high!) to put on a Gamepass-type subscription, Sony could add 10 third-party games every month (!) at an annual cost of $1.2 billion.
  • That still leaves Sony with roughly $500million as annual profit.
Sony would likely earn more than $500 million because of:
  • Income from Tier 1 subscribers.
  • Retail sales of first-party games from non-subscribers
  • MTX and in-game purchases in first-party and third-party games from subscribers and non-subscribers.
  • Sony already gives away 3-4 games every month to PS+ subscribers. I didn't include that cost in the above calculation. So that money will be saved or deducted from the aforementioned $1.2 billion.
  • Sony also gives away 3-6 games every month on PS Now. By merging these two subscriptions, Sony would not have to bear that additional cost, thus will save money there as well.
  • If Sony makes everything downloadable on consoles, they could do away with streaming servers (which would also save them money)
  • By making the subscription dependant on console downloads, Sony will also be able to bring people to their ecosystem.
  • They can release first-party games on day one, and then later release some games on PC at $60 or $70 retail after a year or two for additional income. But the value of their subscription will be more pronounced on a PlayStation console.
  • Most importantly, as subscribers grow above 25 million, Sony will also start increasing their profits almost linearly.
Note 1: There is a lot of assumptions simply because we don't have the actual data. But I kept the cost as high as possible.

Note 2: Personally, I am not a big fan of subscription services, and I'm not entirely sold if these are 100% sustainable in the long run. So a Sony Gamepass isn't necessarily my wish. But this has become such an interesting case study scenario b/w two very good companies and their contrasting business strategies that we likely won't see in the gaming industry ever again. So I wanted to share my ideas and seek others'.

What do y'all think? If you were to design a Sony Gamepass, what would you do?
PlayStation makes Sony more than $500m profit in a single quarter now. You also have to realize the kind of content Sony makes would have to be changed if they wanted to keep people subscribed, most of their games are thankfully story driven single player experiences that can be finished in a month, you aren't going to have people who want to subscribe for a year at a time especially when they won't be releasing 5 AAA titles a year they never do.
 
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Clear

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There's a flaw in this math. You're only thinking about the existing PS userbase. You need to take into account the Cloud Gaming portion of a game subscription service. This is where the economics of a game subscription service by Sony becomes unsustainable. Because cloud gaming consumes more data than TV and film subscriptions, it will drive up cost, there's also the risk that cloud gamers consume more data than they are paying. The risk increases the more users there are.

Cloud infrastructure is ridiculously expensive, it's what forced Discord to sell to Microsoft. MS has their own servers so they don't have this problem that Sony will face.

Here's the thing though: What came first, the chicken or the egg? Or in this case the "ridiculously expensive" infrastructure, or the service that uses it?

See, MS have poured a fortune into Azure because they hoped to make money from it. Now if its being used to prop up Xbox, which means they most likely had bandwidth/capacity going spare because realistically they'd prefer a third-party to be paying for its use. Basically they are their own client for this so aren't actually making any money from it!

Bottom line: Not having to resort to an external partner for hosting may be a cost saver for Xcloud, but its still costing MS money.
 

yurinka

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psnow isn't like gamepass at all. Neither in terms of game quality (metacritic) nor as a basic feature, i.e. releasing all games on day One on the service. And above all not even as user reach seen that GP combines the PC and platforms console (and on top of this also streaming on basically everything else)
Anyway Ps+ it was not successful on its own feet, but solely due to the fact that you need it to play multiplayer, if you compare the number of PlayStation / ps+ users vs number of ms users and whoever pays for gold live you will realize that the two services are comparable. On the Sony side we have around 114m consoles with 47m ps + users on the ms side we have 47m of consoles with 19m of live Gold users
They are the basically same, for sure. GamePass is Microsoft's attempt to have their own PS Now: a game download and streaming service that aims to have a big library from several generations playable on console, PC and mobile by paying a subscription.

Obviously there are differences, like PS Now having a bigger catalog -almost 900 games- of streamable and downloadable (PS2 and PS4 and not in PC) games, different platform availability (is already fully working on console and PC, coming to mobile/tablets/etc) or different pricing (a single service/subscription for all platforms) etc.

MS also made their own version of Remote Play to stream from (this is free) your console instead of from the (this requires subscriptin) servers.

Gold and PS+ aren't a service for PS4 and XBO only. As an example, you can get PS+ for PS3, PS5 or Vita, or Gold for 360 or Series X|S, or to have Game Pass streaming in mobile or PC (streaming is only available on GP Ultimate, which includes gold), etc.

Here's the thing though: What came first, the chicken or the egg? Or in this case the "ridiculously expensive" infrastructure, or the service that uses it?

See, MS have poured a fortune into Azure because they hoped to make money from it. Now if its being used to prop up Xbox, which means they most likely had bandwidth/capacity going spare because realistically they'd prefer a third-party to be paying for its use. Basically they are their own client for this so aren't actually making any money from it!

Bottom line: Not having to resort to an external partner for hosting may be a cost saver for Xcloud, but its still costing MS money.
Azure is software running on the servers. Sure, to have these licenses for free saves them some money.

But the data centers for Azure, AWS or anyone else are primarly owned by 3rd party datacenter companies from around the world that all these companies hire and they are outsourcing work while also physically hosting servers from many other webs, video streaming services, apps, games and more. And well, their hardware, HDD's, bandwidth/internet connection usage, etc is the same.

Depending on your needs to store your server cloud sometimes is better to use Amazzon, MS, Google or other services. The market leader here is Amazon. If Sony moved to Azure maybe is because it got better pricing, helps to improve some server scaling tech stuff, or something like that.The bandwith/capacity is something you hire as client: you pay a certain amount of money depending on the bandwith and the amount of servers you want your cloud (in this case PSN or XBL) to havee.
 
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Dr Bass

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🙄 ffs. A simple search on google will tell you otherwise.
"ffs", what are you googling exactly?


Latest quarterly earnings, not cash flow positive, but hoping to get there soon. Raised a ton of debt in 2011 that it still needs to pay down. 200 million subscribers. And yet with all this, yeah they are money losing operation. Maybe not in the near future. Any profits in past quarters has to do with how they are doing accounting and amortizing production expenses. But they are burning a lot of money. And they had a few quarters last year of being "cash flow positive", but again, it was because they halted production. So they were only hitting that by not making new content. That certainly isn't sustainable with a subscription service. Netflix, as it stands now, is a money losing business with 200 million people signed up and billions of revenue each quarter. It begs the question for people who think GP is going to be this massively profitable success, what has Phil Spencer figured out, that Reed Hastings has not?

People who sign up for GP definitely don't have to worry about this stuff. It's not their problem. Take advantage of it all you want. It just seems to go against basic reason in terms of it being a good business move for MS. If it were, why wouldn't the number 1 and 2 game companies be jumping on it?
 

Leyasu

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Perhaps that's the reason Jim/Sony isn't that worried? They may have a firm belief in their tried-and-tested method, instead of trying a subscription-based method (which honestly no one in the gaming industry has made excellent profits with).
Of course nobody has made “excellent profits “ yet. Sub services take time and investment before reaching critical mass. This should not have to be explained.

Disney predicted 5-6 yrs before their service becomes profitable. I am sure Microsoft are projecting a bit longer.
 

Leyasu

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Depends, if they can get their userbase to buy their games at $70 each one in the millions i would argue changing to a GamePass model would be dumb.
? Getting 30m subscribers paying 15 a month every month doesn’t seem dumb to me.

That sort of money can easily pay the salaries of all people working on the games and then some. Plus people still buy the games.

That is on top of everything thing else related to the console, mtxs etc.
 

Azurro

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You sound like an old angry boomer not understanding internet and MP3's back when people still bought cd's to listen to music

Don't be that guy... Act now or lose it all

It's fundamentally different because the level of investment needed to create games can't be covered with a $10 monthly subscription, which limits the amount of third party games that can be included, even if MS is throwing billions away at it by using their first party games as loss leaders, but how much money do you think they pay Ubi soft and EA to pay for their content, plus whatever other fees they need to pay other publishers and devs to keep that content there? Of course it's a money hole, any dumbass can see that.

The thing is, MS is willing to believe they can somehow expand their market, while I see it as incredibly difficult given their shrinking Xbox userbase and the lost cause to attempt to displace Steam as the go to gaming app on PC, while also banking on Cloud gaming finally happening.

It is not going to happen, but MS has the pockets to throw billions at something way past the point it's obvious it won't be a thing, so we won't settle the argument for a long time.
 
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Sub Boss

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Depends,
? Getting 30m subscribers paying 15 a month every month doesn’t seem dumb to me.

That sort of money can easily pay the salaries of all people working on the games and then some. Plus people still buy the games.

That is on top of everything thing else related to the console, mtxs etc.
They need to be sure its gonna replace their traditional model, its like people wanting Nintendo to jump on GamePass it may happen one day when the money stops coming but they have no reason to do it now
 

BeardGawd

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With the latest MLB on GP day 1 move, I think Xbox has forced Sony's hand. We will see some response from Sony in the near future. The most likely option would be that Sony uses the PS+ subscription to expand the PS+ Collection and use it as a competitor for Xbox GamePass.

However, a Sony Gamepass just wouldn't work (imo) if PlayStation Studios games do not release on that subscription service day one.

Everyone's favorite Jim Ryan has said that it does not make financial sense to put these AAA blockbuster games on a subscription service because those games cost over $100M to develop. Honestly, this makes sense because Sony's games really are the epitome of AAA.

But let's explore if it's really the case. More importantly, let's share our ideas of what a Sony GamePass could look like and how it would make financial sense (based on the limited information we have).

Possible Idea for a Sony GamePass

My idea is that Sony should just the PS+ subscription and divide it into 2 tiers:
  • Tier 1 ($30/$40 per year): Online multiplayer + Cloud storage
  • Tier 2 ($100/$120 per year): Online multiplayer + Cloud Storage + PS Now Downloadable section + PS Plus Collection + New monthly games + Day 1 releases of first-party games
Will it make financial sense for Sony?

PS+ current subscriber base is roughly 50 million active users. I think that's the biggest advantage Sony can leverage. How will it work?
  • Let's assume that by increasing the price, Sony loses roughly half the subscribers and ends up with 25 million active Tier 2 users. At $100 per year, that'd net Sony $2.5 billion every year. That's a lot of dough.
  • Assuming Sony releases 5 AAA games per year, each costing $150M, on the subscription, that would cost them $750 million per year. That still leaves them with $1.750 billion that Sony could use to get third-party deals.
  • Assuming AA and AAA third-party games, on average, costs $10M (seems high!) to put on a Gamepass-type subscription, Sony could add 10 third-party games every month (!) at an annual cost of $1.2 billion.
  • That still leaves Sony with roughly $500million as annual profit.
Sony would likely earn more than $500 million because of:
  • Income from Tier 1 subscribers.
  • Retail sales of first-party games from non-subscribers
  • MTX and in-game purchases in first-party and third-party games from subscribers and non-subscribers.
  • Sony already gives away 3-4 games every month to PS+ subscribers. I didn't include that cost in the above calculation. So that money will be saved or deducted from the aforementioned $1.2 billion.
  • Sony also gives away 3-6 games every month on PS Now. By merging these two subscriptions, Sony would not have to bear that additional cost, thus will save money there as well.
  • If Sony makes everything downloadable on consoles, they could do away with streaming servers (which would also save them money)
  • By making the subscription dependant on console downloads, Sony will also be able to bring people to their ecosystem.
  • They can release first-party games on day one, and then later release some games on PC at $60 or $70 retail after a year or two for additional income. But the value of their subscription will be more pronounced on a PlayStation console.
  • Most importantly, as subscribers grow above 25 million, Sony will also start increasing their profits almost linearly.
Note 1: There is a lot of assumptions simply because we don't have the actual data. But I kept the cost as high as possible.

Note 2: Personally, I am not a big fan of subscription services, and I'm not entirely sold if these are 100% sustainable in the long run. So a Sony Gamepass isn't necessarily my wish. But this has become such an interesting case study scenario b/w two very good companies and their contrasting business strategies that we likely won't see in the gaming industry ever again. So I wanted to share my ideas and seek others'.

What do y'all think? If you were to design a Sony Gamepass, what would you do?

Sony makes $500 million off one game itself just in initial sales not factoring in DLC.
 

Ten_Fold

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No it doesn’t. Sony can sell a new god of war at $70 an sell like 5+ million copies in 1 month. They can make horizon and sell about the same. Microsoft games doesn’t have that same selling power right now. Halo hasn’t been huge since 3, I think infinite will be amazing and will do well. It’s probably gonna be on gamepass. Now once ES6 and a new fallout and fable come then I would say the Xbox will probably be a overall better choice.

Now back to Sony can make more money off of their AAA games because once it’s $20 dollars at retail they will put it on PC with all the DLC sell afew more million copies at a higher price.
 

jroc74

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Sony already has a game pass like service. It's called PS Now and debuted before game pass and before putting it on Azure. They also have PS Plus, which is more successful. To decide to put AAA games there day one is a (suicidal) business decision, not a technical issue that requires Azure or any tech from MS.
Exactly. The only standing in the way is Sony deciding if their excusives go on there day one.

Hell, Sony could do it the Disney Plus way and add them after 1-2 months.
psnow isn't like gamepass at all. Neither in terms of game quality (metacritic) nor as a basic feature, i.e. releasing all games on day One on the service. And above all not even as user reach seen that GP combines the PC and platforms console (and on top of this also streaming on basically everything else)
Anyway Ps+ it was not successful on its own feet, but solely due to the fact that you need it to play multiplayer, if you compare the number of PlayStation / ps+ users vs number of ms users and whoever pays for gold live you will realize that the two services are comparable. On the Sony side we have around 114m consoles with 47m ps + users on the ms side we have 47m of consoles with 19m of live Gold users
You're right, PSNow isnt like Game Pass:

There are no separate tiers
PSNow didnt need Plus for online MP day one, MS finally decided to do the same...for the most expensive tier.

Again, Sony went thru the growing pains of this on the PS3 with Plus IGC. They also have the content. They just need to decide if its best for them, and as of right now its not.

Remember when ppl asked how was Sony gonna counter Game Pass after it launched? Less than a year later they allowed downloads from PSNow. Some of yall make it seem like its a monumental hurdle to...add content to the service....lol.

Only thing MS are doing radical is all games day one, thats it.

Also......another fallacy is because Sony sold more consoles, MS sold less the Gold and Plus ratios means one is a better success? lol.
 
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zedinen

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1.How GP impacted PS sales (2020 vs 2017)?

Soft&NS
¥1.9 vs ¥1.1 T
Games 340.5 vs 269.7 M
PS+ 47.4 vs 26.4 M
MAU 114 vs 80 M

2.Is GP sustainable for Sony?

It's unlikely that GP supplants game sales as the primary business model, but Sony needs to be ready.

Sony has increased PS+ value proposition and there's news to come.
 

Yoboman

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It does come down to math in the end

After removing money they make from DLC and such - If they make more at $120 per user each year currently then they are losing profit. That’s two first party AAA game releases and/or third party royalties

It’s possible they do make that already but I am not so certain. They seem to average about 5- 10 million for a AAA release with a bare few pushing towards 20 million, and generally have about two major games a year.

If it were a first party service only it feels like that would be pretty easy to make into a 15-20 million subscriber base that provides consistent revenue. As a business it’s a great thing to have a fixed revenue stream like that too

The unknown is third party. I think they’d be trading getting revenue royalties for what seems to be paying the developers upfront. It’s a very different model. And much easier for MS to dip into when they probably weren’t making a whole lot last gen compared to Sony

I think it might be worth doing for Sony just as a killer app factor in Japan. MS won’t gain traction there with Gamepass but it might be really valuable against Nintendo in Japan

In terms of functionality it’s pretty easy for Sony. PS Now is already the delivery method, in fact it is everything Gamepass is it just needs the day one games commitment
 
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Spukc

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It's fundamentally different because the level of investment needed to create games can't be covered with a $10 monthly subscription, which limits the amount of third party games that can be included, even if MS is throwing billions away at it by using their first party games as loss leaders, but how much money do you think they pay Ubi soft and EA to pay for their content, plus whatever other fees they need to pay other publishers and devs to keep that content there? Of course it's a money hole, any dumbass can see that.

The thing is, MS is willing to believe they can somehow expand their market, while I see it as incredibly difficult given their shrinking Xbox userbase and the lost cause to attempt to displace Steam as the go to gaming app on PC, while also banking on Cloud gaming finally happening.

It is not going to happen, but MS has the pockets to throw billions at something way past the point it's obvious it won't be a thing, so we won't settle the argument for a long time.
in 10 years your post will look extremely silly, it's not a question about if. It's when.
 
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I'd pay £100 a year for a PlayStation Pass if it meant that I got to play Returnal, Ratchet + Clank, Forbidden West, and the rest from day one.
So, you would pay £100 for something that would normally cost you more then the double. Don't you see the problem?
 
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? Getting 30m subscribers paying 15 a month every month doesn’t seem dumb to me.

That sort of money can easily pay the salaries of all people working on the games and then some. Plus people still buy the games.

That is on top of everything thing else related to the console, mtxs etc.
Its not a question of whether they can cover there costs.

It's a question of whether they can get more profit than they do now

When all is said and done Sony is going to have at least 7 to 8 exclusives that have generated more than 500 million dollars each and God knows how much Nintendos exclusives have generated.

At the end of the day your games are your most important product tech and services are second and third. Nintendo have shown this for decades and Sony realized this during the ps3 era.

Until microsoft can develop competitive 1st party content I don't think gamepass will change much. It might be able to be sustainable but it won't be disruptive.
 
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turtlepowa

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PlayStation won't be dragged down to Xbox's level. For Xbox it's a case of "when you've got nothing, you've got nothing to lose". Sony exclusives sell millions upon millions of copies. They're simply not going to give them away when they can get hundreds of millions of dollars for them on launch day.
If it was that simple, everybody would be going for narrative 3rd person action adventures, but they cost at least 100-200 million dollar to make and also Sony has to spend insane amounts of money for marketing to get good sales numbers. For example a single Spider-Man tv spot just in the USA was almost 10 million dollars. Now imagine worldwide marketing with tv spots, radio, billboards, the Sony truck, internet ads, articles and so on. The main purpose for those games is to sell consoles and especially subscriptions + 3rd party games, because that's how they make most of their money.
 
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With the latest MLB on GP day 1 move, I think Xbox has forced Sony's hand.

I stopped reading there op. Nobody outside of America gives a shit about American things.

Secondly, Sony are better off just giving away free games every now and then and keep on doing what they're doing. Their games are quality, cater to their audience and sell like hot cakes.

Vs Microsoft who... 🤷‍♂️ who the fuck knows what they're doing. Thanks for the cheap games though
 
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JerryinSoCal

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in 10 years your post will look extremely silly, it's not a question about if. It's when.
Not really, MS has been pushing cloud/connectivity stuff for years and they are wrong every time. Look how hard they tried to push that stupid second screen nonsense, who the hell was going to put their controller down to use the phone to find something out about a game or to look at a map when they could just do that on a much bigger higher res screen right in front of them. They just don't get gaming, yeah Spencer plays Destiny but so what lol it's clear most of the decisions at xbox are made by suits who just look at spreadsheets and don't actually get their audience.

MS can afford to throw a ton of money at this pipe dream because xbox isn't important to their overall health as a company but Sony isn't in that position. Sony is much better off now than they were several years ago but PlayStation is where most of their money is made and they are not going to make changes to what's working for them it would be irresponsible.

The OP seems to think that people will stay signed up to a Sony service for a full year, I'd like to know how many xbox owners actually stay a full year on GP with no interruptions, there is no incentive to sign up for a year because they don't discount it, one full year costs the same as 12 individual months. MS has only released 3 AAA games since GP was a thing, the vast majority of games on the service are old titles (many 360 games) that people just go back to play because there is nothing else for them to play at the time. I have had gamepass a couple of times (always $1 or $2) and it really just wasn't a service that was worth paying for to me. Yes when you just look at the number of games you can try sure the "value" seems to be there but if you don't want to play any of those games or already have what's the point?