Video game subscription services were once considered an undeniable success, but now it seems some companies have overinvested. For instance, Sony offers PS Plus, which is more about enhancing existing offerings rather than replacing them. It’s worth noting that a tech economic analysis firm, Macquarie Science and Technology Fund, which has a financial stake in predicting market trends, claims that “most of the gaming market doesn’t really desire a Game Pass”-style service.
Gus Zinn, the portfolio manager, shared some intriguing insights about Microsoft’s Xbox Game Studios, Sony’s main competitor in the console market, and their all-in business model. This sector appears to be rapidly growing towards becoming the largest publisher in the industry, unless there’s a significant and continuous increase in paying subscribers. An article titled “Microsoft’s Games Business Lacks Success,” published by The Information (thanks to ResetEra), presents a grim outlook on this matter.
Many prominent game development companies have chosen not to align with Microsoft’s proposal, opting instead to launch their games through the conventional market using standard releases in the future. Given the size of our industry, if a major AAA team declines initially, that decision becomes less likely to change over time as new information emerges and opinions adjust accordingly.
Additionally, prior to finalizing its massive purchase of Activision, the publisher of Call of Duty, Microsoft aimed to have more than 100 million subscribers for its Game Pass service by 2030. This figure was likely considered crucial for the project’s success, not just in terms of financial and time investment, but also in helping re-educate its primary audience about the value of a game.
The piece suggests that Microsoft, who could potentially popularize subscriptions within gaming, appears to face an extremely challenging task: they would need to nearly triple their current number of subscribers over the next five years, a growth rate that seems unlikely given its history. This translates to requiring an annual expansion at an exceptionally high pace of around 40%, a rate it hasn’t come close to since the early stages of the COVID-19 pandemic in 2020.
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2025-01-15 06:36