How Will The Netflixication of Games Affect the Industry?

Gaming subscription services are on the rise, but how will those services actually affect the games industry as a whole in the future?

[SocialDanny123]

We will see more and more content long term to become exclusive to Subscription services. However, the first genre that will likely be on the chopping block in this market will be the games Sony excels at. This business model punishes AAA Single Player one-off narrative games that have no MTX and Microtransactions. IF the market moved to Day 1 releases, those AAA SP games would likely be the first to go.

[UltraNova]

Sadly I agree...such a shame.

Netflix's quality has declined throughout the years. They are dead set in having the raw number of releases advantage over their competition while quality offerings are few and far between often buried under a mountain of mediocrity.

I hate to say it but gaming is next and Sony might be following suit in order to "get with the times" and appease shareholders.

[rainslacker]

Sony's games in general, are selling 10+ million per release. That's around half a billion in revenue per game release...if not more. Not too shabby for production budgets in the 50-100 million range(including marketing).

that's a lot of game subs at 10 dollars a month. and unlike sub services, most of that revenue isn't flying out the door to fund other licensed content to keep the subscriber engaged on a monthly basis.

There is nothing wrong with the sub model in principal. But there is a limit to what can be offered, at acceptable price points vs number of subs. A sub service with 40 million subs means there is a potential to have that same audience willing to spend full price for an individual game. But, they're not going to do that if they can get it cheap.

[mgszelda1]

Yea I don't understand how they talk about gears 5 being successful when it only sold some abysmal number for physical copies (I think less than 100k in opening week). But it had 3 million players because people got game pass for the month. AAA games can not make good money on that business model. It's essentially like getting $10 per copy instead of $60 (I know the publisher doesn't get all that but they get most of that). I bet a lot of the new game pass subscriptions disappear once they've played gears 5. It's just not a healthy AAA development environment.

[SocialDanny123]

Economics differs from large companies to smaller companies and how much of the business matters to the overall company. Microsoft doesn't care about losing money on Game Pass, because Xbox is currently in aggressive invest mode and all they care is about getting Game Pass subs, MS is also large enough to absorb the losses made and Xbox contribution to the overall company is small.

Sony is the opposite, they are a smaller company, so they don't have much of an ability to absorb the losses. Playstation as a business is likely the biggest division in the company, so the losses made by PS will impact the whole company. It's why they aren't going as aggressively as Microsoft on PSNow.

[opc]

It's all about getting people signed up and locked in to your ecosystem so that they come back and spend money elsewhere, on full games, on hardware, movie rentals...

A good amount of people will forget and never use the service, that's free money. Other people will sign up for 3 years on an impulse and not use it as much as they think.

[opc]

SocialDanny is also right. We're seeing the same thing with Epic right now too. They're obviously taking a loss on all of these exclusives but selling getting people signed up and making steam look like wasteland in comparison are the ultimate goals.

[bluefox755]

Why would it be chopped? Changing a business model doesn't erase demand. People will still want to play those games. This is why Sony is killing it this gen, because that demand is really high, and almost no one else is doing it on the same level.

[rainslacker]

Yep. The number of narrative SP games, especially in the AA-AAA camp are a fraction of what we saw last gen, despite the rise of MP. Now, so many publishers are trying to be the next big MP company, and the more risky SP games have taken a back seat. Both Sony and Square, and even Sega, have capitalized heavily on this by offering some of the only games in this department on a regular basis.

In the mean time, there is an influx of MP games, which last gen probably would have sold well, but because there are so many to choose from, it's harder for them to make headway, and each one is becoming more and more scrutinized over what it does wrong, and not every MP game is something magical anymore.

[opc]

We're also seeing less SP games because it becomes harder and harder to compete as expectation arise.

Talent is sparse.

[rainslacker]

Probably see the narrative model move more towards episodic gaming for services such as these. Makes more sense to release a new chapter every few weeks to keep people engaged on a monthly basis. The fact that so many people just say they'll sub, play the game, then cancel, is enough to make companies work on ways to continue keeping people engaged.

[opc]

I was thinking those are what will drive these subscriptions. If I were to play a MP game, I'd just buy the game because those have much more staying power.

Right now I have 3 months of PS Now to play God of War on my PC. The only reason I didn't get a year was because they have said that they are taking away GoW, Infamous, and Uncharted 4 in January. If they were to leave them up there indefinitely, I'd sign up for the entire year and then probably just let it renew.

I get that they would only be getting $60 from me year after year, but that's better than $25 one time.

[--bienio--]

To be honest I don’t care! Never will pay for games in this way! I’m too old for that.

[kingPoS]

I was having a grand adventure and almost got my character to level 20.. But then I got [Data] capped in the knee.

Gateway MT6706 2008

[AK91]

17 Billion dollars loss just like Netflix.