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Former Xbox exec says he’s ‘scared’ of Game Pass’s potential impact (VGC)

kingfey

Banned
https://www.videogameschronicle.com...ys-hes-scared-of-game-passs-potential-impact/
Former Microsoft exec Ed Fries has expressed concern over the potential impact the company’s Game Pass subscription service could have on the games industry.

Speaking as part of a wider interview with Xbox Expansion Pass, Fries – who was part of the original Xbox launch team before his departure in 2004 – was asked what he would do were he still part of Microsoft’s gaming team today.

Fries didn’t give an explicit answer but said that he was ‘scared’ of the impact Game Pass could have, should it become a dominant business model like Spotify has in the music industry. He also made broad claims about Spotify’s impact on the music industry, some of which have been disputed by experts.

Xbox Game Pass launched in June 2017 and has become central to Microsoft’s gaming business, offering members access to over 100 titles for a monthly subscription fee.

As of January 2022, Game Pass has over 25 million subscribers, according to Microsoft, so it still has a long way to go before it reaches the level of Spotify (182m) and Netflix (222m). In fact, it was recently estimated that subscription services account for just 4% of annual games revenues in Europe and North America, compared to 65% of global music revenues.

Both Microsoft and PlayStation have said they don’t believe subscriptions will ever be the dominant model in video games. However, former MS exec Fries encouraged the platform holders to be “careful” over the business models they create.

“The one thing that they’re doing that makes me nervous is Game Pass,” he said. “Game Pass scares me because there’s a somewhat analogous thing called Spotify that was created for the music business.

“When Spotify took off it destroyed the music business, it literally cut the annual revenue of the music business in half,” the former Microsoft exec claimed. “It’s made it so people just don’t buy songs anymore.

“People don’t buy songs on iPhone for example, because why would you? They’re all on your subscription service app. Apple’s said they’re going to take away buying songs because no one’s buying them any more.

“So we have to be careful we don’t create the same system in the game business. These markets are more fragile than people realise. I saw the games industry destroy itself in the early 80s. I saw the educational software business destroy itself in the mid-90s… they literally destroyed a multi-billion dollar market in a few years.

“So Game Pass makes me nervous. As a customer, I love it. I love Spotify as a customer: I have all the songs I’d ever want… it’s a great deal as a customer. But it isn’t necessarily great for the industry.”

Fries went on to question whether it was possible for game developers to embrace subscription platforms to the extent seen in the music business.

“At some point it tipped and everything had to be [on Spotify]. The percentage of all games that are on Game Pass is still tiny, and there are a lot of games. 200 games a week come out on Steam and more than that come out on mobile.”

Some of Fries’ claims regarding Spotify were strongly disputed by music industry journalist Tim Ingham, editor of MusicBizWorldwide, who told VGC that streaming’s impact on the music industry had overall been hugely beneficial.

“Spotify didn’t cut the music business in half – piracy did,” he said. “Spotify, and the cloud-based technology on which it relies, actually gave music fans a more convenient, legal and monetised alternative to piracy.

“And then, once consumers were comfortable with that, Spotify (and its rivals) performed a further miracle: upselling hundreds of millions of music consumers to subscription via monthly billing… despite the fact that the same free alternative, music piracy, remains available in any browser!”

He added: “Arguably the biggest problem the music industry has with Spotify today is whether its free tier remains fit for purpose, because consumers have become so accepting of the paid subscription paradigm. And make no mistake: subscription as a model is loved by the modern music business; it’s taken the whole industry back to commercial peaks many thought Napster and Limewire had snuffed out for good.”

Ingham pointed to figures from IFPI which show that since 2011 when Spotify launched in the US, the global recorded music industry has grown by 73%, from $15 billion in annual revenues to $25.9 billion in 2021.

Responding to Fries’ comments, ReedPop’s head of games B2B Christopher Dring acknowledged concerns over the impact subscription models could have if they ever reached the scale of Spotify, but questioned whether they ever would.

“Right now, there are plenty of stories on how subscription services have been additive for game creators. Not only have they been a source of revenue in their own right, but they immediately open games up to millions of people,” he said.

“There are many examples of games going into a subs service on one console, becoming hugely popular, and that has caused a spike in normal $60 sales on other platforms.

“There is industry concern about what might happen if subscriptions become dominant, like they have in music and TV,” he added. “The subscription model doesn’t necessary generate the revenue needed by AAA games, particularly single-player games with no microtransactions… you can see why Sony is reluctant to put its latest releases into PS Plus.

“However, games are very different to music and TV. Those linear forms of entertainment are much shorter, and more digestible. How many songs or TV shows do most people consume vs games?

“If you’re someone who only plays a couple of games a year — like FIFA and Call of Duty — how likely are you to subscribe to a service with hundreds of options? It remains to be seen just how big games subscription services will become.”

Microsoft has argued that the additional monetisation opportunities in gaming differentiate it from streaming services for other mediums, such as video-on-demand.

Unlike on video streaming platforms, Game Pass users continue spending money via in-game transactions, expansion content and the purchase of additional games, the company has said.

Microsoft CEO Satya Nadella claimed last year that Xbox Game Pass subscribers play approximately 40% more games and spend 50% more than non-members.
 

DeepEnigma

Gold Member
 

ManaByte

Member
So we have to be careful we don’t create the same system in the game business. These markets are more fragile than people realise. I saw the games industry destroy itself in the early 80s. I saw the educational software business destroy itself in the mid-90s… they literally destroyed a multi-billion dollar market in a few years.

Atari producing more E.T. carts than systems on the market is in no way comparable to a subscription service.
 

kruis

Exposing the sinister cartel of retailers who allow companies to pay for advertising space.
Some of Fries’ claims regarding Spotify were strongly disputed by music industry journalist Tim Ingham, editor of MusicBizWorldwide, who told VGC that streaming’s impact on the music industry had overall been hugely beneficial.

“Spotify didn’t cut the music business in half – piracy did,” he said. “Spotify, and the cloud-based technology on which it relies, actually gave music fans a more convenient, legal and monetised alternative to piracy.

“And then, once consumers were comfortable with that, Spotify (and its rivals) performed a further miracle: upselling hundreds of millions of music consumers to subscription via monthly billing… despite the fact that the same free alternative, music piracy, remains available in any browser!”

He added: “Arguably the biggest problem the music industry has with Spotify today is whether its free tier remains fit for purpose, because consumers have become so accepting of the paid subscription paradigm. And make no mistake: subscription as a model is loved by the modern music business; it’s taken the whole industry back to commercial peaks many thought Napster and Limewire had snuffed out for good.”

Ingham pointed to figures from IFPI which show that since 2011 when Spotify launched in the US, the global recorded music industry has grown by 73%, from $15 billion in annual revenues to $25.9 billion in 2021.

Ingham leaves out the fact that that same global recorded music industry had shrunk by 73% between 2001 and 2011. Interestingly streaming has saved the record industry - but not physical media and record stores. The resurgence of vinyl has only slowed down the decline. A substantial section of the recoded music revenues in the past went to the retail business, now those profits go to record labels and streaming services. Tens of thousands (or even hundreds of thousands) of jobs gone.

 
I mean..the main problem is something we're witnessing right now: People saying they will unsubscribe because there's no new AAA title to play in there.

That also brings 2 issues:

- Short-term: MS will try to have a constant flow of high-budgeted content to be there so that people never feel like they should unsubscribe and their studios could feel completely burned out after a few years;
- Long-term: If these subscription models are indeed the future...what if MS starts releasing games in...chapters like Life Is Strange so that there's always a flow of content? Imagine Gears 6 or 7 releasing in chunks instead of full paid games like right now. I'm not saying now but in 10 or 15 years.

This is something i fear. Hopefully releasing games as products never stops being a thing. Turning games into services, even single player experiences won't be good for anyone...including us.

Still too soon to say this.
 

Represent.

Member
When Spotify took off it destroyed the music business, it literally cut the annual revenue of the music business in half, It’s made it so people just don’t buy songs anymore

This is a fact. I would be scared too. People can pretend it's a non issue or "concern trolling" all they want, but that makes you naive. This will be an issue if you give a shit about quality AAA games.

*unsubscribes*
 
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Plantoid

Member
I don't care, I go where I can get cheaper deals, the industry is constantly changing and it's a good thing

If GP ceases to exist, meh, guess I will be experiencing less games, the ones that I find interesting I buy anyways

I see the good indies going downstream if GP fails, I've played like 30 different games last year alone that I would NEVER play if I had to pay.
 
I'm not losing any sleep over it. The gaming business is doing a fine job all by themselves of making themselves unsustainable and prone to failure. When I started playing games, I had to put in quarters. Shit changes sometimes.

On one side you have subs trying to save you money. On the other side, every game is $70. Fuck that $70 shit. I'm so grateful there are options.
 
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Hobbygaming

has been asked to post in 'Grounded' mode.
I mean..the main problem is something we're witnessing right now: People saying they will unsubscribe because there's no new AAA title to play in there.

That also brings 2 issues:

- Short-term: MS will try to have a constant flow of high-budgeted content to be there so that people never feel like they should unsubscribe and their studios could feel completely burned out after a few years;
- Long-term: If these subscription models are indeed the future...what if MS starts releasing games in...chapters like Life Is Strange so that there's always a flow of content? Imagine Gears 6 or 7 releasing in chunks instead of full paid games like right now. I'm not saying now but in 10 or 15 years.

This is something i fear. Hopefully releasing games as products never stops being a thing. Turning games into services, even single player experiences won't be good for anyone...including us.

Still too soon to say this.
I've been wondering if we'll start to see more game's designed for Gamepass at Xbox's show in June, like episodic games

It would be very bad for gaming imo
 
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skit_data

Member
What we've been saying from the start. Its not sustainable. Everyone who used the music industry analogy as a positive has no idea how corrupt that industry actually is at paying its artists.
Artists also have other sources of income than just the streaming of their music. Touring, merchandise etc. make up a lot, if not the majority of their income.
I have a hard time imagining how a game developer could find similar alternative sources of income.
The closest we can find is the film industry and surprise surprise, Netflix shows that generating profit while also keeping a steady flow of content is tough.
 
- Long-term: If these subscription models are indeed the future...what if MS starts releasing games in...chapters like Life Is Strange so that there's always a flow of content? Imagine Gears 6 or 7 releasing in chunks instead of full paid games like right now. I'm not saying now but in 10 or 15 years.
This is already happening, Halo:Infinite launched without coop and its being added as dlc at an unknown time in the future. This problem will only get worse as devs are pushed to get release products way earlier than expected in order to make gamepass appealing at integral points throughout the year to combat competitors.
 
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This is already happening, Halo:Infinite launched without coop and its being added as dlc at an unknown time in the future as dlc. This problem will only get worse as devs are pushed to get release products way earlier than expected in order to make gamepass appealing at integral points throughout the year to combat competitors.
Seriously. If only there were no subs, all games would release complete and finished with no patches, DLC, or lacking content.
 

BeardGawd

Gold Member
The entire premise is based on factually wrong information. Subscriptions increased music industry revenue and saved it from piracy.

Subscriptions did not decrease revenue.

This is a fact. I would be scared too. People can pretend it's a non issue or "concern trolling" all they want, but that makes you naive. This will be an issue if you give a shit about quality AAA games.

*unsubscribes*

Sigh.
 
It would certainly help if today's music wasn't a lot of garbage, but I love 80s music so a lot of the stuff today, not all, is music I dislike. Who says you can't have both a sub and still sell games traditionally?
I guess if GamePass doesn't work out, the investment MS has made can easly be converted back to a traditional sell per game model.

I'd hate that because is easily been worth the subscription for me.
 
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Bojanglez

The Amiga Brotherhood
This does seem like revisionist history. Before Spotify all I remember was rampant piracy and taking physical sales. Yes, the model is not great and musicians may make less of album sales, but finding a wider audience and growing secondary markets (tutoring, merchandise etc.) can help them. It's probably great for massive acts who can benefit from that and even independent acts that can get traction without the 'industry' but a lot of middling acts have probably lost out, I won't lose sleep over that.

It will be interesting how the gaming industry adapts, I like subscription services, enjoy GaaS options, I'm also willing to pay £70 for premium games. We'll see how that pans out.
 

Filben

Member
I'm more concerned with MTX and other monetization practices because they change game design fundamentaly in many games now.

I still buy games and will do even if they exist in Game Pass.
 

Pagusas

Elden Member
Ingham leaves out the fact that that same global recorded music industry had shrunk by 73% between 2001 and 2011. Interestingly streaming has saved the record industry - but not physical media and record stores. The resurgence of vinyl has only slowed down the decline. A substantial section of the recoded music revenues in the past went to the retail business, now those profits go to record labels and streaming services. Tens of thousands (or even hundreds of thousands) of jobs gone.


Does the "Other" part include things like tik tok licensing and such? I imagine thats been a a big boon for the industry.
 

ReBurn

Gold Member
Atari producing more E.T. carts than systems on the market is in no way comparable to a subscription service.
That was a rumor. By the end of 1982 there were 12 million 2600 systems in homes. There were an estimated 4 million ET carts produced.
 
What we've been saying from the start. Its not sustainable. Everyone who used the music industry analogy as a positive has no idea how corrupt that industry actually is at paying its artists.
Perhaps the percentage of revenue that artists receive today is much smaller than the percentage that artists 20+ years ago used to earn, but the revenue base has increased so exponentially due to streaming that even a smaller cut of it is way more money than anyone in past generations could have ever dreamed of. For example, 20% of $50 million is much more than 50% of $10 Million. There's a reason every up and coming singer/performer has no problem giving out free soundcloud samples of their work.
 
The music industry is screwed up from top to bottom. A simple example of this is when a single paid user listens to an entire album release on Spotify, for some reason it doesn’t count as 1 album sale. You have to listen a few more times for it to count as one sale. The music industry themselves decided this. That’s why you sometimes have artists who are already at the top and in the spotlight asking people to buy merch and go to shows. There’s more to this but this isn’t a music thread. I just wanted to say it’s a horrible comparison.
 

Faithless83

Banned
So everyone is opening their eyes on this as an issue now that Sony is doing it, huh?
Been saying this for a while now, at least Sony is not doing games day one in it. By the time first party games reach the service, they will be at least an year old I presume.
Based on the backlog that the service will generate, A LOT of people will choose to wait.

This will hurt sales overall and we can all blame MS for starting it, same as the acquisitions current trend. lol
 
This is already happening, Halo:Infinite launched without coop and its being added as dlc at an unknown time in the future. This problem will only get worse as devs are pushed to get release products way earlier than expected in order to make gamepass appealing at integral points throughout the year to combat competitors.
I remember the Last of Us releasing in 2013 with singleplayer and multiplayer components on day one. Now here we are in 2022 and the game's sequel released nearly two years ago, yet we are still waiting for the multiplayer component of TLoU2 to release (and probably for another upfront charge). Was this also a "Game Pass" effect?
 

SlimySnake

Gold Member
Damn, I didnt realize streaming hurt the music industry so much.

I still think the gaming industry is never really going to adopt the service model despite how hard MS tries to make it a thing. We have games that cost $100 million to make and another $100 million to market. They need to sell 4-5 million just to break even after royalties and retailer/digital cut. And no one wants to break even or make $50-100 million in profits for $200 million game. See how Days Gone, Tomb Raider reboot and Dead Space were profitable but not profitable enough for Sony, Square and EA. Every game needs to triple if not quadruple their investment.

MS paid a paltry $5 million for Guardians six months after a bad launch. The question is, what would Square be ok with from a day one Gamepass launch. $50 million? $100 million? MS has 25 million monthly subscribers, thats $250 million a month. $150-200 million if you count the people who upgraded their XBL Gold subs for a dollar, but the monthly number takes into account recurring subs So $150-250 million should be enough to buy CoD, Battlefield, RE8, Guardians and yet MS could only afford Outriders. A B game at best.

So either MS isnt offering these companies $100-200 million or these companies dont want to settle for $100-200 million. I know Sony made $240 million from TLOU2 in the first three days. 4 million units. There is no fucking way they are gonna put that on a $10 service and cost themselves $200 million. Heads would roll if that ever happened.

P.S It's interesting that EA Pro and Ubisoft+ are not on consoles, but are perfectly willing to give away their AAA games on PC for $15. Maybe it depends on the audience. The PC audience typically dont buy Ubisoft and EA games so thats how they entice them.
 

AJUMP23

Gold Member
I want to play Biomutant but I keep thinking it has to be coming to Gamepass any minute now. And they still want $60 for it. I will just wait until it hits gamepass.

But I don't think I have bought less games since gamepass, but I have played games I would not have bought.
 

Flutta

My tears. Exclusive to gamepass. Forever.
The issue is imo pubs/studios who puts their games on a rental service on day one just to get a quick buck and not caring about the overall impact this will have on how consumers approach gaming as a whole. More and more gamers will get used to not buying games. Less profit = less quality AAA games = more MTX injected into games = half assed releases like infinite will increase.
 
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Lognor

Banned
This is a fact. I would be scared too. People can pretend it's a non issue or "concern trolling" all they want, but that makes you naive. This will be an issue if you give a shit about quality AAA games.

*unsubscribes*
But the music industry adapted. New artists make nearly all of their money with touring. Not the way it used to be but they adapted. This industry will need to adapt as well. For better or worse.
 
The entire premise is based on factually wrong information. Subscriptions increased music industry revenue and saved it from piracy.

Subscriptions did not decrease revenue.



Sigh.
uhmm i see what you are saying but..

Piracy isnt as big in the gaming industry as it was for Music.... Pirating games require much more work around then Downloading a song off Kazaa or Limewire and burning it on a Disc back in the day which was super quick to do....

Songs also doesnt Require a Big team to Complete like Triple AAA games do.. and it takes yrs to make as well...
Also Many more Song artists exist compared to Gaming Studios.. like mannnnny more all over the world

so yes Subscriptions would be different in our entertainment and can really harm it atleast thats my take on it
 

Fredrik

Gold Member
Here We Go Reaction GIF by MOODMAN


My opinion: I don't care. It's cheap, I will use it while it exists. If it really proves to be unsustainable and cease to exist or become too expensive, I'll move to whatever I find more advantageous. Win win for me I guess.
Exactly. I’ll use it as long as I can and that’s that. And it’s awesome, I haven’t bought a game on Xbox in 1.5 years, I get enough games through Gamepass. I’m subscribing to the new PS+ too so I hope to cut my spendings there as well. I’m definitely not among those who spend more after starting to subscribe.

And I trust the rich people in charge to not kill the industry and remove their income. Once it’s shown in the figures that it’s bad I’m sure we’ll see price increases, or delayed uploads to sub services just like we see with movies. If I don’t like the new price model I’ll stop subscribing. Don’t know what else there is to say really.
 

Hobbygaming

has been asked to post in 'Grounded' mode.
What was the first 'designed for Game pass' title? You might not know this but there is no such thing as a Game pass only title. You can also purchase every game on the service.
I'm referring to Gamepass affecting the way their AAA games like games being split up or more games having monetization. We'll have to see if it changes things as far as the budgets
 

Wohc

Member
I know i'm an egotistical miser, but i don't care what happens in the future. Right now Pc Game Pass gives me the ability to play games at almost no cost. 3 years were less than 2 full price AAAs and i will get dozens of day one AAAs and tons of AAs for almost nothing. Is it possible that all the sub stuff flops at some point or gets incredibly expensive? Maybe, but right now the next 3 years are secured and that's all i care about. If i have to buy my games again in 3 years, i have lost nothing, but won 3 years with lots of money in my pocket.
 
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