• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

Take-Two’s CEO says having its games on subscription services on day one ‘doesn’t make sense’ (VGC) (It doesn't when you sell 160+m copies of gtav)

kingfey

Banned
I understand the lucrative potential of subscription services, but something has to give when attempting to sell premium (massive budget) content under this model. You either cut the budget/quality for these games, or achieve a subscriber base and retention rate that supports the large budgets. In my opinion, consumers won't go for the former and as of today, there is no evidence to suggest that Microsoft is anywhere close to achieving the latter.
MS being a trillion dollar is the key for that, so no cut for their budget. They spent enough money to buy Nintendo on activision. They wont lower the budget for their games.
If it was someone like Nintendo, it would have affected them massively.
 

yurinka

Member
I think Zelnick explained it very well. To have the game there day one doesn't make sense for games that costs hundreds of millions of dollars and that sell many millions of copies. For these games, if something it's worth to included them when they no longer sell so the sub acts as a secondary extra revenue support channel.

Depending on the case, for small games maybe it's worth to have it there day one, depending on how much pays them the platform holder for putting it there. The problem with that is that consumers could get used to don't buy small games, so only the few small games chosen to be included there would survive, while now hundreds of small games are released every month.

I think the only way for AAA games to fit there day one would be the ones of a relatively small budget and are GaaS to a point they heavily rely on their DLC, microtransactions and season passes for their monetization. In this case a subscription would give them a bigger userbase, so more microtransactions and dlcs sold, even if not as big as in F2P games.
 
Last edited:

kingfey

Banned
I think Zelnick explained it very well. To have the game there day one doesn't make sense for games that costs hundreds of millions of dollars and that sell many millions of copies. For these games, if something it's worth to included them when they no longer sell so the sub acts as a secondary extra revenue support channel.
Ubisoft and EA does this on PC day1.
I think the underlying issue, is that no one wants to lose those money. If there are more users willing to spend money on your games, you want to maximize those sales.
 

ChiefDada

Member
Or if Microsoft buys take two ;)

Will not happen.

Because it would be harder for them to compete against Sony and Nintendo "without" doing it. It was a smart business move for them specifically and no one else. Don't forget that MS is neck-deep in the subscription business with almost every product they sell now. And it's working for them literally in every other business of theirs.

Until Microsoft provides cash flow information specifically for Xbox Gaming division, I refuse to 100% agree with this. Could be proven true in the future, but for now there are legitimate questions.

Don't forget that MS is neck-deep in the subscription business with almost every product they sell now. And it's working for them literally in every other business of theirs.

Lol yeah because those other businesses are highly commoditized. That is NOT the case with the console gaming industry that Nintendo, Sony and MS operate in. You basically highlighted my point here. Microsoft is introducing a business model that works best for services/commodities and trying to make it work in a premium gaming/entertainment industry where the product (game) is the main driver of consumer interest.

MS being a trillion dollar is the key for that, so no cut for their budget.

Market cap has absolutely nothing to do with how much money Microsoft or any other company has. I will admit that the purchase of King/Candy Crush could significantly assist with budgets for 1st party games.
 

Leyasu

Member
I think Zelnick explained it very well. To have the game there day one doesn't make sense for games that costs hundreds of millions of dollars and that sell many millions of copies. For these games, if something it's worth to included them when they no longer sell so the sub acts as a secondary extra revenue support channel.

Depending on the case, for small games maybe it's worth to have it there day one, depending on how much pays them the platform holder for putting it there. The problem with that is that consumers could get used to don't buy small games, so only the few small games chosen to be included there would survive, while now hundreds of small games are released every month.

I think the only way for AAA games to fit there day one would be the ones of a relatively small budget and are GaaS to a point they heavily rely on their DLC, microtransactions and season passes for their monetization. In this case a subscription would give them a bigger userbase, so more microtransactions and dlcs sold, even if not as big as in F2P games.
If Microsoft or Sony went to Take 2 and said "We want GTA6 on our sub service day 1 for 6 months how much would it cost?" and Take 2 came back and said "we estimate losing 20m sales if we did that, so for us to agree you need to pay us 800m" and the platform holder said "ok we'll pay". Do you honestly think that Take 2 would refuse?

Of course they wouldn't. Zelnick explained everything except the fact that having GTA6 on any service would end up costing more than Take 2 spent on developing it.

It would be like asking the platform holder that wanted it to pay for the development of your game, yet they don't get it exclusively. It ain't happening. Nothing to do with the size of the game or the development costs. The bigger the I.P, the higher the cost. With multi-million sellers commanding fees that go into nearly/full or even more of the dev cost territory.
 
Last edited:

kingfey

Banned
Market cap has absolutely nothing to do with how much money Microsoft or any other company has. I will admit that the purchase of King/Candy Crush could significantly assist with budgets for 1st party games.
They generate like $20b a quarter. That is alot of money for them, which they can support gamepass for too long.
 
Last edited:

Vognerful

Member
NO, but it makes sense to re-release your game on 3 generations.

And it looks like Sony took a page from his book and applying it to TLOU
 

ChiefDada

Member
The generate like $20b a quarter. That is alot of money for them, which they can support gamepass for too long.

Sure it's a lot of money but obviously not all of it goes back into Xbox/Gamepass. That's why said cash flow information specifically for Xbox would be great to see.
 

kingfey

Banned
Sure it's a lot of money but obviously not all of it goes back into Xbox/Gamepass. That's why said cash flow information specifically for Xbox would be great to see.
Even 1b-2b for xbox would be enough. That is enough to pay several AAA 3rd party day1 games, or fund 2-4 AAA $500m projects.

That is why MS can afford it. They have unfair advantages from their software subscriptions, which generates insane amount of money.

They had $130b cash on hands. Spent $67b on activision. They were left with $63b, then gained another close to $20b this last fiscal year.

They have unlimited amount of money cheat code.

For example, Sony managed to make 23b-25b from PS (not profit). That is their most profitable division.

It's why MS is all in on this service.
 
Last edited:

mckmas8808

Mckmaster uses MasterCard to buy Slave drives
Until Microsoft provides cash flow information specifically for Xbox Gaming division, I refuse to 100% agree with this. Could be proven true in the future, but for now there are legitimate questions.

That's why I believe MS will need around 100 Million GP subs to prove it truly successful.
 

yurinka

Member
If Microsoft or Sony went to Take 2 and said "We want GTA6 on our sub service day 1 for 6 months how much would it cost?" and Take 2 came back and said "we estimate losing 20m sales if we did that, so for us to agree you need to pay us 800m" and the platform holder said "ok we'll pay". Do you honestly think that Take 2 would refuse?

Of course they wouldn't. Zelnick explained everything except the fact that having GTA6 on any service would end up costing more than Take 2 spent on developing it.

It would be like asking the platform holder that wanted it to pay for the development of your game, yet they don't get it exclusively. It ain't happening. Nothing to do with the size of the game or the development costs. The bigger the I.P, the higher the cost. With multi-million sellers commanding fees that go into nearly/full or even more of the dev cost territory.
I think if they pay enough to make it profitable for Take 2, they would accept. But the thing is MS or Sony wouldn't pay over a Billion to have a game there during some months, because the amount of extra subs that this game would generate wouldn't compensate it.
 
Last edited:
I mean, not even Battlefield 2042 is on EA Play yet. Microsoft can lose a ton of money with Gamepass and Cloud, but for how long? :lollipop_hushed:
 

wOs

Member
They'd be stupid unless MS or PS ponied yo so much cash they couldn't resist. Why would anyone think a gta game would be day one?
 
20 years, just from cash reserves.

I don't know about that. More studios more games day one, more money burned. They must have a strategy. Forza Horizon 5 for example offered a paid version to play early.

Another thing would be to cut the budget for smaller games or even go to the island of microtransactions, or even put ads in service games (there's some rumors about this btw).
 

ChiefDada

Member
Even 1b-2b for xbox would be enough. That is enough to pay several AAA 3rd party day1 games, or fund 2-4 AAA $500m projects.

That is why MS can afford it. They have unfair advantages from their software subscriptions, which generates insane amount of money.

They had $130b cash on hands. Spent $67b on activision. They were left with $63b, then gained another close to $20b this last fiscal year.

They have unlimited amount of money cheat code.

For example, Sony managed to make 23b-25b from PS (not profit). That is their most profitable division.

It's why MS is all in on this service.

I don't know friend it's tough to speculate how exactly their accounting shakes out for all of this. Coming from finance space this is all fascinating to me so I'm excited to see how it works out for them and the industry as a whole.
 

kingfey

Banned
I don't know about that. More studios more games day one, more money burned. They must have a strategy. Forza Horizon 5 for example offered a paid version to play early.

Another thing would be to cut the budget for smaller games or even go to the island of microtransactions, or even put ads in service games (there's some rumors about this btw).
Nah, that would destroy xbox completely.
From studio output wise, they have to match PS and Nintendo. Cutting those games means, xbox 1st party games image would suffer, and people won't be able to xbox consoles, because of the 1st party low quality.

What you are suggesting is driving away people.

There is a way MS makes money already from their 1st party studios.
They are doing day1 steam, sell their games to non xbox users, and gamepass money. With enough cash input from MS, its enough for them to do this for a long time.

That 20 years is from $60b(63b to be exact), which have it as hands on cash. Their other business also generates like $20b. They bring in way more money

So for those 20 years, they can inject $3b, then add whatever gamepass makes. Add what their games sell, and you have more funds for each year.

Remember, consoles last like 8 year per gen. So that is 2 and half gen funding.

We are not even counting what xbox console makes from 3rd party games and accessories.
 

kingfey

Banned
I don't know friend it's tough to speculate how exactly their accounting shakes out for all of this. Coming from finance space this is all fascinating to me so I'm excited to see how it works out for them and the industry as a whole.
The industry found their gold machine from mtx. This subscription so far, is just baby.

But from money making aspects, it's gold egg, that would bring unlimited money if they are very careful.

But considering what happened to streaming services, I think every publisher would go for this route in the future. EA and Ubisoft already set up that route with day1 pc.

It's fascinating and scary at the same time.
 

Hobbygaming

has been asked to post in 'Grounded' mode.
Day one releases are good for consumers but a moronic business move.
Yep and It could be bad for consumers too once they get enough subscribers

I think a lot of these subscription's investments/content diminishes in quality after a while and they count on people keeping the sub and just getting used to it
 
Subscription service games to me always seemed like games you'd put on when when full priced sales start to have diminishing returns. I mean yeah you'll make money selling your game at say £25 a year after release if you've already recouped your budget but is it enough to fund future titles and grow your company? Or what if you've not even hit budget yet? For me it makes sense in the former and latter. But if you're onto something like GTA or even just a game making great profit at retail so long after release then it'd take a fair wad of cash to get your game on that service.
 

yazenov

Member
It makes sense for Microsoft as their games don't sell as well as Sony and Nintendo and their games aren't the same league quality wise.

And it doesnt make sense for 3rd party publishers to put their big games on the services day one unless their are paid big amount of cash to offset the lost sales from purchases. For indie games it makes sense.
 

kingfey

Banned
Yep and It could be bad for consumers too once they get enough subscribers

I think a lot of these subscription's investments/content diminishes in quality after a while and they count on people keeping the sub and just getting used to it
Can you stop with this bulshit?

Do you think devs get less money, and magically those new games lose quality?

These are dumb logic to scare people like you.

Come on. You are smarter than this.
 

Leyasu

Member
I think if they pay enough to make it profitable for Take 2, they would accept. But the thing is MS or Sony wouldn't pay over a Billion to have a game there during some months, because the amount of extra subs that this game would generate wouldn't compensate it.
Works out cheaper to buy studios and I.Ps
 

StreetsofBeige

Gold Member
I mean, not even Battlefield 2042 is on EA Play yet. Microsoft can lose a ton of money with Gamepass and Cloud, but for how long? :lollipop_hushed:
Who knows.

But Xbox has been around for 20 years and still here no matter what losses they have. The copany also makes about $65 billion profit per year, growing and that number already has whatever crappy Xbox financials baked into it.

By the looks of it, something like Zune will get the cord cut fast. But Xbox and its services have an infinitely long leash.
 

yurinka

Member
Can you stop with this bulshit?

Do you think devs get less money, and magically those new games lose quality?

These are dumb logic to scare people like you.

Come on. You are smarter than this.
If they expect that a game has potential to generate $1B, it will have a budget. If instead they think it has a potential to generate $100M or less, then the budget will be way smaller.

If you drastically reduce the amount of revenue that a game generates and wants to keep a profitable business then you have to drastically reduce costs too.

Smaller budget doesn't always imply less quality, but keeps many AAA things out of the question.

I'm a customer and I care about getting the best value. It's on companies to make the business work. I am not interested in making sure companies get more of my money.
I'm a customer and I want Ferrari to give away their cars for $10/month. It's on companies to make the business work.
 
Last edited:
All apart of the bigger picture I think.

Microsoft wants people to choose Xbox over PlayStation. Value for customers and all that with GamePass. Now of course on the surface it doesn't make sense for a game to release day one if it sould sell, I dunno 10 million copies say first two weeks. But Microsoft is willing to sacrifice/invest in gamepass with its first party titles in order to get your sub each month.

Not to mention one key aspect of adding a game to gamepass (even non first party titles) means you sell a lot of dlc.
Not to mention even further MS takes a cut from every game sold on its platform. All bigger picture stuff.

It's all about getting an xbox in your hands.
 

Moses85

Member
Oh No GIF by The Maury Show


GTA V on PS6 and Xbox Series Z confirmed
 

The Alien

Member
Take 2 maybe. Rock Star?...no need.
Besides seeking 160M copies, they literally have their c own subscription service. Ha!
 

Tomma19

Neo Member
I always felt like this benefits the smaller games, that don’t have built in user bases and don’t have a revenue guarantee…..sure the game could explode, and they end up losing potential sells, but more often than not these small studios need the guarantee money.
 

12Dannu123

Member
I mean, not even Battlefield 2042 is on EA Play yet. Microsoft can lose a ton of money with Gamepass and Cloud, but for how long? :lollipop_hushed:

The key is to make money long term is expanding the Xbox ecosystem. They allow day 1 purchasing of Xbox games, DLC, MTX etc. There are many ways to make money in a subscription service, the only difference is that subscription services require upfront cost with profit coming later.

They're also looking to bring the full Xbox experience to PC, Console and the Cloud, MS has also mentioned eventually being able to purchase a game and running that game on Console, PC and Cloud.
 
Can you stop with this bulshit?

Do you think devs get less money, and magically those new games lose quality?

These are dumb logic to scare people like you.

Come on. You are smarter than this.
Except he's actually correct.
They generate like $20b a quarter. That is alot of money for them, which they can support gamepass for too long.
You continue to work under the delusion that all of Microsoft exists to support their Xbox division, which is just not how any of this works.
 
Top Bottom