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Business Take-Two CEO: "Subscription model doesn't really make sense for frontline titles”

Stuart360

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That's sort of how I hope subscription services go. Big AAA games are paid releases that after some time come to the subscription service.
Still don't see how the model is sustainable otherwise unless you turn all your big AAA titles into microtransaction fueled GaaS, or significantly raise the subscription price.
Well apart from one or two first party games, Gamepass games are only the base game, no dlc's etc. And wasnt it soemthing like 70% of all gaming revenue last year was for DLC and MTX? ,it was somethinglike that.
The potential waith people buyilng mtx abnd dlc on Gamepass titles is huge, especially when they are getting the base game for 'free'
And also, and somehting people always fial to mention, Gamepass is also a store front where you can buy games. Buy games with a permanant 20% discount too.
 

Negotiator101

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Yeah for the likes of GTA and RDR but what about less successful GAMES? Max Payne for instance? Oh that's right you throw it in the waste disposal 🙄
 

Helghan

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Apparently no one at Microsoft is able to workout the economics behind a subscription service...

The only reason take two doesn't do this today is because they have the feeling they can get more money from consumers their way. So don't say the economics don't work, it's just that you believe you can get even more money the old fashioned way.
 

Negotiator101

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Basically that statement is exactly what I've been saying for years:

Economics don't work for big third-parties outside of product that's already at end-of-life, and the consumption pattern for an a-la-carte gaming sub is highly dissimilar to that of passive entertainment media.
And you've been wrong for years.
 

megreotsugua

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Zelnick observed that "consumption patterns" for a streaming service like Netflix--which offers linear entertainment (for now at least)--are different from interactive entertainment.

The Office Reaction GIF



"Consumers who are involved with interactive entertainment have different consumption patterns than those involved with linear entertainment. Linear entertainment consumers consume something like 150 hours of programming a month. That's probably well over 100 different titles. In the case of interactive entertainment, consumers are consuming something like 45 hours a month, and that may be one, two, three, four titles. But it's certainly not 100 titles. So from a consumer point of view, it's not clear that a subscription model really makes sense, for the bulk of consumers"

As I have been saying, Sony should approach this differently. Streaming is for the CASUALS. Bundle your movies, shows, anime, and videogames. The videogames should be profitable on its own at its release. The inclusion should be years down the road and only for the purpose of adding value to the movie/shows/anime streaming service. The focus should be the movies and shows.

It would be a way to trickle down the value of gaming to a larger audience with the aim of better subscription retention.
 
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Evilms

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Another manufacturer would have already gone under with such a service which is not at all profitable. You have to be a GAFAM to afford this even if in the long term it will be a problem if it doesn't change.
 

Evil Calvin

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Both GTAV & Red Dead have been on Gamepass though. Totally makes sense from a T2 point of view.
It does. They sell a lot of microtransactions that way. More users = more sales of MTX.
 
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Sub Boss

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Some popular games should come at full price, then in a year or so earn additional income with GamePass, nobody loses.

Im talking third party games not Xbox Microsoft Studios obviously
 
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Rockstar is on a different level from every other dev. Nobody else sells like them except maybe Nintendo.

Yet RDR2 was on gamepass and GTAV was given away for free on EGS.

Yes... which is precisely the point he's making. RDR2 was released in 2018 and GTAV in 2013. These games are the definition of "catalogue" games as per T2's CEO's own terminology.

He's saying subscription services make sense for catalogue games, but not for new AAA games releases on day one.

So these weird attempts at a gotcha only highlight the poster's own poor reading comprehension.
 

sunnysideup

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game pass costs 10 bucks. ultimate costs 15 bucks.

on pc you dont need ultimate because online is free + ea play is included in the base tier.
point still stands.

games are dirt cheap. Take forever to play through.

You have to play games 10 hours a day for it to be worth it.
 
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DJ Shalad

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You should never take what any of them say as pure gospel just because it might confirm your preexisting biases.
There's always some potential backstage theatrical politics involved with these figureheads when they talk, whether it's Microsoft, Sony, or Take-Two, etc.
So far we've seen many more cases of games actually selling more copies (or selling well in general) in spite of being on GamePass versus games that have seen sales decrease
all of these figureheads talk as if the games are exclusively on the service itself, when they know they're not.
Eventually if and/or when services like GamePass can reach a threshold in active subs that's high enough, then even games like GTA 5 financially work out better being included on such a service Day 1 (along with physical and digital copies available) versus not being there.
If Microsoft, for example, gets to a point within the next 2 years where they have 50 million subs paying an average of $10/mo, that is $5 billion/mo in subscription revenue.
People vastly overestimate the costs Microsoft incurs on running GamePass and getting content secured for it
they aren't 100% like Netflix, because Netflix doesn't own their own streaming hardware/servers and networking software/OS in a vertical stack the way Microsoft does. That alone saves a ton on operational costs.
That's an average of $700 million/year in investment for securing 3P content on the service
People do realize that they would make that up nearly 2x over in the course of a single month's sub revenue @ 50 million active users, right?
Let alone the rest of the 11 months of the year
to assume operational costs for running and managing the servers isn't in the billions annually, or even greater than $100 million/year most likely
Like I said, you gotta wonder if there's theatrical political chess moves trying to be made sometimes by some of these comments
because I know
Crypto Reaction GIF by BitPal



Funny Face Dog GIF
 
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megreotsugua

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they only need either FIFA or call of duty to really shake things up

That wouldn't help either. FIFA gamers and COD players mostly play the same game for months and months with occasional game or two from time to time.

Why would he pay $15/month which would be $60 in four months if he can just buy the game and own it forever. (or resell it)
 

kretos

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You realize a lions-share of those 20 million weren't sold at full original MSRP, right? So the lower the pricing on the games, the lower a cut the publisher gets from the sales, at least at retail.

Digital is a different story tho Sony might find themselves in some legal trouble for this as apparently at least one dev/pub has tried suing them for not offering digital codes from different outlets redeemable on PSN. Guess we'll see how that evolves, don't know how much of a case they have there tho.

well that's the case with all games?

anyway i don't know how much it sold before price cut but let's go with official info we have

In total, the game sold over five million copies in its first month, with 2.1 million in digital sales.

that's 300 mil revenue in 1 month why would they abandon that and put it on a sub service day 1?
 
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Bryank75

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Well, yeah. I mean, even in the movie business there are still theater and Bluray releases. The only ones putting streaming exclusive movies that could be on par with Hollywood big productions are the ones that can afford to lose money.

Take Two would be making a mistake by trying to compete there. They obviously can keep doing their thing and people will follow them wherever they go.

There is space in the market for both. They actually complement each other.
Nobody 'can afford to lose money'..... they do it because they feel they have to. That is the only reason.
Companies do not throw away money needlessly.
 
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Negotiator101

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well that's the case with all games?

anyway i don't know how much it sold before price cut but let's go with official info we have



that's 300 mil revenue in 1 month why would they abandon that and put it on a sub service day 1?
Halo 5 pulled in more revenue than that in its first month, but first party for Microsoft doesn't sell does it? 🤣 also that 20mil is not comfirmed, let's use real sales statistics please.
 

Clear

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And you've been wrong for years.

Prove me wrong, smart guy.

Make your counter-argument. MS might be able to make it work as a platform-holder with deep pockets, but they aren't the entirety of the industry. Especially in terms of software production -where the drawbacks of this distribution model really bite- they are relatively insignificant.

The revenue generated by a GTA or RDR title is simply too vast to be underwritten. GTA 5's lifetime revenue is estimated to be $6billion. That's a single title, which could only ever be 1 of 100 plus offered concurrently on a Gamepass like service.

Yes, GTA is an exceptional success story, but its one that EVERY big third-party vendor is seeking to emulate. Consequently sacrificing your "next big thing" to the safe, but relatively low-level returns of a subscription service is never likely to be that appealing.
 
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CAn someone please post what Blockbuster CEO said about Netflix?

Not the same circumstances here... like... at all.

The VAST majority of dollars spent on video games currently goes to MTXs first, then digital and physical full games sales, then subscription-based games like MMOs, and finally subscription game services like GamePass are at the bottom of the list.

Yes, sub-services like GP are growing in revenue generated, but not faster than any of the other aforementioned items.

So gamers overwhelmingly are not seeing game subscription services as the exclusive future of gaming, rather an additive option... which is entirely unlike what Netflix has become for TV and movie content.
 
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kretos

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Halo 5 pulled in more revenue than that in its first month, but first party for Microsoft doesn't sell does it? 🤣 also that 20mil is not comfirmed, let's use real sales statistics please.

where did you get that info from you ass?

On June 9, 2016, Frank O'Connor said that the game managed to sell 5 million copies in the first 3 months of its release.[118] Halo 5: Guardians is the lowest selling Halo title of the franchise, in the UK.[119]

on God of War 20mil it's simple math, the series before God of War 2018 sold 29 mil, and this is official update from Sony on the franchise a year ago:

Sony attributes much of its success over the last console generation to the popularity of its exclusive game franchises, including stalwarts like God of War (more than 51 million copies sold)
 
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That wouldn't help either. FIFA gamers and COD players mostly play the same game for months and months with occasional game or two from time to time.

Why would he pay $15/month which would be $60 in four months if he can just buy the game and own it forever. (or resell it)

you know microsoft and xbox fans would run with it though. "oh you guys have to pay $70, while we get it for free on gamepass"

ultimately your right, i think most people would probably just keep playing those games where they are used to playing them. it needs to be coupled with a big mistake from sony to really make an impact. like PS6 costing $599, while the next XBOX is $499 or something like that. otherwise nobody is going to switch ecosystems.
 
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Negotiator101

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where did you get that info from you ass?



on God of War 20mil it's simple math, the series before God of War 2018 sold 29 mil, and this is official update from Sony on the franchise a year ago:
As of May 2019, the game had made $500 million in revenue, significantly exceeding Sony’s revenue targets. The title sold over 10 million units in its first year, 40% of which were digital sales.

That's the only numbered figure, sales for the following year would be much lower.
 
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yurinka

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Subs work well for some, but not all.
The article says "His views are unchanged--subscription services make sense of catalog games but not new ones.", something that is common sense.

AAA need to make a lot of revenue to recoup and it's mostly generated with game sales and only on a few games, MTX+DLC. To put AAA at launch there isn't profitable at all. Once it's very old instead it's ok to put it on subscriptions as an extra.
 
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DynamiteCop!

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Take-two is the manufacturer and owner of nothing. Subscription services make sense for a platform that you own, they drive up engagement therefore purchases therefore further engagement of the platform.
 

yurinka

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Netflix spens tons of money on its tv shows and movies, as much and more than actual tv series.
Netflix has over 200M subscribers paying a full subscription, Game Pass doesn't have even a 1/4 of these and many of their 'subscribers' don't pay full subscriptions.

Rockstar is on a different level from every other dev. Nobody else sells like them except maybe Nintendo.
In consoles GTAV is only comparable to Minecraft, Nintendo isn't at the same level. In F2P there's stuff like LoL, Dungeon Fighter Online or some mobile games like Candy Crush, Clans of Clans, Honor of Kings, etc.

Anyone that cant compete in this space will say this. See sony
Yes, Sony doesn't want to compete on seeing who loses more billions of dollars with a service. They prefer instead to have profitable game subscriptions (which also generate more revenue).
 
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kretos

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As of May 2019, the game had made $500 million in revenue, significantly exceeding Sony’s revenue targets. The title sold over 10 million units in its first year, 40% of which were digital sales.

That's the only numbered figure, sales for the following year would be much lower.

more than $400 million in global sales of Halo 5: Guardians games and hardware

more than $400 million in global sales of Halo 5: Guardians games and hardware

more than $400 million in global sales of Halo 5: Guardians games and hardware

so they counted the sales of the game AND console to inflate numbers? or what does this hardware part mean?

 

ethomaz

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That is if that $500 game can be successful.
We have seen big games flop easily. Black ops 4 flopped. Avengers flopped.

Having a game which big money doesn't guarantee success. Gta had a long road and franchise built in to achieve 150m. Same for red dead 2.

Can't say the same for new titles. You need a risk taker. That is where sub services comes in. Getting paid 1/5th of your investments makes your flop less. Than to just get 1/5 by selling your product.

Best example is avengers game vs outriders. Outriders made money from gamepass, while avengers lost tons from sales only. It made a huge loss for square.
Black Ops 4 flopped?

BTW GTAV did $1 billion day one full priced... no subscription ever will have a GTA game at day one.
 

DynamiteCop!

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more than $400 million in global sales of Halo 5: Guardians games and hardware

more than $400 million in global sales of Halo 5: Guardians games and hardware

more than $400 million in global sales of Halo 5: Guardians games and hardware

so they counted the sales of the game AND console to inflate numbers? or what does this hardware part mean?

Halo 5 branded hardware, the limited edition console and the master chief controller.
 
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M16

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What is there to compete in? The "how to lose billions" market sector?
Exactly. You lose money in the beginning, something that could sink sony. Theres an exclusive club of a few companies who could partake in this subscription model, and everyone else could only dismiss it because they couldn't try it even if they wanted to.
 

ethomaz

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As of May 2019, the game had made $500 million in revenue, significantly exceeding Sony’s revenue targets. The title sold over 10 million units in its first year, 40% of which were digital sales.

That's the only numbered figure, sales for the following year would be much lower.
Remove from these $400 million all the Xbox One consoles bundled and all Xbox Controller bundled... that is the most part of the $400 million revenue.

Shock of reality.

Even the leaked data of 5 million months after should give you $300 million revenue if all copies were sold at full price.
For $400 million at day one a game need to sell over 6.7 million copies at full price.
 
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Negotiator101

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more than $400 million in global sales of Halo 5: Guardians games and hardware

more than $400 million in global sales of Halo 5: Guardians games and hardware

more than $400 million in global sales of Halo 5: Guardians games and hardware

so they counted the sales of the game AND console to inflate numbers? or what does this hardware part mean?

That's in one week buddy, regardless Where's the sale figures of 20 million? You don't have them so until you do have a coke and a smile.
 

Negotiator101

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Remove from these $400 million all the Xbox One consoles bundled and all Xbox Controller bundled... that is the most part of the $400 million revenue.

Shock of reality.

Even the leaked data of 5 million months after should give you $300 million revenue if all copies were sold at full price.
For $400 million at day one a game need to sell over 6.7 million copies at full price.
Day one? Who said anything about day one?
 

ethomaz

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Day one? Who said anything about day one?
? 400 million is technically 5 days for Halo + Hardware... day one is being used to say all copies were full priced... that is what publishers will lose with subscriptions... the full priced sales.

BTW it is what a subscription service needs to match to allow 3rd parties games get into.

In this thread example to have RDR day one it needs to give Take 2 at least $750 million... for GTA day one at least $1 billion... that is the minimum to start to talk about these games getting into subscription services.

After your pockets get full they will eventually get the game in all subscription services.... that can take several years in the case of a RDR or GTA game.
 
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kingfey

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Black Ops 4 flopped?

BTW GTAV did $1 billion day one full priced... no subscription ever will have a GTA game at day one.
The game had massive followers. You are talking about a series, which had vice city, and san Andreas.

Elder scroll skyrim sold 3.4m copies, despite having marrowind and oblivion.

No one can reach the grand theft auto, aside of minecraft, which has 240m as of now. 90m more than gtav. And this is one series.

New games don't have that much power. Gtav would have done decent shooter game, and went out like sleeping dragon, if weren't for CJ, and Vice city guy.
 

Ezekiel_666x

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I agree with him.

I never understood the comparison of MS GamePass with Netflix.

Netflix has a much much better outreach than a video game subscription service.

My mom watches Netflix, my aunts watch Netflix, my girlfriend watches Netflix, my niece watches Netflix and I watch Netflix.

Apart from the last 2, no one else play video games, and certainly not in the volume needed to make a subscription worth it.

Netflix had 207.64 million paid subscribers worldwide as of the first quarter of 2021.

The idea that there's "1 billion" potential gamers out there that would subscribe to a video game service is ridiculously out of touch. Someone who occasionally plays a game on their phone won't automatically become a console gamer.

After the Xbox One and the great success of the PS4, Microsoft had 2 choices :

A) Cut their losses and abandon the videogames market.
B) Heavily invest and switch to a subscription loss-leader model and pray that it pans out in the long run.
 

ethomaz

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The game had massive followers. You are talking about a series, which had vice city, and san Andreas.

Elder scroll skyrim sold 3.4m copies, despite having marrowind and oblivion.

No one can reach the grand theft auto, aside of minecraft, which has 240m as of now. 90m more than gtav. And this is one series.

New games don't have that much power. Gtav would have done decent shooter game, and went out like sleeping dragon, if weren't for CJ, and Vice city guy.
There are several games franchises that do over $500 million in full priced sales... but we can lower the number to $200 million that will basically put all franchises in the same situation as GTA.

Games that have big revenue in full priced sales will take time to enter in subscriptions services.

That is the reality of subscription.. except for first-party you will only see 3rd-party franchises when it gets old... they will be some few small to mid franchises exceptions per year but that is all.
 
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Negotiator101

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? 400 million is day one for Halo + Hardware.

BTW it is what a subscription service needs to match to allow 3rd parties games get into.

In this thread example to have RDR day one it needs to give Take 2 at least $750 million... for GTA day one at least $1 billion... that is the minimum to start to talk about these games getting into subscription services.
Wait a minute, that's got nothing to do with what I replied to. It was implyed that Microsoft games don't sell very well so that's how GP was born. Granted they don't do PS numbers but they sell well enough.

The guy I replied to said 400 million revenue in a month for GOW, which I replied Halo 5 did similar revenue. Obviously hardware was included in that number but that was after just one week. The 20 million figure is a estimate (could be right).

Let's deal in reality though, nobody is doing GTA or RDR2 numbers. So to put PS exclusives in the same bracket is disingenuous to say the least.
 
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ethomaz

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Wait a minute, that's got nothing to do with what I replied to. It was implyed that Microsoft games don't sell very well so that's how GP was born. Granted they don't do PS numbers but they sell well enough.

The guy I replied to said 400 million revenue in a month for GOW, which I replied Halo 5 did similar revenue. Obviously hardware was included in that number but that was after just one week. The 20 million figure is a estimate (could be right).

Let's deal in reality though, nobody is doing GTA or RDR2 numbers. So to put PS exclusives in the same bracket is disingenuous to say the least.
My mistake... I didn't get what you guys were talking.

What matters for a game enter or not in a subscription service at day one if if the full priced sales are big or not... anything over $100 million full priced sales will have a hard time to enter day one on a subscription service unless it is a 1st party game (owned by the own subscription service owner).

After that first wave of sales when the game start to drop in price is when 3rd-party will start to look in subscription services.
 
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Del_X

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Take Two doesn't publish enough titles to justify a $15/month subscription. I'm sure Game Pass will inflate to $20 by 2025 or so (assuming they can get a AAA title each quarter)
 
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K' Dash

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i play maybe 10 games a year at best.

Why the fuck would i subscribe to a service and limit my self to their catalogue.

instead of just picking the titles i want freely regardless of what's on a service.

because maybe you want to try games you wouldn't buy and find out something new that you actually love?, I know I've been trying LOTS of games and for those that I love, I'm buying their sequels day 1.

If you're really time constrained, then you can still buy whatever the fuck you want, whenever you want. Your specific case doesn't invalidate the fact that GP is the best deal in gaming.
 

Panajev2001a

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because maybe you want to try games you wouldn't buy and find out something new that you actually love?, I know I've been trying LOTS of games and for those that I love, I'm buying their sequels day 1.
If you're really time constrained, then you can still buy whatever the fuck you want, whenever you want. Your specific case doesn't invalidate the fact that GP is the best deal in gaming.
Is it marketing approved ;)?
 
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