I'm really feeling it!
I'm really feeling it!
Illustration for article titled Netflix-esque Services for Games is the Future, Like it or Not

The past decade of gaming has been characterized by one shared trait among publishers: The desire for more and more money. While they used to finish a game, release it, and called it a day, that is no longer the case. Once paid DLC was introduced, publishers couldn’t get enough of it and wanted to pump out more and more to rake in that sweet, sweet cash. And then the mobile market exploded and the concept of microtransactions became embedded in the psyche’s of every CEO. What’s better than selling a $25 expansion to gamers? Why, selling them bits and pieces of a game for $5 a pop, and putting ads for said microtransactions in the games themselves to remind the player that the game is rigged to force you to buy these microtransactions.


Of course, there are more factors at play than just greed(Rising development costs just to name one.), but as exemplified by Electronic Arts at this past E3 and even before that, they aren’t making these games for their fans, they’re making them for their investors, and their investors demand more and more revenue from a single game, whether its from microtransactions or boosting the price of the game itself, doesn’t matter, more money is the goal. And now publishers are looking towards the future of the gaming landscape and the possibilities that brings.

Subscription services have became rather popular and commonplace over the last decade, so it was inevitable that gaming publishers would take an interest in that. Some companies went for outright streaming games, but to mixed results due to gamers either not having fast enough internet, having data caps, and/or the service itself just being bad. When it came to the major game publishers, namely Sony and Microsoft, they started small by adding free monthly games as an incentive to subscribe to their online services. That was followed by Sony releasing the PlayStation Now service which allows gamers to stream and play a library of select PlayStation 2 & 3 games(Not sure about PS1 games.) for an added fee on top of the yearly PSN service. Electronic Arts followed with their own subscription service, albeit functionally different. Select EA games are added to the EA/Origin Access vault for free so long as you remain subscribed, but never on the same day a game is released. Typically it takes half a year for a brand new game to hit the vault if at all. The silver-lining is that if you wait it out, you don’t have to pay full price for the game, you get a 10% discount on everything in the Origin store, and you don’t have to stream the games, just download and play.


The most recent entry is Microsoft with their Xbox Game Pass program. For an additional $13 monthly fee on top of the yearly $60 Xbox Live subscription, you get access to a library of over 100+ games, both first and third party, on the Xbox One. Originally, this did not include brand new games. However, starting earlier this year, every first party Microsoft title has and will be added to the Pass on day one for no extra charge outside of the subscription fee. You download the game and play it, no restrictions. The icing on the cake is that while this does not apply to special editions, the Game Pass gives you a slight discount on DLC. And prior to E3, Ubisoft made the claim that the future is in streaming and that consoles will no longer be around after the next generation, at least not as we know them today. This implies that Ubisoft is also considering getting in on the subscription service deal.

So you may be wondering, how would a publisher offering all their brand new games via a Netflix-like service without buying them individually make nearly as much money? Well, you just have to do the math honestly. Since Microsoft currently has the ideal system, we’ll use them as your example.


Lets say that Microsoft has 40 million Xbox One’s sold, and each of those Xbox One’s has an Xbox Live Gold account attached to it, and each of those Gold accounts also has a subscription to Game Pass and those players pay throughout the whole year without cancelling.

12 x 13 = 156

So off of a single user, Microsoft makes as much as two and a half full-priced games.


156 x 40,000,000 = 6,240,000,000

And off of all their subscribers, combined, they make 6.24 billion dollars a YEAR. Now, just to compare this to something, lets say they release a new Halo title. The average sales numbers, at least at one point, were around 5,000,000 copies.


5,000,000 x 60 = 300,000,000

So off of one game, they make 300 million dollars. Not too shabby. Of course that’s not counting fees that get taken out and all that, same for the Game Pass numbers, but we’re just going to keep them that way for the sake of argument. So now lets say a Gears of War title and a Forza title release in the same year, and each sells 5 million copies and each makes 300 million total.


3 x 300,000,000 = 900,000,000

Microsoft made a grand total of 900,000,000 not counting Xbox Live subscriptions or Game Pass subscriptions. Now can you see how Microsoft makes more money if everyone signs up for the Game Pass rather than just regular game sales? 2,000,000 players jumped into State of Decay 2 between May & June, and it was offered free in the Game Pass. Now I don’t know how many of those users got it through the Pass, I paid for it despite having the pass because I wanted to support the devs more directly, but for arguments sake lets say that everyone did. That’s 2 million people that subscribed to the Pass.


2,000,000 x 156 = 312,000,000

Even if that was made up of all the Pass subscribers, Microsoft still made back more than the games budget in a single year, and more than they would have made if it sold 5 million copies.


So what about Sony who have around 80 million consoles sold? What if they upgraded their PlayStation Now service to allow downloads instead of streaming and made the price $15 while also putting all their PS4 exclusives onto the service day & date?

12 x 15 = 180

80,000,000 x 180 = 14,400,000,000

By making that simple move and getting all their PS4 users to subscribe, Sony makes 14.4 billion dollars in a single year, more than doubling what Microsoft makes. Nintendo has already stated that their online service will cost $20 - $25 and come with free NES and SNES games(And recent statements suggest that it may not necessarily stop there.). If Nintendo expanded that service to include their Switch library, at the same price point(We’ll say $25 for this since it’s tied to their online service rather than a separate subscription.), they’d be making quite the buck too.


20,000,000 x 25 = 500,000,000

So in a single year, with users only paying once a year, Nintendo makes 500 million, and the number of Switch units sold continues to climb at a steady pace and it’ll be interesting to see how high it is after this upcoming holiday season with the double whammy of Pokemon and Smash. And just for arguments sake, what if Nintendo did the unexpected and made their service monthly, but kept it at $25?


12 x 25 = 300

300 x 20,000,000 = 6,000,000,000

And there ya go, they’d be close to Microsoft in terms of revenue, and since the online service and Netflix-esque subscription service are bundled as one, they can justify the higher price point compared to their competitors.


So after all of that, you may be wondering why I haven’t mentioned third parties yet and how much they’d profit off of such a model. Well that’s because it’s a tad trickier. The three console manufacturers have an identifiable install base to base all of this off of. Nintendo has said they’re around 20 million units, Microsoft was last estimated to be in the ballpark of 35 million and given some time having passed since then, 40 million seemed reasonable, and Sony is very vocal about the 80 million units bragging rights. But EA, Ubisoft, Konami, Square Enix, Sega, Capcom, Deep Silver, etc. don’t have anything for me to go off to make such estimates. Instead, I would have to look at all the games they’ve released over the last few years, work out an average in terms of sales, and then go from there, but that’s easier said than done since the sales of games even from AAA publishers can fluctuate wildly. Just look at Metal Gear Survive from Konami. They didn’t even disclose the numbers, but we can surmise that it sold REALLY poorly and that it’s sales are a far cry from Metal Gear Solid 5.

And that’s the thing, if publishers don’t give out a sales number, that just makes a lot more guess work for me, and that creates final tallies that can be way off the mark from reality. At least with consoles the assumptions are more reasonable because in this day and age everything and everyone is connected to the internet and so a majority of console users will likely have an Xbox Live Gold, PS Plus, or Nintendo Online subscription. And actually, now that I’m thinking about it, Microsoft can actually cheat in this respect because Xbox Game Pass extends to Windows 10 users. You can sign up for Game Pass via the Xbox website, and so any Play Anywhere title that’s a part of the pass becomes available to you via the Windows Store. This means that Microsoft can actually surpass that 40 million install base. Though if I recall, I think Sony was going too or already has extended their PS Now service to PC as well, albeit still as streaming so in a sense they also get to surpass their 80 million number. I can’t count those numbers though because there’s no base for me to work with. I could count every Windows 10 user, but unlike with Xbox or PlayStation, it’s a lot harder to say that every Windows 10 user subscribes to PS Now or Xbox Game Pass, let alone uses the Windows Store.


But there you have it. If it’s too long and you just skipped down here:

Microsoft & $13/month = $6.4 billion/yr

Sony & $15/month = $14.4 billion/yr

Nintendo at $25 = $500 million/yr OR $6 billion/yr if yearly or monthly fee’s respectively


While I doubt a company like, say, Electronic Arts would abandon microtransactions altogether in favor of this model, it would certainly raise the question if it’s more than enough to offset whatever microtransactions are making up for. Publishers can take all that money, and funnel it back into the devs as bonuses and/or pay raises, or even just as a much larger budget for their next projects.

Share This Story

Get our newsletter