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[DFC Intelligence] Does Nintendo Have the Best Online Subscription Service?

Which service is the best?


  • Total voters
    47

Topher

Gold Member
Console Online Subscribers

A great deal of attention has been focused on Microsoft’s Game Pass subscription service. However, the recent Microsoft quarterly earnings show that the service does not appear to be doing much for Microsoft’s bottom line. Revenue from both Xbox hardware and content and services declined during the holiday 2022 season. This begs the question, does Microsoft’s game business model make sense?

How Many Subscribers Does Game Pass Have?​

As a large conglomerate, it should be noted that Microsoft provides limited insight into its game business. However, the company did note that Game Pass subscribers were up. On the earnings conference call, Microsoft CEO Satya Nadella said Xbox monthly active users reached 120 million.
Microsoft gaming revenue

However, Xbox users is not a relevant number as Xbox basically comes free with any Windows PC or phone. As DFC reported, our company has had issues making sure that we do NOT become active Xbox users on business PCs. The tendency is to get anyone with a Microsoft account into Xbox.
The important metric is Game Pass subscribers. A year ago this time, Phil Spencer, CEO of Microsoft Gaming reported Game Pass had 25 million subscribers. The media has pegged this number at 29 million after Sony filed a comment with the U.K. CMA last October. However, like much of Sony’s filing. the source was dubiously cherry-picked and has since been discredited.
Whatever the true number of Game Pass subscribers, it is clear that Game Pass is struggling to grow into a true mass-market service. In its latest financial filings Sony reported 45.4 million PlayStation Plus subscribers (down from a peak of 48 million at the end of 2021). Meanwhile, Nintendo reports 36 million Switch Online subscribers, up from 32 million in the previous year’s quarter (ending 9/30).

How Many Subscribers Are Needed for the Business Model to Work?​

On the surface, the numbers for the video game industry appear staggering. DFC Intelligence shares some blame for adding to the hype when talking about over 3 billion video game consumers worldwide. However, this is primarily a number thrown out for mass media journalists. The true analysis lies in the many subsegments where a company like Microsoft can report quarterly revenue in video games of $4.8 billion and it feels like a disappointment.
The problem with Game Pass is the business model does not appear to work. Comparing subscriber numbers is not necessarily fair because the services have significantly different prices. However, what is clear is how well Nintendo’s subscription service works as an enhancement to the overall business model of selling hardware and software. In contrast, Game Pass appears to be trying to be its own end where Xbox hardware sales are not important.
Xbox Game Pass subscriptions range from $5 month to $15 a month. There is even a $25/$35 a month/for a 2-year financing option that includes an Xbox Series S or X at 0% financing. Sony launched a new PlayStation Plus program last June. The new service is confusing but essentially monthly prices range from $10 to $18 a month, with a significant discount buying yearly of $60 to $120/year/
Meanwhile, there is Nintendo Switch Online which costs only $20 a year or a family plan for 8 accounts is only $35 a year. In late 2021, Nintendo added the option to upgrade to a Nintendo Switch Online + Expansion Pack for $50 a year ($80 for family option).
When one does the math, Game Pass is making probably three times the revenue Nintendo Switch Online currently generates and probably getting close to matching PlayStation+ revenue because it is priced higher. However, Microsoft is giving away a lot to generate that revenue and it does not appear to be a sustainable long-term business model.
Of course, if Game Pass could somehow get 100 million subscribers the economics would change. But that is a big if. Even if the Activision Blizzard user numbers (minus mobile users) are added in the numbers fall far short. A top-selling front-line Call of Duty can only hit 30 million units and Blizzard MAUs have hovered around 30 million for years.

Nintendo Switch Online: Average Service at a Reasonable Price​

The beauty of Nintendo’s online service is it is not very good in comparison to the competition but offers decent value for the consumer. The basic service gives you online play for a fairly limited number of titles (about 40) as well as a limited number of the 1980s and early 1990s NES and SNES games. The Expansion packs add Sega Genesis (console system launched 1989) and Nintendo 64 (console system launched 1996) games from the mid-to-late 1990s as well as some expansion packs for Mario Kart, Animal Crossing, and Splatoon.
Nintenco Switch Online

PlayStation Plus gives free monthly downloadable games and the option to upgrade to a catalog of over 400 downloadable games plus over 300 streaming games going back to the first PlayStation. Game Pass is similar to PS+ but takes it a step further by adding PC games, EA games, Ubisoft games and most importantly making all Microsoft first-party content free for subscribers.
The last part of giving away AAA first-party content is the kicker. Nintendo’s online service includes extra content for Mario Kart 8 and Animal Crossing: New Horizons. However, these titles respectively sold 48 million and 40 million units at full retail price. In other words, these two titles generated more revenue than a year of Game Pass.

Are Video Games Appropriate For a Netflix-Style Model?​

For many years, DFC has argued that it is usually not appropriate to compare video games to viewing traditional non-interactive video. They are a different medium and a major mistake subscription services tend to make is talking about the “Netflix of video games.”
The difference with video games is that the content tends to attract a long-term audience who stays around a specific game for the long term. In contrast, once users watch a show on a service like Netflix the majority move on to the next show. This is good news for the overall video game business. Nintendo, and companies like Electronic Arts, have moved to a high-price initial content purchase model followed by live service updates.
The problem with game services like Game Pass is they rotate games before consumers can finish playing them. If a consumer truly likes a game they will tend to buy the full version. The hope is that they will buy it through a Microsoft Xbox channel but the reality is they are likely to choose another distributor.

What About Exclusives?​

Take for example the recent release of the Sega/Atlus title Persona 4 Golden across multiple platforms including Switch and Game Pass. Persona 4 Golden was one of the standouts for the poor-selling portable PlayStation Vita. Many consumers did not get to try it because they did not have a Vita. However, a new audience was introduced to the franchise with the 2016 launch of Persona 5.
persona golden switch

Persona 4 Golden is a free title on Game Pass, but in the DFC office several people choose the Switch version for $20. The thinking was that this title works well on the portable Switch and $20 is nothing to pay for 40+ hours of entertainment.
Note that as this article was being completed the classic GoldenEye 007 was announced as a January 27 exclusive for both Nintendo Switch Online and Game Pass subscribers. But it appears online play is exclusive to Switch users! DFC did a separate analysis on this but it only highlights our points.

Subscription Services = Value-Add More Than a Complete Solution​

The bottom line is that game subscription services seem to work well as a value-add proposition. Nintendo has shown that with Nintendo Switch Online. There are tens of millions of users that will pay $60+ for a game and a cheap mediocre online service. Taking it to the level of a Game Pass requires not only significantly more expenditure but requires giving up a large established revenue stream.
Game Pass is a great service for the consumer. For less than $200 a year, one gets access to all kinds of games. It allows subscribers to save money to spend on Nvidia graphic cards, Nintendo Switch, and PlayStation products. What it does not seem to yet do is drive more revenue to the Xbox side.
The video game market is huge. Asking how many people play video games is like how many watch TV. The answer is basically everyone, the devil is in the details. Surprisingly it is Nintendo and Switch Online that have found an answer that is both compelling for consumers AND the company bottom line.

Not sure I agree with the conclusion of this, but it is an interesting question.
 

jigglet

Banned
"Reasonable Price"

See I've never really bought into this argument. Back when everyone talked about how Nintendo's was better because it was free - well free is only appreciated if it's actually good. Give me a big pile of shit for free and I'm unlikely to take it.

I don't care about price, even the most expensive service is what, less than $100 a year. For thousands of hours of entertainment? Am I really going to bitch about $100 a year (or whatever the hell Sony / MS charge)? If we were talking $50 a month ok sure, value for money starts to enter the picture. But we're talking about what, the difference of maybe $50 between Nintendo's service vs. the competition for ONE YEAR?
 
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Ceadeus

Member
It's affordable and it lets you play great classics. A month of PS Plus Premium is as expensive as a whole year of Nintendo Switch Online.
 

MagnesD3

Member
No you don't own anything if you stop subscribing, better off emulating. Also they don't let you buy the games with money.
 
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TintoConCasera

I bought a sex doll, but I keep it inflated 100% of the time and use it like a regular wife
I like Gamepass. This is just my second month which means that I have spent 11€ on it, getting access to at least 5 cool and new games that I want to play, those being High on Life, Pentiment, Chained Echoes, Atomic Heart and Hi-Fi Rush. I never cared about it too much in the past so I don't know if this stream of good games ir normal or not but hey, so far so (very) good.

I don't care for the Switch one tho, once I was finished with MH Rise I cancelled my sub. I also think the retro games they offer are best played on a CRT and with an actual d-pad. Wish they had more on offer and also for us to being able to buy them rather than just being available to those that subscribe to the service. It's cheaper tho so that's nice.

The PS one looks cool, specially if you have a PS5 but never had a PS4 imo. Lots of very good games there too and also improved over their original release.
 
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feynoob

Banned
Whatever the true number of Game Pass subscribers, it is clear that Game Pass is struggling to grow into a true mass-market service.
What nonsense is this shit?
Gamepass grow massively in 2 years.

84086_32_xbox-game-pass-now-has-440-games-offers-tremendous-value.png


Also these services are mandotory, and not a choice like gamepass.

Any sub that requires you to pay online is forced service as you users have no choice.

In that term, gamepass shouldnt be compared to PS+ and NO+.
 

sendit

Member
Also these services are mandotory, and not a choice like gamepass.

Any sub that requires you to pay online is forced service as you users have no choice.

In that term, gamepass shouldnt be compared to PS+ and NO+.
What are you talking about? These are the options if you want to play Xbox online:

Xbox Live Gold $9.99
Xbox Gamepass $9.99
Xbox Gamepass Ultimate $14.99

Xbox Live Gold is being phased out completely.
 

feynoob

Banned
What are you talking about? These are the options if you want to play Xbox online:

Xbox Live Gold $9.99
Xbox Gamepass $9.99
Xbox Gamepass Ultimate $14.99

Xbox Live Gold is being phased out completely.
Gamepass is not a mandatory like xbox live gold.
People can ignore gamepass, but they cant for gold. So these people will pay $60 instead of paying $15 a month for gamepass.
 

Lasha

Member
"Reasonable Price"

See I've never really bought into this argument. Back when everyone talked about how Nintendo's was better because it was free - well free is only appreciated if it's actually good. Give me a big pile of shit for free and I'm unlikely to take it.

I don't care about price, even the most expensive service is what, less than $100 a year. For thousands of hours of entertainment? Am I really going to bitch about $100 a year (or whatever the hell Sony / MS charge)? If we were talking $50 a month ok sure, value for money starts to enter the picture. But we're talking about what, the difference of maybe $50 between Nintendo's service vs. the competition for ONE YEAR?

50$ is another game. Would you rather play another game or pay for something you used to get for free? Online on PS3 worked remarkably well. Games like warhawk and mag ran well despite being massive games. PS3 online had everything from RPGs like white knight chronicles to fast sports games like ssx tricky. Nothing has materially changed with Sony's switch to paid multiplayer.

Nintendo's old system was fine because only a handful of games were online to begin with. Those games worked well. Being asked to pay on switch felt especially egregious when you're playing peer to peer games like smash, ac, or Splatoon 3. It's mildly tolerable because of its price and the virtual consoles. The family plan also softens the blow.
 

jigglet

Banned
50$ is another game.

yes that's totally fair.

i guess i'm speaking based on the perspective of an older gamer. for younger gamers i can see it being a draw, but once you're older i can't imagine $50 being the deciding factor of anything for a long period....$50 spread over 12 months is nothing.

any given gas, electricity, rent, car bill etc is like 10x that.
 

Lasha

Member
yes that's totally fair.

i guess i'm speaking based on the perspective of an older gamer. for younger gamers i can see it being a draw, but once you're older i can't imagine $50 being the deciding factor of anything for a long period....$50 spread over 12 months is nothing.

any given gas, electricity, rent, car bill etc is like 10x that.

There is no deciding factor though. You must pay to play online on console. That's the part that irks me. The big three already have to maintain digital account systems for their stores. Games are either p2p or hosted on servers provided by the developer. Requiring payment for online is pure greed and taking advantage of a captive market.

At least subscription games and f2p no longer need a console online pass. It was bonkers in the early days where you would need Xbox live to play FFXI.
 

Crayon

Member
I felt arm twisted into buying it for mmario maker 2 (dissapointing game!!), but I turned out to be pleased with that snes collection. I preferr my real consoles but there is a devent little collection on there. Whether it's a good value or not, $20 a year is hard to get mad about.
 
Persona 4 Golden is a free title on Game Pass, but in the DFC office several people choose the Switch version for $20. The thinking was that this title works well on the portable Switch and $20 is nothing to pay for 40+ hours of entertainment...

& this's suppose to indicate what, exactly?...

i try reading some of these articles, & then i'll hit something like this & think 'what?! this demonstrates what you're saying how?'...
 

jigglet

Banned
There is no deciding factor though. You must pay to play online on console. That's the part that irks me. The big three already have to maintain digital account systems for their stores. Games are either p2p or hosted on servers provided by the developer. Requiring payment for online is pure greed and taking advantage of a captive market.

At least subscription games and f2p no longer need a console online pass. It was bonkers in the early days where you would need Xbox live to play FFXI.

Don't get me wrong, I'm not arguing about the paid part. I agree, I think for the shit they offer it should be free.

I'm just saying that if you DO need to pay, arguing over $20 vs $60 (or whatever the prices are) for a TWELVE month period is kind of like splitting hairs. I often see fanboys arguing about pricing and I think; seriously, is it even worth bickering about for such a small amount?
 

DaGwaphics

Member
I'm completely shocked that the "required for online play subscriptions" for the consoles with more than 100m users have more subscribers than the competitor with around half as many consoles sold. It's really a revaluation.

Shocked Patrick Stewart GIF


Now, we should compare like for like services. Drop Nintendo's offering from the chart all together and delete the PS+ essentials tier from the results and then we can discuss.
 
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